There has been a growing acknowledgement and understanding of the importance of live sporting events on TV, as it is one of the areas where viewers want to watch in the moment and advertisers get their ads watched.
A less talked about but almost as important genre is that of the numerous award shows such as the upcoming Academy Awards, which will be aired by ABC, which is owned by The Walt Disney Company (DIS 1.09%). This is considered by some as the equivalent of the Super Bowl for the movie industry.
To give an idea of the reach of the show, in 2013 the broadcast attracted approximately 40.3 million viewers. Meanwhile, Super Bowl XLVIII attracted 112.2 million viewers. While it may not be reaching Super Bowl numbers, the Oscars are still the second most-watched telecast on broadcast television.
Award show revenue
Over the three-year period of 2010 through 2012, the number of advertisers buying a spot on the Oscars has been 21. This year, the price of a 30-second ad is in the range of $1.7 million to $1.8 million. Assuming an average of $1.75 million per ad, that would generate just under $37 million in ad revenue for the night for Disney and ABC.
While the revenue is nice for Disney and other companies showing these popular one-off events, it also reinforces the need for major broadcasters as there is no other way to attract this big of an audience. This is why general advertisers catering to basic wants and needs are attracted to these types of shows. Among the companies advertising on the Oscars in 2014 will be Sprint, Pepsi, Johnson & Johnson, and McDonald's, among many others.
Following the popularity of The Academy Awards is the Grammy Awards show, which in January 2014 attracted about 28.5 million viewers for CBS (PARA 1.52%). Advertising for this event now garners about $1.0 million for a 30-second ad for CBS.
Foolish outlook
Whether it be events like the Olympics, which Comcast's (CMCSA 1.11%) NBC is airing across its various channels and properties, or CBS landing eight weeks of Thursday night football, the thing to understand is that all of these can only be successfully aired by the major broadcasters. This gives them one of the few advantages they have over most cable channels and websites.
Investors looking at the larger media companies need to include the many live event specials as part of their research. These are an important part of the overall picture for these businesses, and generate a lot of interest and advertising dollars.
The intangible here is the good will and recognition the companies putting on these special and live events receive. That is hard to quantify, but it's definitely an important part of the overall picture and performance of a broadcaster.
This is why Disney, CBS, and Comcast continue to provide these types of shows. They bring the networks a bit of prestige while reminding people that they are still important and needed in a very competitive marketplace.
