Comcast Entertainment Group’s Ted Harbert

January 2007

By Anna Carugati

It seems that anywhere you turn these days you can see people enjoying
content in some new—often portable—way. On laptops, cell phones,
iPods, while on vacation, on public transportation, in doctors’ offices, and even
at work, people are catching up on sports scores, news headlines, the latest
videos and missed episodes of favorite TV shows. There is no doubt the
television paradigm has changed—the schedules of linear channels no
longer dictate the relationship with viewers. Rather, viewers have taken
control of their media, especially young viewers.

Ted Harbert has been an eyewitness to just how much the TV paradigm
has shifted. He spent two decades in the traditional television business,
holding numerous management positions, including chairman of ABC Entertainment,
president of NBC Studios and producer at Twentieth Century Fox Television.
Today he is the president and CEO of the Comcast Entertainment Group and
oversees Comcast’s West Coast properties: E! Networks, which includes E!
Entertainment Television and Style Network, and G4. He is responsible for
making sure that not only do these channels grow and remain profitable, but
also that their content is available and appealing on the myriad new digital
platforms and electronic devices available to consumers today.

Under Harbert’s direction, E! has successfully launched the broadband
channel The Vine @ E! Online. Early in 2006 he also unveiled “E! Everywhere,”
the company’s multiplatform and distribution initiative designed to move the E!
brand to new outlets that serve E!’s young audience.

E! Networks is one of the world’s leading producers and distributors
of entertainment news and lifestyle-related programming. The company operates
E! Entertainment Television, a 24-hour network that offers programming
dedicated to the world of entertainment; Style Network, which features
lifestyle programming targeted at women aged 18 to 49; and E! Online. E! is
currently available to 89 million cable and satellite subscribers in the U.S.,
while Style counts 43 million subscribers. E! programming can be seen in more
than 120 countries around the world, reaching some 600 million homes, and the
E! International Network, a 24-hour English-language entertainment channel, is
available via satellite in Europe, Africa, Asia Pacific and the Middle East.

Harbert talks to World Screen about his plans for serving
viewers in this new “anywhere-anytime” programming world we now live in.

WS: News—entertainment
news and hard news—is one of the genres that lend themselves to mobile
and broadband. Is new media an increasingly important part of your business?

HARBERT: Yes, I
can’t underestimate that. What’s fascinating is that we now have businesses and
revenue streams that didn’t even exist two years ago. And my job is so much
different than I thought it was when I first started because I am spending a
considerable amount of time helping us grow our new businesses. It really
unfolds in several ways. E! Online is not a new business, but within the digital
landscape it’s the biggest part of our business. We recently launched a
brand-new look, a brand-new functionality, and there are so many more benefits
to advertisers and to our users, and we are seeing great results. Our team has
done a great job but we are not going to stop there. We have so many more ideas
for E! Online—that will be an important 2007 initiative.

The Vine @ E! Online, our
broadband player, is just going gangbusters—we have so much programming.
And to your point about news being perfect for this category—it’s not
just news. Yes, we cut up our newscast into little sections and we can put
those on The Vine each day, but
everything we do, all of our clip shows, The Soup, The Girls Next Door, so many of our shows are perfect candidates to be
cut into two- to five-minute clips.

We are also creating
original programming for The Vine. We have a program called Planet Gossip, which features two reporters standing up and
talking about the gossip of the day. And frankly, we just don’t have time on
the linear network to cover so much, so The Vine is perfect for this and it’s
just plain fun. We have a list that has three dozen ideas on it of things we’d
love to do on The Vine. Frankly, one of the issues for me as a manager is how
to build this business without adding a lot of staff, [but by asking our] people to take on more.

In new media, we have a
department called SPANC, which stands for Short-form Programming and New
Content. This group is working seemingly 24 hours a day, cutting the E!
archives but also creating new material that we not only put on The Vine, but
we also put on mobile and VOD. We get so many uses out of our product that a)
it helps keep our costs down, but b) also expands the “E! Everywhere” brand,
which is critical to [our
success].

It’s typical in my job to
ask, What is the most important thing right now? And I always say, Well, I’ve
got several priorities, but nothing is more important than the expansion and
extension of “E! Everywhere.”

WS: Why has
that been such an important priority for you?

HARBERT: Because
it came from a study of our audience and how young people use media. It became
quite clear to me about 18 months ago that the days of dedication to the linear
channel are waning. And yes, we still have more viewers than we did a year ago,
and we still have 89 million people a month watching E! in the U.S. and
hundreds of millions more around the world. But I have two teenagers and I see
how much time they spend in their rooms, accessing anything they want on their
laptops and on their cell phones. It’s amazing to me that less and less time is
spent watching the big beautiful flat-screen TV in the family room. Nowadays
the cool kids are going to college and not even taking a TV. They use their
laptops. I see my kids downloading movies and anything they want off of iTunes,
using their allowance to do that; and I have this fight with my son—he’s
almost 14. I say, “Why are you spending your allowance to download an episode
of The Office when you can
watch it for free on NBC?” He says, “I’m not going to watch it on NBC when they
put it on.” And I argue, “But you can TiVo it.” And he answers, “Yeah, I can
TiVo it, but I want to watch it in my room after doing my homework.”

So I said to myself, OK,
the game has changed. It’s changed forever. So at E!, we went out and very
aggressively—frankly, before we knew there was any business there—started
our broadband initiative, and our mobile initiative. And now we’ve not only got
deals with just about every mobile carrier in the U.S., but around the world,
every place we go, the mobile carriers want us. We’re closing deals as fast as
the lawyers can make them. And that’s a real revenue stream.

We are commercializing our
broadband player, The Vine, wisely but slowly, because I don’t want to do to
The Vine what we all did to commercial television in the last 50 years, which
is over-commercialize it, with 11 to 12 minutes of commercials an hour, to
which the young people are saying, “No thank you.” So we are very careful about
how much commercialization there is on The Vine. It is a wonderful television
experience, because there is so little commercialization. But on the mobile
deals you get a subscriber fee, and that is a brand-new revenue stream that
didn’t exist two years ago.

WS: How
important are program sales and E!’s international channel to E!’s overall
business? Is that a segment you want to grow?

HARBERT: Not
only do I want to see it growing, but under the incredible work of Kevin
MacLellan’s [the senior VP of international at E! Networks] unit, it’s the
fastest-growing business at E!, by far. I turn to Kevin and say, “You are the
growth engine of this company.” I think the new-media business is three to five
years away from being the next growth engine.

I want the E!, Style and
G4 linear networks to grow, but if I can get double-digit growth on those
networks it will be a huge accomplishment, but Kevin’s unit is growing much
faster than that. As the penetration of digital platforms increases, then our
international unit is the driver in the two ways you mentioned. Program sales
are incredibly important and Duccio Donati [VP of international sales] had an
unbelievable year. He is beating his budget significantly and I think it’s
because we have given him better programs to sell. And he’s getting great
reaction from around the world. And so is Cheryl McDermott [VP of business
operations for international at E! Networks.] We’ve got a real challenge on our
hands because every place we go [platforms] want E!, so not only does she have
to grow the distribution globally, which she is doing very well, and we’re in
the middle of some very exciting discussions with new territories to expand our
distribution, but at the same time, we have to make the channel work in the
territories we’re in. We recently launched in France and we’ve got to grow that
business and we are doing it by getting more French-language television so that
[the channel] will be more accepted.

We are growing very well
in the U.K. because we were upgraded by Sky. We have a better channel position
and a marketing campaign that lets people know that we are there. We’ve found
that if you tell people that we’re there, they’ll come watch. But frankly,
Kevin never had the budget to dedicate to marketing.

I told [Comcast management
in] Philadelphia that Kevin keeps on making more and more money each year but
we haven’t reinvested in the international channel by letting people know it’s
there. And we must spend money on both programming and marketing. So now Kevin
is making original programming for international and each show has worked, and
he has a marketing budget now to let people know that we are there. They say
that America is a crowded universe, but go look at BSkyB. I can’t believe how
many channels are on that platform, so competing there is just nuts unless you
are marketing and telling people you are there.

WS: Because
there are more and more companies offering entertainment programming and news,
what has been key to E! maintaining its competitive edge?

HARBERT: The
key is brand building and brand polishing. You can always say it’s about the
shows, but the real truth is that for a network like E! it’s about the audience
knowing that the brand is dependable and that it’s there for them all the time.
We really are the only source that is there all the time. Every year we do our
brand-tracking study where we get [almost] 2,000 people who tell us exactly
what they think about E! Shockingly, the interest in the category is up year on
year. We were at a very high level before and you say to yourself, how much
more interest can people have in the entertainment world? But it seems to be
unstoppable. And I think there is a reason for that, which is frankly that the
world of hard news is mostly depressing. People don’t want to go to work and talk
about Iraq and the lousy environment, they would rather talk about what Paris
Hilton did last night—especially young people. So that presents nothing
but opportunity for us. I shouldn’t comment on whether it is good or bad that
people aren’t watching hard news, but they are certainly considering E! news as
their hard news. So when you have that going for you, you just have to deliver,
and Ryan Seacrest and Giuliana DePandi on
E! News have been the secret to
polishing our brand.

Now it’s not all good news.
The one thing we saw in this brand-tracking study is that the one source [of
entertainment news] that has seen a significant increase year on year was
broadly defined as “the Internet.” We are far and away the number one
television source, but the Internet is another incredibly competitive source
for us, because you can go on just about any website and catch up on what the
latest Brad Pitt headline is.

That’s why we have to
really concentrate on E! Online and on all our digital businesses, so that when
people want to go to the Internet, they know that they’ve got to go to E!
Online and to our other digital platforms to know what is going on. We are very
mindful that we are not the only ones in business that have realized what a
huge category the entertainment and pop-culture world is.

WS: Over the
past couple of years you and the team at E! have been working on diversifying
the programming and strengthening the brand. What is the state of the
programming at E! and are you satisfied with it?

HARBERT: I’m
happy; I’m never satisfied. I don’t have that gene in me! But I’m quite a bit
happier than I was a year ago and definitely much happier than I was two years
ago when I started here at the company.

We have a good story to
tell about 2006. We predicted that our ratings would go down because we were
losing our highest-rated show with Howard Stern. We all thought there would
have to be some dip, and in fact our ratings are up. We are down in late night
where Howard Stern was but we are up in other dayparts enough to mitigate that
loss totally in late night. Our ratings are up year on year, especially in
prime time and especially with adults 18 to 34—it’s a significant
increase.

The real story there is
Ryan Seacrest joining E! and helping us in so many regards, most notably on E!
News at 7 p.m. and now at 11 p.m. E!
News is doing so well that we were
able to move Saturday Night Live
past midnight and put E! News
each day at 11 p.m. And on some nights the 11 p.m. hour of news outperforms the
7 p.m. hour.

The best thing that has
happened to this company is that we have grown E! News and launched Daily 10 at 7:30 p.m. On any given night Daily 10
can [rate even better than] E! News.
We have an hour that works so well for us. There is no reality show or other
show that can be a substitute for that five nights a week and we do E! News
Weekend and Daily 10 Weekend, and those perform very well. We are able to put on so many hours of
our branded news programming and that really is the main story this year.

In addition, we’ve got
successful shows in The Girls Next Door and The Soup, which has had a huge year—it has increased
in double-digit figures year on year. And Dr. 90210 continues to deliver and House of Carters is doing very well for us, and The Simple Life was a terrific addition to the schedule. While we
were certainly worried that the loss of Howard Stern would hurt us, we have
more than made up for that loss. Now the question is, how do I beat this
performance in 2007?

WS: What
issues are facing the cable industry as a whole?

HARBERT: The
issue is accelerated maturity, and what I mean by that is I think the advent of
all these new digital platforms has made all linear businesses—not just
cable but broadcasting as well—mature faster. It’s always been true that
the cream rises to the top, but now there is a fraction of the cream rising to
the top because the young viewers, who we seek, will only watch the very best
that linear television has to offer. So we’re almost to the point where
scheduling, which I grew up doing, doesn’t really work that well.

The last real example of
program flow working was when FOX pounded viewers into House, by placing it after American Idol. That’s the last time I’ve seen a hit being
created by its lead-in. Now viewers have got their remote control, they’ve got
their TiVo and they can watch what they want to watch, and that has instantly
made the linear business mature. That puts pressure on us to continue to take
chances and innovate on the linear side while trying to monetize the digital
world quickly, but not make some of the same mistakes we made over the past
several decades on the linear side.