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Memo to Comcast: How to Fix NBC

Throw Money Back Into Programming (Read: Drop the 'Leno' Experiment) and Push the Envelope Creatively

By Published on . 5

NEW YORK (AdAge.com) -- Weighed down by lackluster programming and declining ratings, NBC has been a problem for many different people: programming honchos Kevin Reilly and Ben Silverman; NBC Universal CEO Jeff Zucker; GE chief Jeff Immelt; and even one-time top-rated late-night comic Jay Leno. Now the hot potato is soon to be passed to Comcast -- which, oddly enough, doesn't see the broadcast network as a burden at all.

Media buyers use NBC's current position to secure berths on popular programs such as 'The Office' for lower prices than they might expect to get if the network was faring better.
Media buyers use NBC's current position to secure berths on popular programs such as 'The Office' for lower prices than they might expect to get if the network was faring better. Credit: NBC
"The network, the broadcast station, and then TV production -- when you look at those three as kind of an ecosystem, it's a good business," said Steven Burke, Comcast's chief operating officer and the executive who will oversee NBC Universal once Comcast acquires it. "It clearly is not a business that is without its challenges, but it's a good business," he said in remarks made at an investor conference held in New York last week.

Yet NBC's flagship broadcast network enjoys a tarnished reputation. The Peacock has failed to keep its pipeline stocked with new hits after enjoying great success with such fare as "The Cosby Show" and "Seinfeld" back in the day. Want proof? A recent episode of "Saturday Night Live," NBC's own late-night comedy program, poked fun at the transaction, suggesting that "The final sticking point to the deal was GE convincing Comcast that it's still 1996."

In 2006, NBC pulled in more than $6 billion in ad revenue, according to TNS Media Intelligence. Through October of 2009, it has taken in about $3.65 billion, hurt by the economy, audience erosion and the lack of an Olympics telecast.

During the 2000-2001 TV season, top-rated NBC programs such as "ER," "Frasier" and "Friends" lured anywhere from 17 million to 20 million viewers on average. During this season so far, only broadcasts related to "Sunday Night Football" are bringing in more than 10 million viewers. Season to date as of Dec. 6, NBC's top entertainment programs, "Law & Order: SVU" and "The Biggest Loser" brought in an average of 9.64 million and 9.98 million, respectively.

Criticism for cost-cutting
NBC's attempt to keep viewers tuning in without making a splashy investment has garnered criticism. Since instilling Jay Leno every weeknight at 10 p.m., NBC has managed to lose ratings and ad dollars, and has caused many affiliates problems by providing a lackluster lead-in to late local news. NBC "has lost about a third of its viewers in the 10 p.m. time slot year over year given the switch to Jay Leno," wrote Wells Fargo Securities analyst John Janedis in a Dec. 9 research note.

Indeed, media buyers suggest they like particular properties on NBC, but they use the network's current position to secure berths on popular programs such as "30 Rock" or "The Office" for lower prices than they might expect to get if the network was faring better.

Now, NBC appears to be reversing course. "Our priority at NBC is to invest in quality content. We have been very aggressive this season with additional pilots and high-profile projects with such marquee producers as J.J. Abrams and Jerry Bruckheimer," Jeff Gaspin, chairman, NBC Universal Television Entertainment, said in an e-mailed statement.

But media observers suspect a substantial effort is required. "Overall, NBC needs to make the investment necessary to compete. If Comcast takes a cheap and gimmicky approach, they are destined to remain in fourth place. Worse yet, they could be challenged ratings-wise by some of the cable networks," said Jeff McCall, a professor of media studies at DePauw University in Greencastle, Indiana.

Jeff McCall, a professor of media studies at DePauw University, called the Leno experiment 'a weak attempt at saving money.'
Jeff McCall, a professor of media studies at DePauw University, called the Leno experiment 'a weak attempt at saving money.' Credit: NBC
"NBC needs to be more like Fox Entertainment, HBO and Showtime, by going for searing, powerful, taboo-breaking series that really push the envelope of television narrative," said Paul Levinson, a professor of communication and media studies at Fordham University in New York.

'Abandon the Leno strategy'
One recommendation: Removing "The Jay Leno Show" from prime time. "They need to abandon the Leno strategy and make the investment in the 10 o'clock hour that it will take to be competitive," Mr. McCall said. "NBC could use Leno less often, but with more effectiveness in weekly broadcasts, or with special stunts. The Leno experiment was a weak attempt at saving money. With the exception of reality TV, cheap won't get networks very far in prime time."

With technology rapidly snatching viewers away from traditional linear TV watching, one theory that has emerged is that audiences and advertisers may not be able to support five broadcast networks. And while the idea of venerable NBC -- once the dominant force in advertiser-coveted Thursday-night prime time -- as one of those outlets that might be thrown to the scrap heap would have shocked many not so many years ago, these days, the thought doesn't sound so implausible. Such talk hasn't been helped by NBC Universal executives floating such notions as making NBC a cable outlet or talking about managing for profit margins rather than ratings.

For its part, Comcast is throwing cold water on those ideas, even as it admitted that the majority of NBCU's cash flow comes from operations other than broadcast or film. "It has never been the case that we have thought about selling the broadcast business," said Mr. Burke, because it is "integral to the way NBC operates" and boosts all operations through creation of programming and promotion of content to a wider audience. Any push of NBC toward higher ratings, meanwhile, could result in better finances, he suggested.

The overall consensus is that it takes money to make money on TV. Content that attracts sizable groups of audience drives everything from ad dollars for first-run programs to web viewership to international and aftermarket sales.

"If I were directing Comcast's program interests, I would give [NBC] free rein to go make great programs. They have the money to get talent and great writers," said Len Shyles, an associate professor of communication at Villanova University. "Give them free rein, and then [Comcast] will deliver it, repurpose the hell out of it."

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