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CBS, NBC Offer Two Views of TV Business

Poltrack: Better Data Will Make Medium More Valuable; Zucker: Time to Rethink Programming

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NEW YORK ( -- You might call it a tale of two TV industries. In one, the turmoil that threatens the business is really just a short-term setback, a hurdle to be overcome so that advertisers can continue to use broadcast networks as they typically do -- to drive consumer awareness and interest. In the other, the current and dire economic malaise threatens to accelerate the demise of a business that is too slow to transform itself because it is shackled to business models that were devised in the 1940s, '50s and '60s.

David Poltrack
David Poltrack
Those two viewpoints, espoused by CBS Chief Research Officer David Poltrack and NBC Universal President-CEO Jeff Zucker, come from two very different perspectives. CBS Corp.'s main asset is its TV business -- U.S. TV advertising is responsible for about 70% of the company's overall revenue, according to Bernstein Research -- and the CBS network is faring better than its rivals this season, albeit ratings have been down across the board this autumn. At NBC Universal, the company's broadcast-TV assets -- stations, Spanish-language network Telemundo and flagship property NBC -- account for 15% of its overall operating profit. Both executives made remarks separately at an annual conference of media investors hosted by investment-bank UBS.

Hope for the future
"This, too, shall pass," said Mr. Poltrack, suggesting that broadcast TV will become even more important to advertisers as consumers face a dizzying range of media choices for their entertainment and information consumption. Citing a number of recent research reports, he predicted a time when advertisers would have more precise data about how consumers saw and used commercials, which would make advertising inventory on TV more valuable than it is today.

Still, he said the economy and the prevalence of political and election events on network TV in the fall had hurt the four big broadcast networks' revenue for 2008, and he revamped his prediction that he offered at about this time last year for 2008 revenue from up 7% to up 1%. And he suggested network ad revenue could be down as much as 7% in 2009, though he said economic conditions would improve quarter by quarter.

Jeff Zucker
Jeff Zucker Credit: AP
NBC Universal's Mr. Zucker suggested broadcasters would have to do more than just weave in better research to thrive as technology and the economy prompted radical shifts in how people spend money and watch TV. "The broadcast network cost structure has got to continue to be redefined," he said, noting that if a broad rethinking of how the industry does business does not take place, "we will end up like the newspaper companies -- or worse, the car companies."

New concepts
Among the ideas worth considering, he said, were whether NBC needed to program 22 hours of original prime-time fare; whether it needs to offer original programming seven nights a week; and whether it needs to "program Friday and Saturday the same way." He also asked, "Can we continue to operate our TV stations in the same way. ... We don't think we can."

Mr. Zucker's remarks come after NBC has already begun making substantial shifts in how it does business, offering advertisers an earlier look at its coming program schedule, working more diligently to incorporate advertisers into programs in a more substantial fashion and rearranging the substance of its upfront presentation.

Separately, Mr. Zucker said he stood behind NBC Entertainment co-chairs Ben Silverman and Marc Graboff, even as he acknowledged that the network's 2008-09 fall season was lackluster.

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