They don't. But for any of the major sports in the U.S., finals of every type, local affiliates will happily move aside. If a baseball game runs past 11PM, the local news will simply have to wait. A game starts at 5? No problem, the news will be postponed till after.
Happily? There's nothing happy about an affiliate moving programming aside like that. And the East coast affiliates generally don't like going late either. Did you see the clip of a news anchor, I think it was in Jacksonville, going off on NBC and Costas for running a few minutes long on primetime? The worst is baseball because the end time of those games is so volatile and that's bad for local news. Again, that local programming is extremely important to affiliates and the biggest benefit they get from airing these events is the lead-in they get to their local programming, not always how many people are watching the national event itself.
The Olympics could have easily adopted this schedule:
3:00 National News. (match EDT)
4:00 Olympic Zone.
4:30 Olympic Coverage (match EDT)
9:00 Local News. (to make up for 5:00 miss)
9:35 Olympic Late Night
11:00 Repeat Olympics Coverage, 4:30-5:30 hour.
12:00 Local News.
12:35 Repeat rest of Olympics Coverage.
My point is.... if they PLANNED it well they could have given local news in the west a PRIME TIME spot in exchange for NATIONWIDE coverage, and I believe they would still be able to make a profit.
There's nothing easy about that for an affiliate. News at 3pm? That's not going to be as profitable as news at 5pm in the usual slot. And if Olympic ratings aren't going to be hurt by the delay (which it seems like they're not), then affiliates have little incentive to want to do that.
I understand this. And although you say they are lucky to break even, I also believe more and more people went to alternative routes to watch their coverage. You can already buy a ROKU and configure it for permanent VPN use, allowing it to be your viewing device for anything .UK, including BBC streams and whatnot, and I expect that technology will continue to evolve in such a way that by 2014 it will be easier, and in 2016 it will be easier still to utilize IPTV type connections.
I personally believe that if NBC keeps up the current model with delays + added west coast delays, they will find in 2016.... (2014 delays are unavoidable) that customers will walk away from them altogether and find their live coverage elsewhere.
In 2016, people will still have traditional TV services en-masse. But they will also have access to so much more, and more importantly it will have become easier and easier to circumvent the rules a little and access Canadian and/or British streams. (And/or other countries if you speak another language)
NBC's model is behind the times, and they paid for that kind of model. They will need to get creative, and they will need to get the affiliates on board.
There's definitely an element that people are going to start moving away from traditional television. Comcast is not unaware of this. It's part of the reason they investing in the future of the Olympics, because they think they can profit off it. NBC is going to have to evolve with the times, but people were talking about that in 2008 that it would scare people off to non-traditional means to watch the Olympics. Clearly that wasn't the case in 2012 (people didn't exactly walk away this time).
In 2014 and 2016, NBC has to re-evaluate their coverage. I believe we'll see some changes moving forward as Comcast takes more control and Dick Ebersol is no longer in the picture. But that doesn't mean they need to kill the current model altogether and start from scratch instead of using what they're learned and improving upon it.