NATPE Opens with Jeff Zucker Keynote

LAS VEGAS, January 29:
Jeff Zucker, the president and CEO of NBC Universal, delivered the opening
keynote as NATPE kicked off in Las Vegas today, calling for a “reengineering of
our business from top to bottom.”

Beginning his address,
Zucker noted that it has been a year since he was promoted to the top job at
NBC Universal, “what a year it has been—such a quiet time!” he joked.
“The truth is, it has been an especially trying and tumultuous 12 months and
the tumult is likely to continue, and I’m not just referring to the writers’
strike.”

Zucker noted that the
Hollywood work stoppage “is only the most visible sign of disruption. Almost
everywhere you turn, traditional business models in Hollywood are under
pressure. And their replacements are not necessarily ready for prime time. We
are dealing with that in every part of our business. But especially true in our
broadcast television business. For many years, if there was anything everyone
could count on at an industry meeting like this, it was that if the head of a
media company was up here, we could assume that he would talk about how
broadcast television has a strong and robust future, in spite of all the
challenges: fin-syn rules, the rise of cable, the advent of the VCR, or what
have you. It has been a great run, but today we need a different message.

“Don’t get me wrong, I
think the future remains incredibly bright. The NBC part of NBC Universal is a
big part of our future. But we also have to be honest. I can’t talk to you in
the usual clichés… We must acknowledge that a significant part of our industry
is under incredible pressure and has to change.”

Referring to
“game-changing technological development and profound shifts in consumer
behavior,” Zucker noted the need for “a reengineering of our businesses from
top to bottom, both at the network level and at local stations. We’ve needed to
do this for quite a few years now, but there was no real sense of urgency
behind it. Inertia kept things moving in the same direction, a gentle downward
slide disguised by a strong economy and robust ad market. Change isn’t easy and
sometimes it requires a catalyst. This past November, maybe we got one, when
the talks broke down between the media companies and the writers guild.”

Stressing the
“devastating” consequences of the strike for thousands of people working in
Hollywood, Zucker made an analogy to forest fires, which “have devastating
consequences as well, but it turns out that some plants depend on smoke and
heat from fires to sprout. Fires fertilize the soil with new ash and clear the
ground, often setting the stage for robust growth. Don’t take this the wrong
way: it would have been a lot better if there had been no strike, but maybe
what were going through now is our version of a forest fire. We didn’t ask for
it and it is unfortunate to live through, but if we are lucky it may very well
leave behind fertile soil, clear ground and the opportunity for robust growth.
And it can happen, if network and station executives realize that the new
landscape requires some new behavior. And if government regulators recognize
the realities of our marketplace.”

In order for that growth
to take place, Zucker continued, “broadcast networks can no longer spend tens
of millions every year creating dozens of pilots that will never see the light
of day. They can no longer lock producers into long-term deals that rarely ever
pay off. They can no longer spend millions putting on upfront presentations
that are really aimed at a half a dozen influential media buyers. They can no
longer ignore the financial opportunities presented by international
distribution and localized international content and of course by new-media
platforms such as VOD and the web.

“In short, they can run
their companies with intelligence and creativity and a willingness to embrace
and adapt to change. By they, I mean, of course, us, and me. At NBC Universal
we are convinced that we can provide consistent long-term growth in broadcast
television, if we execute on these goals quickly and efficiently. The current work
stoppage in Hollywood has allowed us to stop and think about business. It has
given us an opportunity to revise and potentially revitalize the broadcast
business.”

One area Zucker is anxious
to see change in is the pilot process. “Last year the five broadcast networks
spent more than $500 million on developing new series scripts and pilots. Some
80 pilots were made, next fall, at most, eight of those series will return [for
second seasons]—that’s 1 in 10. Out of those eight, none could be
considered a big success. Go back two years, 12 shows came back for a second
year, again about 10 percent, and only two, Heroes and Brothers and Sisters, could really be considered big hits. What has
making pilots really gotten us? Those pilots have become stand-alone
mini-movies costing $10 million a piece to make. The problem is, they’re not
even close to what the series will look and feel like. So why not make fewer
pilots and have the courage of our convictions and order series straight to
air, just like we do on the reality side? Or just like they do in Britain,
where there are no pilots?”

“For the price of that one
$10-million pilot you can order a full six-episode series,” he added.

Zucker reiterated, however,
that there will still be some pilots made at NBCU: “maybe 5 or 6 instead of 20.
There can be no hard and fast rules here, but we must show greater discipline
in these new times.”

He also stressed that the
upfront ad inventory selling season will continue, but “do we need the big
show? We’re not so sure anymore. We believe the big show is a vestige of the
last decade. We have not made an absolute final decision but we are very
close.”

Zucker went on to discuss
the effects technology is having on media consumption habits, and as such,
“distribution must be ubiquitous.”

He noted: “We are in the
business of video in the home, out of the home, at work, in the supermarket, in
the taxi, on the train, and every place there is where one could turn their attention
to a screen of any size.

“It is a shift from habit
to choice, individuals making choices for when and how to consume media. This
is a new kind of appointment TV, where the appointment is made by the viewer,
not by the network scheduling department. The old cliché ‘content is king’ has
been rewritten—today the consumer wears the crown and that changes
everything.”

On multiplatform
distribution, Zucker stressed that the key is monetizing all those new
platforms, “so we do not end up trading analog dollars for digital pennies.”

—By Mansha Daswani