Zucker on NBCU: We’re a Cable Network Company

NEW YORK: Speaking at the Media Summit in New York yesterday, NBC Universal’s president and CEO, Jeff Zucker, stressed the importance of brands such as USA, SCI FI, Bravo and MSNBC, stating: "We are, first and foremost, a cable network company."

In conversation with Ellen Pollock, the executive editor of BusinessWeek, Zucker noted: "I think that people don’t understand how important cable is to our company…60 percent of our operating profit comes from our cable networks. We are, first and foremost, a cable network company. People are confused by that because the first three initials of the name of our company are NBC. But the fact is, our cable portfolio is second to none."

He continued: "Every one of our networks is in a tremendous zone right now, and a trajectory that is out-performing the market. And I think that’s really the key, is that the strength comes from our out-performance of the market…And 2009, even in the midst of all the difficulties we’re facing, is on target to be the same story. And that’s the strength of our portfolio and I think that’s the story that really isn’t told about NBC Universal enough."

Zucker went on to discuss the challenges of broadcast TV today, drawing parallels with the newspaper medium and the auto industry. "We can put our heads down and we can cross our fingers and wish this was 1987. But it’s not. And technology has changed everything. Digital video recorders have changed the way people watch prime-time television. The Internet has changed the way people consume video. And advertising is not what it was. In our view, we have to think about the model."

He conceded that NBC has had a difficult time in prime time the last few years. "Sometimes you see the world more clearly when you’re flat on your back. And you know, it makes you step up and acknowledge what’s going on. And I think when we look at broadcasting, we’re looking at the model and saying, you know, it’s been that way for 50 years, but does that mean that today, that’s still the right model? And I think you have to, in the environment that we’re in, especially in the economic environment we’re in, you have to question everything."

Discussing the move of Jay Leno to prime time, Zucker said: "This was an attempt to change the model. I can tell you … this is the third or fourth time that NBC in the last 30 years has looked at moving The Tonight Show format into prime time. I have the memos from research from the last time they looked at it, which were sent to me. And this is the time we decided to do it. Because I think technology and viewers’ habits have changed sufficiently so that now it made sense. Now this is not going to do the same ratings as the scripted dramas at ten o’clock, so this is not a ratings play, okay? So I don’t think we’ll ever be able to sit here and say NBC is number one in prime time, because you can’t have the ratings that we’re going to do at ten o’clock. Now we still expect to do well, but we’re not going to do what the original prime time dramas have done. You know, what does being number one in prime time mean, okay? What does that mean anymore? The fact is, we shouldn’t even be measuring the amount of people who watch The Office Thursday night at nine o’clock by just the number of people who watch it Thursday night at nine o’clock. The number of people who watch The Office should be measured by the number of people who watch The Office at nine o’clock, how many people watch it on NBC.com, how many people watch it at Hulu, how many people download it at iTunes, et cetera. None of those things existed five years ago, but we’re in a whole new world. The television season historically has been judged September to May. You know, we sell for 52 weeks a year. And so we’ve got to re-think everything and we’ve got to adjust."

Zucker continued: "I don’t want to say ratings don’t matter, because they do, okay? So this is not about ratings don’t matter. This is about … they are not the only gauge of success. You know, we’re in show business. And the show is important and the business is important. And I think you know, it was easier to be in the show when the business was easier. The business is a lot harder today. And it’s changed dramatically because of technology… I think it’s unbelievably exciting. More people are watching television, and more people are watching our content than ever before. This is fantastic. The technology has made the content, television, film, whatever it is, more accessible, more available. And we shouldn’t bemoan that. But we should acknowledge that it changes the model. And that’s okay. This is not a defeatist attitude at all. I would actually say it’s a proactive, exciting attempt to change the model." 

On digital media revenues, Zucker said: "I think we’re at digital dimes now. I actually think we’ve made some progress. But there’s still a long way to go from those dimes to dollars. Like I said, I think we will continue to make progress. I don’t know that we ever get to the one-for-one dollar replacement. But you know, that’s okay if you can also fix your cost structure in the process. This is not just about revenue, it’s also about cost. And you know, that’s why it’s so hard. I get why a lot of people are scared of it and they don’t want to change, and they want to attack the messengers. These are scary times in terms of trying to change those models. So we’re just going to have to work our way through it."

Speaking about the upcoming Upfronts, Zucker noted: "We obviously know that we go into this upfront at a more difficult economic time than we’ve had in a long time. And we know that there’s a lot of uncertainty out there. And there’s, frankly, some paralysis on the part of advertisers who aren’t sure where their budgets are going to be. So that’s the landscape. What do we expect to happen? Look, I expect it to move slowly. I expect that some of the broadcast networks may not move as much inventory this upfront season. I expect the cable upfront to be very strong particularly for us and our properties, like I said, USA in particular, given that it’s now competing with the broadcast networks to be very, very strong. I think cable will be strong. I think broadcast will be slower. And there may not be as much inventory."

Discussing the drubbing CNBC has received on Comedy Central’s The Daily Show with Jon Stewart, Zucker said: "I thought it was incredibly unfair to CNBC and to the business media in general…CNBC is a spectacular organization that has done a tremendous job covering the markets and the business world for 20 years, and probably distinguished itself more in the last two years than at any point. Everybody wants to find a scapegoat now, everybody wants to point a finger. I’m upset that my 401K isn’t what it was. You’re upset that your 401K isn’t what it was. And we all want to blame somebody, you know, and that’s human nature. But to suggest that the business media or CNBC was responsible for what is going on now is absurd…You can’t look at any singular call that Jim Cramer makes or CNBC makes. CNBC has done a great job. I’m incredibly proud of the job they’ve done, and I think that the criticism of CNBC, and the business media in particular, was completely out of line."