Wednesday, January 30, 2008

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:
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Calling for a total revamping of federal rules, Zucker believes the Federal Communications Commission needs to change outdated regulations, especially where cable networks have one set of rules and broadcast networks another.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.

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