More number of people watching Olympics on TV means more people are offline and hence there is a slump in the online activity and especially on weekends, the traffic is always low.
What I've been doing to draw in Olympic traffic to one of my other sites (personal blog) is to write about the Olympics and Michael Phelps are much as I can. My blog gets indexed in Google after about 2 minutes of making a post, so I'm getting a ton of Google traffic for highly targeted keywords, like "Michael Phelps medal", "Olympic age rules" etc.
I also see a drop in my adsense earnings. The traffic is down too I guess you are right, people are busy watching Olympics
I think it's just a normal summer cycle where Advertisers generally spend less. Obviously if your site deals with Olympics, people are going to bid higher because it's just once every 4 years.