“I’m incredibly bullish on our diversification,” NBC Universal President and CEO Jeff Zucker told the UBS media conference Monday. Six years ago the company was 90% reliant on advertising and today that’s under 50% “and completely diversified.” That’s positioned the company to deal with a tough economy in 2009, when Zucker still expects double-digit earnings from NBCU’s cable networks. Broadcasting, meanwhile, is going to have to undergo some changes.
Because of the changes made over the past six year, the cable networks now account for 60% of the operating profits at NBCU. 20% comes from Universal Pictures and 5% from the theme parks. That leaves 15% from broadcasting, although many people still tend to thin of NBCU as primarily a broadcasting company.
“We’re continuing to try to transform the broadcasting model,” Zucker said. He said some “legacy” practices are up for review, noting that NBC currently buys about three times as many new series as a typical cable network. “Can we continue to broadcast 22 hours in primetime? Three of our competitors don’t. Can we continue to broadcast seven days a week? One of our competitors doesn’t,” he told the UBS gathering. Zucker insisted, though, “I am optimist about the future” for broadcasting.
[Just a few hours later we learned that Zucker had already figured out how to cut out five hours of expensive programming each week, putting Jay Leno on in primetime.]
The current depressed advertising environment may, in fact, make it easier to make changes, since economics make it clear that the status quo can’t continue. Zucker said the advertising environment is as bad as he’s ever seen. “Businesses are just afraid to commit,” he noted.
Local advertising is the area that has been hit hardest. “Can we continue to operate our television stations as we always have? We don’t think so,” Zucker said. Asked about the WNBC-TV New York operation that is the prototype for integration of broadcast and online for NBC Local Media, Zucker noted that it has both fans and critics, but he insisted that it is the direction the company has to go for the future.
On other topics:
–Zucker said Internet video ad revenues have slowed dramatically in Q4 and that putting high quality digital video online is not going to be the big growth engine in 2009 that had been envisioned.
–The NBCU CEO agreed that the NBC Network has not had a good fall and said that Ben Silverman and Marc Graboff, Co-Chairmen, NBC Entertainment and Universal Media Studios, are aware of that. “In no way have we lost confidence in either one of them,” Zucker insisted.
–Zucker expressed frustration at the stand-off between the major TV and movie studios and the Screen Actors Guild. He said he could not understand SAG’s position that it should get a better deal than other unions had already agreed to.