In terms of moving a work from one territory to another, there are several things that have to occur in order to do that. The first, being translation, needs to happen whenever two territories have different sets of languages to cater to. (The most extreme example in the first world is Japan to Western Europe, which requires at least five different translations from Japanese, an orphan language, to at least five completely different languages.) However, just because you've translated something does not mean it's done. There's also localization.
Localization is the process by which cultural references are fixed to work in another territory. Alone, cultural references do not necessarily persist across countries. Go ahead and pick up a newspaper in your native language but from a country you have never been to. Read any random article. You'll probably find, unless it's a story about international events, that while you were perfectly able to understand the content of the article, you didn't understand what that article was about. What was missing? Cultural context. Without it, things have less meaning. Cultural context is the language behind language.
Now, what does that have to do with NBC? Well, NBC is the US licensor of the London 2012 Olympics, and in fact, every Olympics up until 2020. They alone are allowed to show the Olympics in the US. During the opening ceremony, there was a seven-minute tribute to the victims of the 7/7 London subway bombings. People watching the ceremony in the US didn't see this. Instead they saw a seven-minute tribute to irrelevant commentary and Twitter-recital that passes as news today.
Now, was NBC in the right to cut out critical sections of the ceremony? Perhaps. That's for NBC and the IOC's lawyers to decide. They may have contractual options to do so. Is it insensitive? Definitely. When pressed for a reason as to why NBC decided their commentators were worth more than subway bombing victims, NBC obfuscated the issue by saying their programming was "tailor made for US audiences", or in other news, that cutting out the ceremony was an act of localization.
First off, what NBC did is not localization, it's deculturalization, in the same way that a translation that uses the wrong words is a mistranslation. Deculturalization is any localization that obfuscates or removes cultural meaning rather than explains it. It's localization gone wrong. By doing so, NBC is willfully misinforming their audience. Most of them don't know about the 7/7 London terror attacks, and by removing the ceremony, NBC is perpetuating that ignorance.
NBC most likely believed that the terror attacks were too hard to explain to US audiences. There's a tendency in a lot of US media companies to believe that your audience is stupid and that they should cut out things "American audiences wouldn't understand". This has been going on for decades, but NBC has actually made it painfully obvious now.
Here's the thing: US audiences aren't stupid enough to not know what a terrorist attack is. Even though the 9/11 New York terror attacks happened almost 11 years ago, this doesn't mean that everyone forgot about them. Hell, we're still in two ill-advised wars because of the justifiably defensive position we were put in to as a nation during the attack's aftermath. People will understand bombings in the London Underground, they will understand gas attacks in the Tokyo subway system, they will understand car bombs, they will understand any action of terrorism as terrorism even if it isn't.
And that's the biggest pitfall when localizing: Underestimating your audience. Americans are not stupid, but by cutting out things you think we're not going to understand, you are implying that we are stupid. And the first thing the audience does not want to be is to be called an idiot, especially by cheapening highly-rated sports coverage.
NBC, you should issue a formal apology to the 7/7 victims and a formal apology to your viewers. Air it during your Olympics coverage. And stop assuming we're idiots.
As for those wondering what localization really is, it's not the wholesale destruction of foriegn cultural elements one believes to be flawed or uncommunicable. It's the explanation of foriegn cultural elements not necessarily known by the target audience.
A proper localization would be NBC explaining that there was, in fact, a terror attack committed in London on July 7th, 2005. But I don't think even that is necessary. Localization is necessarily a 'light touch', not a heavy hand.