Will Coronavirus Cancel Olympics? Struggling Seven Prepares
Seven West Media is preparing for the coronavirus to lead to the cancellation of the 2020 Tokyo Olympics in what would be a financial crisis for the network already struggling with ratings, profits and increasing debt.
It’s been reported that Seven has been in frequent communication with Olympics organisers, advertisers and legal insurers pending any worse case scenarios if the games were cancelled in Japan over COVID-19 concerns.
Seven West Media paid around $200 million for the rights to the 2012, 2016 and 2020 Olympic game broadcast rights and has founded its entire 2020 strategy on ratings and advertising around the Tokyo Games.
It comes after the struggling network reported a $67 million loss with a debt of over $550 million, double the company’s market cap, just two weeks ago. It’s shares also slumped to record lows of 16 cents on Friday.
The International Olympic Committee (IOC) has set aside $981 million for broadcasters in case the games are cancelled or postponed, but Seven would still suffer significantly from advertising deals.
While corporate insurance for big events is common, Seven did not reveal if its current broadcast rights agreements or advertising deals are covered.
An industry source told The Australian that infectious disease would would less covered than terrorism or large weather events, with the cover for broadcasting not bringing a guaranteed flow through to sponsorship deals.
‘They may just have to give the money back,’ another told The Australian.
A Seven spokesman also told the publication they had not received any further changes to the Olympics due to coronavirus.
‘We’re obviously monitoring the situation very closely… However, at this stage there’s been no official advice from the World Health Organisation or the International Olympic Committee that there will be any change to the Olympic Games. There’s really nothing further to say for now.’
Despite some qualifying events being disrupted or moved, IOC president Thomas Bach said over the weekend that the Games were going ahead ‘as planned.’
Founding chairman of advertising group Atomic 212, Barry O’Brien, estimated the sponsorship deals for Seven were worth around $90 to $100 million, The Australian reports.
O’Brien said that if the Games cancellation went ahead, it would be a massive setback for Seven as well as athletes who have trained hard for years to reach the Olympics.
Another issue he flagged was the promotion of new shows like Plate of Origin which Seven strategically scheduled for after the Games to use as leverage. O’Brien said the Games acted as a 12-month investment, instead of just a two-week event.
However, O’Brien doubted the Games would be cancelled, citing the $5 billion worth of sponsorship deals Japan has secured through it.