Peter Smith

October 2007

NBC Universal Global Networks is home to a number of international services: SCI FI, which specializes in science fiction; 13th Street with its action and adventure slate; the 24-hour movie channel Studio Universal; and Universal Channel, which offers a general-entertainment mix. The newest addition to that stable is the international Hallmark channels, which NBC Universal recently acquired from Sparrohawk Media. As president of NBC Universal International, one of Peter Smith’s responsibilities is to expand the distribution of these channels around the world. He and is team are in the enviable position of being able to tap into a treasure trove of NBC Universal movies and TV programs from with built-in international appeal—including the Law & Order franchise, Battlestar Galactica, the recent hit Heroes and the feature Fast and the Furious—as well as acquiring programming from other distributors. Smith talks about launching branded channels in today’s multichannel landscape.
WS: What is NBC Universal Global Networks’ overall strategy for launching channels internationally?

SMITH: We have an ongoing expansion strategy, which we announced in March 2007 and which will be driven by our newly appointed president of global networks and digital initiatives, Roma Khanna.

Our expansion strategy is quite simple really, one that has proven successful so far in Western Europe, Latin America and Brazil. We start with well-known brands such as SCI FI Channel and Universal, invest heavily in first run series and blockbuster films, and put together local teams that have the necessary on-the-ground relationships and management expertise to build top quality channels.

WS: What new channel launches are expected in the coming months?

SMITH: Coming off two successful launches in Benelux and Brazil within the last few months, we’re now looking forward to taking SCI FI and Universal Channel into Central Europe and Southeast Asia within the next six months. In 2008 our plans include expanding Global Networks’ existing portfolio of channels in Latin America, Portugal and Benelux, and launching brands outside of our existing base, including Russia, Scandinavia, South Africa, Japan and India.

WS: What are the inherent strengths of Global Networks’ four brands: 13th Street, SCI FI, Studio Universal and Universal Channel?

SMITH: Each of the brands offers a unique viewing experience and therefore the overall channel portfolio is complementary. In addition, we are fortunate to have distinctive services that attract loyal audiences, and in the case of SCI FI Channel, our viewers automatically become a part of a worldwide community.

WS: SCI FI recently launched in Germany. In today’s crowded multichannel environment, what does it take to successfully launch a channel in a major market such as Germany?

SMITH: We would agree that Germany is a unique marketplace where the abundance of free channel offerings doesn’t make it easy to launch a successful pay TV service. However, both of our thematic channels—SCI FI and 13th Street—offer the audience a viewing experience they can’t find elsewhere, and therefore, have been able to cut through the clutter and rise above the pack. Again, it goes back to the simple formula of creating a top-tier local management team who employ good scheduling tactics, acquire quality programming and provide an appealing on-air environment that engages viewers.

WS: How much of the launch budget is devoted to advertising and promoting the channel?

SMITH: We’ve been successful with each of our launches by partnering with our platform providers from the start. NBC Universal’s goal is to create top channel brands, and therefore we understand the importance of spending a healthy chunk of our budget on marketing and public relations to build awareness and buzz from day one.

WS: Would you give some examples of success localizing the Global Networks’ channels?
SMITH: Our philosophy is to create uniform channel brands around the globe that allow for customization to meet local audience’s unique tastes and viewing habits. With this in mind, all of our channels are localized to some degree, whether that’s through language feeds, home-grown productions, local talent or on-air design.

WS: Will NBC Universal’s International Television Production unit headed by Angela Bromstad produce for the Global Networks channels?
SMITH: Yes, Angela Bromstad’s new TV production unit will produce some content for our Global Networks channels but it will not be a main focus, as they are effectively just another customer [for us].

WS: Are original productions an important part of Global Networks’ growth?

SMITH: Absolutely, yes, original production will be an important factor in strengthening and reinforcing our Global Networks channels as a destination for viewers.

WS: How quickly are VOD and download-to-own services growing in Europe?

SMITH: We’re seeing tremendous growth across the board for all forms of new media services. The VOD market as a whole increased almost two-fold last year and Electronic-Sell-Through [EST], although just emerging, is catching on quickly. Additionally, subscription-based VOD services are growing rapidly, not to mention the fact that we expect to see more advertising-based models emerging in the near future. It is an exciting time as consumers are presented with more and more options on where and how to access great content.

WS: In the coming years, how do you see Global Networks’ business divided up between linear channels on one side and digital delivery such as VOD and download-to-own on the other?

SMITH: Our channels business and digital distribution business are separate and distinct divisions, yet they are very complementary. These businesses offer people different ways to consume content and provide us with different revenue streams. Video-on-demand and Electronic-Sell-through models also help create awareness for content and can actually boost broadcast ratings. There are also opportunities to coordinate branding on both sides, whether to extend an existing brand or launch potential new brands.

WS: What potential for growth does DTT offer in Europe?

SMITH: We continue to explore emerging DTT markets in Europe. DTT platforms offer a unique growth opportunity, allowing strong channels to participate in shifting advertising markets. We are always looking for opportunities that fit our channel brands and approach to multichannel television.

WS: What other opportunities does the digital world offer a company with a library as rich as NBC Universal’s?

SMITH: This ties back to my earlier point about providing consumers with more choice and options. The digital world offers virtually an unlimited number of storefronts and a variety of different retail models for consumers to choose from. At the same time, it allows us to deeply mine and monetize our rich catalogue, in ways we otherwise may not be able to do. We can offer broad, mass-appeal digital storefronts as well as niche-oriented boutiques in a much more easy and cost effective way than we were able to do in the physical world.