Jeff Zucker Reaffirms His Mantra - Change the Business Model

The National Association of Television Program Executives convention is being held this week in Las Vegas. The keynote address speaker was Jeff Zucker, head of NBC-Universal reinterated the mantra that was clear last November - TV must change or become extinct. I won't restate everything I've pointed out repeatedly in this blog. You can read the more traditional reports:

• NBC's Zucker outlines new approach to TV programming
• Zucker: TV Biz Must Change, New Upfront, New Series
• Zucker Calls for Broadcast Changes

And then there is the more direct: Zucker Tackles the Broadcast Delusion .

What do you need to know about what he said, most of which we have discussed in this blog previously? Consider:

• Zucker described the Writers Guild of America strike a catalyst for change, likening the work stoppage to a destructive forest fire that precipitates robust growth.
• "Broadcasters can no longer spend hundreds of millions of dollars every year on pilots that don't see the light of day or on upfront presentations or on deals that don't pay off," Zucker said. "And we can't ignore international opportunities, VOD (video-on-demand) or the Web."
• Concerning local TV, NBC has made recent moves, with new local digital and out-of-home initiatives, to bulk up its local TV business --so much so that it has eliminated a division with TV in the title. "At NBC Universal, we don't even have an NBC television stations business anymore--even though we own NBC stations. Our group is now called NBC Local Media. Broadcast TV is only a part of what local media is about."
• Overall, Zucker says the networks collectively spend $500 million on pilots in a given year--sometimes as much as $10 million on each individual pilot. He said there was little evidence these pilots result in a better success rate than by having a show go straight to series.
• But Zucker said NBC wasn't abandoning scripted shows for reality, since scripted programming is of major value as marketers pay higher CPMs on average.

While generally those comments are a continuation of what has been discussed here, two other subjects were addressed. First federal regulations and the FCC:

Calling for a total revamping of federal rules, Zucker believes the Federal Communications Commission needs to change outdated regulations, especially where cable networks have one set of rules and broadcast networks another. "Something that airs on channel 3 in New York on cable has very different rules than what airs on channel 2 and channel 4. It doesn't make any sense. The rules they chose to enforce because of the political whims of the day seem very outdated."

“Audiences have many sources for news, weather and entertainment, most of which do not require a broadcast license and most of which do not have strong local components,” he said. “If Washington did take on a comprehensive examination of what regulatory policies make sense for today, many of the regulatory initiatives that have been in the spotlight over the last few years would be seen in a new and different light.”

Then, lest we forget where he is coming from, he mentioned the source of the business model NBCU uses:

Zucker also addressed the perennial question about whether General Electric was thinking about selling NBC. "As things have improved with NBC Universal and NBC prime time, those questions have subsided. It's all about performance. If we perform, the question goes away. If we don't perform, they should sell us."

While GE is only one conglomerate involved in deciding the future of tv, it's coming out first and strong for a business model GE embraces. It is already pushing for changes in federal regulation. Keep in mind, you are not hearing a call for deregulation. Rather, it is a call for regulations to support their new business model. Whether that is in the best interest of the American public is a matter of opinion.

What's your favorite presidential candidate's position on this? Bet you don't know any details. But whoever is President from 2009 through 2012 will have a significanat impact on this.

NBCU continues its march into new media - this time for locals

TV Week reported today that the local stations division of NBCU just purchased LX.tv in a deal that calls for the new-media shop to produce original entertainment content for all NBC-owned stations. LX.tv produces two shows for NBC-owned WNBC-TV in New York, “Open House NYC” and “LX.tv 1st Look New York,” which run both online and on-air.

This continues the movement by NBCU to expand it tv media universe into the combination of online and on-air. See previous posts Why Broadcast TV Can’t Use Scripted Programming, NBC Direct still in beta cuts ad deal, and Writers Win-Win as NBC Business Strategy Becomes Clearer.

It's Only TV....

On a internet board dedicated to satellite TV, someone who was upset with media conglomerate power over federal regulations posted some complaints. Another board member responded: "It's only TV...." That pushed my satellite-tv-user rant button as follows:

In 1878 home entertainment did not include radio, tv, movies, recorded music, or the internet. People had the options of getting together to talk, sing and play musical instruments, play games, quilt, etc. Solitary activities could include some of the aforementioned, plus reading. They got their news from newspapers and magazines. To see performers of any kind, they had to leave their homes, but for most people the renowned performers of the day generally were out of reach without a significant amount of money and time devoted to travel.

Fifty years later, 1928, things had begun to change. Within the home people could hear professional performers on phonograph records and radios. They could get almost instant news on the radio and a much greater percentage could see some renowned performers of the day at a movie theater.

Twenty years later, 1948, home entertainment had shifted. In most homes, records and radio had begun to dominate entertainment activities. The local movie theater had become an important communal center for experiencing professional performances on a shared basis.

By 1958, just ten years later, television had changed all of that. Two year later Jack Kennedy and Richard Nixon solidified the political implications of mass media first used effectively by Roosevelt and Hitler. And George W.'s people used it well, if corruptly, against John McCain in South Carolina in 2000.

It really took 40 years, 1998, for the internet to begin to be an additional home entertainment and mass communication option. It hasn't replaced TV, however, as the significant medium. And two or more Americas exist relative to these home entertainment and mass media delivery systems.

My kids and their kids live in urban areas. They have ready access to all the out-of-home alternatives - concerts, theater, theme parks, etc. They also have access to all the tv options: off-the-air, cable, satellite, and the new phone companies. And they have access to the highest speed internet options.

For many Americans who - by fate or choice - live in rural areas, satellite tv is the only access to the home entertainment choices available to their urban cousins. Yet it is the barely tolerated step-child of the media industry, a concession to both the appearance of fairness in free enterprise and the need to access the rural market. The same discrepancy exists relative to high speed internet. These times are most certainly not like the 1930's when the federal government deliberately facilitated through regulation and funding universal access to electricity and telephone service, as it did for highways in the 1950's.

When I got my first Echostar C-band dish in 1988, I really enjoyed access to regional news feeds from other parts of the country and Canadian television - it opened up new windows on the world. On October 17, 1989, at 5:04 pm PDT, a major earthquake known as the Loma Prieta Earthquake struck the San Francisco Bay Area and the Monterey Bay Area. We were living well north of the impacted area but had three adult children in the San Francisco area and a parent in Monterey County. The SFO stations went off the air and the phone system did its usual crash leaving us with no information. But with my C-band satellite we could scan and get live satellite feeds from nearby Sacramento stations, as well as national networks because they were broadcasting the World Series from Candlestick Park. At the time, I thought: "Wow, this is the way to go. What a public benefit an open satellite system could become in times of crises." Plus the possibility of improving understanding between people from different locations seemed endless though we'd have to pay for it.

Not long after that, access to local feeds begin to disappear off C-band. Canadian tv was blocked by American networks by legal means without any consideration of the moral issue of limiting access to information. I finally switched to the small dish when the C-band box failed. Through that, in the 9-11 situation, I could get at least local takes from NY stations without having the drama queens and kings of network tv filter the news.

But that came to a screeching halt in order to protect the economic interests of "fictitious people" known a corporations that now thought they "owned" the airwaves the government had licensed to them on behalf of me, originally with strict public service requirements which had been eliminated.

Most satellite users now can get the Fishing and Playboy Channels if they want. But most of us have no access to federally licensed local programming in Iowa, New Hampshire, Nevada, South Carolina, and Florida. No one seems to care that we are prohibited by federal law from being allowed to see what the locals in these important presidential primary states are seeing on their tv. It isn't that it couldn't be delivered, as local channels from those states are being delivered to satel- lite tv users in those states, it is that I am prohibited from seeing those signals by the government.

Yes, it is only television to some. But not to me. It is my principal home entertainment, with access not only to tv shows but movies and concerts. It is still a principal source of crises news. Not regular news, though. The style of reporting daily news is, with government approval, controlled by the preferences of an Australian whose only real concern is that media make him richer and his opinions more powerful.

So for daily news I have to depend on the internet now. And I'm using it more for entertainment. But the government has already allowed the same conglomerates to gain control of that delivery system. And while they haven't quite yet figured out what to do with it, they are rapidly learning to squeeze it for money and control it for power....

The one and only advantage of those dependant on satellite tv service should be access to distant networks. "They" took it away. Imagine if the Viacoms of the world could triple cable profits and double their related networks advertising profits by offering network programming from all four time zones in all four time zones while not fatally impacting the local stations. We would all be getting "distants" because federal regulations would be changed not on behalf of the public, but on behalf of corporate interests.

Yeah, it's only TV.

Writers Win, Directors and Others Lose in NBC Future

The New York Times reported today that Jeff Zucker, CEO of NBC-Universal, indicated that NBC would not be buying numerous pilots in the future as it traditionally has. Instead they will order a couple each year, but would shift more toward a system of straight-to-series orders buying "first episode" scripts.

At the same time, the network will stick by its current script commitments.

This announcement is a win-win for writers, but for producers, directors, actors, and the technical and support staff, the model change is a disaster. They make millions each year shooting pilots that never become series.

The announcement is also consistent with what is becoming an NBCU future business plan for scripted TV, a plan that includes Hulu.com and NBC Direct.

Zucker noted in November that NBC.com had 50 million video streams in October, 50% higher than the previous record, in May. "It's become a small cable channel in our universe," he said. Of the Hulu venture he said it was a "superstore" while NBC.com was a "specialty shop." He indicated that the digital issue is the biggest nightmare in his job. "Nobody has figured out the economic model yet. And if we don't figure it out soon, those dollars will turn to pennies."

He emphasized: "We don't want to replace the dollars we were making in the analog world with pennies on the digital side."

As this blog described in November, major changes in the method of scripted tv delivery are looming.

NBC Direct still in beta cuts ad deal

It's hard to keep up with the dizzying pace NBC is moving to the web, NBC's beta subscription full episode download delivery service NBC Direct has signed an advertising delivery technical deal with YuMe.

The Major Housecleaning at the Conglomerates

If you haven't been closely following the news related to the writers strike, you probably aren't aware of the networks cleaning house - scrubbing commitments to scripted programming.

Beginning with ABC Studios on January 11, the five major TV studios terminated about 70 deals under the force majeure provisions in its producers' contracts. These cases include "producer" contracts, some of which were opportunistic in that there were already disputes between the producer and the studio. See the Hollywood Reporter's "ABC Studios terminates nearly overall deals" and "Black Monday at TV studios" .

In the past few days, the studios started terminating scripted projects beginning last Friday with CBS releasing 20 projects. Tuesday it was reported that Fox dropped over 20 scripts and the CW about a dozen, with ABC said to be close to making a similar move.

All these announcements come with statements indicating that the strike caused these terminations, except Fox gave what I consider to be a more honest statement: "In the current environment, we've been forced to take a hard look at our needs for the upcoming season, and as a result we're going to target a more focused range of projects."

As I have noted before, in my opinion the AMPTP never had any intention of settling with the writers and was not bargaining in good faith because of the changes in the distribution environment surrounding scripted programming. I expected broadcast tv to degenerate into mostly news, sports, and reality/game show programming, but I frankly didn't expect it to happen so rapidly. It appears the conglomerates were more prepared to adapt to change than I anticipated and they are using the strike as an excuse to rid themselves of commitments inconsistent with the current economic reality.

Instead of the slow, painful transition from radio to TV that occurred between 1948 and 1958, it appears the conglomerates are cutting out the vestigial organs of scripted TV body in a headlong attempt to adapt. If you like scripted programming, you should start preparing to access Hulu.com, the Fox/NBCU joint venture to stream programming on the web.

To repeat what I noted in November in Why Broadcast TV Can’t Use Scripted Programming, Jeff Zucker, CEO of NBC-Universal, said: "We don't want to replace the dollars we were making in the analog world with pennies on the digital side."

Zucker noted that NBC.com had 50 million video streams in October, 50% higher than the previous record, in May. "It's become a small cable channel in our universe," he said. Of the Hulu venture he said it was a "superstore" while NBC.com was a "specialty shop." He indicated that the digital issue is the biggest nightmare in his job. "Nobody has figured out the economic model yet. And if we don't figure it out soon, those dollars will turn to pennies."

Regarding the writers strike he said: "It will be a real watershed event, [and we'll see] whether [viewers will] come back to scripted programming," he said. "An event like this will happen at everyone's peril."

NBC has been mum so far on its plans to weed out its commitments.

Time-Warner is so predictable

Bragging is not good manners. But I'm going to be rude.

Last Thursday in my post Web tv programming - multiple revenue streams for conglomerates I commented on Time-Warner Cable trying out "metered" internet service in Texas and how this would add to the conglomerate revenue stream from web tv produced by the same conglomerate - different divisions.

Now comes the news that HBO, a Time-Warner operation, will be trying out a new service in Wisconsin - the ability to download content from HBO.

We have no indication when both these trials will end, but my guess is that they will roll-out nationwide within a very few months of each other.

Broadcasters Cancel Script Commitments

“…Most completely-scripted programming is likely to become severely devalued to advertisers and the networks under these circumstances.”

That was the one key point from my post “Why Broadcast TV Can’t Use Scripted Programming” written in early November.

Now many, many scripted projects are being cancelled with the Hollywood Reporter announcing this morning the most recent with “In the latest fallout from the writers strike, CBS has trimmed its development slate, letting go of about 20 projects, most of them dramas.”

…CBS said. “This year’s pilot season, at best, will be played out in a very compressed time frame. In this landscape, we are better served creatively, financially and strategically by focusing our development on a more targeted number of projects.”

CBS is only the most recent to announce this. You don’t have to be a genius to figure out that the shows that will do best in the C3 are sports, reality, and game shows. It was inevitable though accelerated by the writers strike.

Web tv programming - multiple revenue streams for conglomerates

As conglomerates prepare new television programming for the web, like Trenches, Broadband Reports.com ran a news story yesterday that indicates just how those conglomerates are going to generate revenue. See Time Warner Cable Eyeing Overage Charges?

The story indicates that Time Warner Cable is going to test the implementation of overage charges for its RoadRunner cable broadband service. Ultimately this could lead to ISP's charging for heavy usage. Of course, to watch web distributed tv programming you will buy a higher usage tier service.

So Time-Warner subsidiaries could actually shift programming to the web, place unskippable ads in it or charge you for viewing or both, and then through their cable subsidiary charge you again for viewing the programming.

Now, if they could just find a way to keep from paying the creators of the content for their creativity....

Internet TV Moves Closer to You at CES2008

In November, I posted the following within my initial series on just how radical the change in home entertainment will be:

"While the home entertainment industry struggles to cope with changes over he next 5-to-10 years, viewers who want to watch scripted tv will need to adapt."

With CES 2008 comes the announcement that new TV's are going to have plugs to connect to your home network and the internet, that Echostar - the satellite tv folks - have released an off-the-air DVR with both digital and analog tuners and a network plug so you'll be able to "access premium Internet-based TV programming via broadband Internet" as well as record your digital HD off-the-air shows.

One of the most interesting out of CES is xStreamHD, a satellite based 1080p set-top box system. What we have here is:

• A box with three "Off-Air HD tuners" and recording capability.
• Plus a service providing extremely rapid downloading of DVD content in HD - possibly including TV show box sets.

In other words, besides movies you could watch all the last season's shows you might be interested in without commercials, plus OTA HD tv. Most everything I watch on cable and OTA channels comes out on DVD within a few months after the season ends. And shows that find an audience whatever the initial medium could be delivered this way.

xStreamHD will have to be well capitalized for the long haul. And they are initially going to have to give away their boxes, dishes, etc. for an 18-month contract. But they and their competitors - Unbox, Vudu, etc. - are pointing away from DVD's and cable or satellite tv as the delivery medium. And TV manufacturers are now joining them.

Ironically, that's what the writer's strike is all about.