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NBC: What To Watch

5/16/2004 08:00:00 PM Eastern

The newly combined NBC Universal can boast that it has TV's top-rated network, a major movie studio, a TV-production studio, seven cable channels, including USA and Sci Fi, and a group of 29 TV stations. But bragging rights count only if you make more money. To that end, here are some key drivers of the new company:

The NBC Support Group

Look for the cable and broadcast networks to do far more than endless cross-promotion.

With USA and Sci Fi, NBC will trade shows and development ideas. The network will try everything it did with Bravo "but with a bigger playing field," says Jeff Gaspin, the new president of NBC Universal's cable programming. NBC, which replayed Bravo's hit Queer Eye for the Straight Guy a few times last summer, has passed several shows on to Bravo, such as upcoming Pilot Seasonfrom Will & Grace star Sean Hayes.

Just as valuable: Bravo gets plugs in NBC prime and coveted exposure in NBC properties, such as Todayand The Tonight Show.

The network would like to spread some costs, in part by re-airing NBC shows on cable and vice versa. But NBC won't overdose, Gaspin says. "It is very hard to build your brand with repurposing. The goal is original programming."

USA will likely be a cable sports destination, certainly with the Olympics and, perhaps, the NFL or NASCAR when their rights deals come up.

Ad sales

Will NBC Universal's cable/broadcast strategy for ad sales work?

That's the big question as the company tackles the unprecedented task of fully integrating sales of commercials on its new cable networks into its powerhouse broadcast operation.

To NBC execs, it's all TV. They expect the strength of NBC's broadcast sales operation to lift the spot prices of USA Network and Sci Fi Channel. Like other cable networks, USA and Sci Fi sell commercials at a cost per thousand viewers (CPM) that is 40%-50% less than broadcast networks.

But there's a flip side. The concern is that, as the broadcast network tries to move slow parts of its schedule, advertisers will demand deeply discounted time on NBC's cable siblings. That's why other mega-media conglomerates—notably, Viacom and Disney—segregate their cable and broadcast sales units.

NBC Universal ad-sales czar Keith Turner says integration lets the networks pool their strengths and NBC won't be discounting. "We're not going to play that way," he says. "We're not going to prostitute each other."

The studio

Expect Universal's TV studio to ramp up production. Since it lacked a network parent, Universal hasn't had a lot of prime time shows on the air. Law & Orderwas a ratings gusher, but that well was drilled more than a decade ago. (NBC renewed its three current L&O series and committed to a fourth, Trial by Jury.)

But just because NBC has a meatier studio operation, it won't become the exclusive supplier. "We've seen others make that mistake," says Jeff Zucker, president of NBC Universal Television Group, referring to ABC's dependence on its Touchstone Television unit, which produced a string of flops.

VoD

NBC is poised to open the programming spigot for video-on-demand.

NBC Cable President David Zaslav has consolidating video-on-demand rights to all the company's TV and movie product under his command. Now he can use the contents of Universal's movie and TV library as chips to negotiate carriage of the cable networks.

NBC has already proved flexible, supplying Comcast's VOD services with immediate reruns of its news programming, which otherwise has a fairly short shelf life. The Comcast deal gives NBC a prime window "to understand how viewers used the whole VOD platform," says Zaslav, who's also on the board of directors at digital video recorder pioneer TiVo.

NBC executives aren't convinced VOD is real, but they're still willing to play. What operators really want is better access to Universal's theatrical movies, preferably in the same "window" when they're sent to Blockbuster and Wal-Mart. (Cable's current window is 45-90 days later.) Studio chief Ron Meyer says that will probably happen, though not soon.

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