Burke: Rebuilding NBC Remains Top Priority
Cable networks can increase ad, sub fee revenues
By Jon Lafayette -- Broadcasting & Cable, 9/13/2012 3:34:46 PM
Two years after Comcast acquired control of NBCU from GE, Burke said, "We think we're ahead of where we thought we would be. We feel like we've done a lot, made a lot of progress," adding, "there's still a lot more to be done."
Burke said that with Comcast in charge, NBCU's focus has been moved from short-term results to long-term growth in operating cash flow, as well as taking advantage of the company's scale by putting its resource behind initiatives like the Olympics, launching shows like The Voice or opening movies like The Lorax.
Burke says that NBC -- including the broadcast network, the owned stations and the syndication business -- make "a little money, but not very much." Its competitors generate between $700 million in OCF and $1.5 billion.
"There's no reason for that other than we need to make better shows. We need to rebuild NBC brick by brick, which is the process that we're going through right now," Burke said. I look at this as a tremendous opportunity. If you have three competitors and doing as well as the worst of the three adds close to a billion in OCF to your company, to me that's a big opportunity."
But Burke said it's an opportunity "you can't grab in one year."
Burke said there has already been improvement at the station group, which was making less than $150 million a year and this year will generate more than $400 million. "This is a political year, this is an Olympics year, but we've made real progress in fairly short order just by reinvesting in local news and developing syndicated shows like Steve Harvey and really putting our attention back to that broadcast business."
Burke also said that while NBCU's cable network generate about 80% of the company's cash flow, with eight channels each making over $200 million a year, "we don't think we've fully monetized those cable channels."
He said both affiliate fee revenue and ad rates should be higher.
USA is the top-rated cable network, but "its affiliate fees are substantially lower than other general entertainment cable channels like TBS or TNT," Burke said. "If you're looking at advertising, our CPMs for our big cable channels we think in some instances are 25% or 30% below others."
He said that networks including USA and Bravo "made real progress during this past upfront."
Burke also said that contracts representing about 25% of NBCU's cable carriage are up this year, giving the company a chance to raise those rates as well. All of NBCU's carriage deals expire by 2016.
He added that NBC currently makes "essentially no money on retransmission consent," compared to CBS which expects to earn more than $250 million in retrans this year.
"There's really no structural reason why NBC should make the same amount of money as CBS makes on retransmission consent," Burke said.
Burke also saw an opportunity for improvement at Telemundo, which makes less than $50 million a year, compared to Univision, which he estimated makes about $900 million a year. "To me that's an opportunity," he said. "We're both programming the same number of hours and the beauty is that once you start to perform, once you start to get the ratings, there's no increase variable cost at all."
Attn COMCAST: please step in and save NBC from themselves. Fire those responsible for a bad decision - poorly executed ! Capus only made it worse with his terrible public comments. Lauer is poisoned and can't be redeemed and therefore must go! He is also to pompous to realize it - just like his bff Gumbel!
Today has lost 1 million viewers in 1 month - not the stats you want! You have a duty to your shareholders to protect our investments - NBC does not have the right to continue to waste our hard earned money!! How many millions were lost on the Leno/O'Brien debacle?? How can NBC be so out of touch with the viewers to make stupid decisions? $21 million for Lauer?? Skip 9-11 moment??
Don't wait to make a change as it will only get worse and more $$$ is lost everyday. They need to be creative and make bold changes to win back viewers!
Stewart - 9/15/2012 5:56:50 PM EDT
As stated the USA Network does well and the NBC broadcast network isn’t doing well. Through the summer months USA airs a gaggle of well-produced, entertaining programs such as Covert Affairs, White Collar, Suits, etc. Their acceptance has been tested not like fresh out-of-the box new network programs. I assume the USA programs are well received or they would have been cancelled.
Rightly or wrongly I see cable networks connected to broadcast networks as the minors. I do not understand why these shows are not brought up to the majors where NBC Network ratings can get a boost along with resultant revenues.
As Mr. Burke states network revenue and profit is the #1 priority. To me, my thoughts make some sense.
Louis P. Kasman - 9/14/2012 10:57:40 AM EDT
First rule of thumb...if you initiate change, get rid of the previous peoples' regime and bring in your own people to believe and work to present your own vision on how to build a network. Mr. Burke, you have way too much work ahead fo you when it comes to rebuilding that mess of a network called NBC. Get those remaining Zucker clones out of there like Steve Capus and bring in people who can make the network respectable once again, not what you have there now and regarding your programming, you'll have a handful of shows you'll be ready to cancel between now and the year's end, and that right there will require major overhauls, so expect to stay in 4th place for the time being.
Jed - 9/13/2012 10:15:30 PM EDT
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