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It would be hard for anyone at NBC Universal’s broadcast network to wrap their head around the dizzying events of the past couple of weeks. After some massive cost-cutting at the parent company, NBC made two whopping shifts, one of which could set a new tone for the broadcast industry.
The first was a reorganization that streamlined much of the creative process between the network and NBC’s Universal Media Studios, a move that saw a housecleaning of several top executives and the return of former studio chief Angela Bromstad.
But then came the real stunner: The Tonight Show’s Jay Leno agreeing to stay at NBC as host of a 10 p.m. strip. With the move, NBC has, in essence, subtracted 23% of its available primetime real estate for original programming. The move also secures that Leno will remain at the network, and not head to ABC as many had surmised. The shift comes at a time when a perfect storm of factors is putting never-before-seen pressure on the broadcast television model.
The man at the center of that action, NBC Universal CEO Jeff Zucker, got on the phone for a Q&A with B&C Editor-in-Chief Ben Grossman. Among the topics were why Zucker is getting out of the 10 p.m. drama business, whether NBC Entertainment co-chairman Ben Silverman will be back after a disappointing fall, and the future of the network-affiliate relationship, which many have questioned. Following is an edited transcript of the conversation.
Last week at the UBS conference, CBS chief Les Moonves said the broadcast model isn’t broken, yet you just added a relatively low-cost strip with Jay Leno. Is the model broken?
I don’t think it’s out-and-out broken at all. I think it’s in need of serious updating. The tremendous change in this industry, with the advent of the number of cable networks, the increase in technology like DVRs and increasing costs of production, have not been offset by any changes in the way we do business. Add on top of that the changes in the way we live our lives and view TV and use computers and other devices. So much has changed in the last 10 years—even in the last five years—and yet none of us have taken a step back and tried to think about the business from a different perspective.
So I don’t think the model is irreparably broken, but I do think it needs to evolve. We are at a critical point where if we’re not willing to be honest about that and to think about changing, then we are in danger of becoming the music or newspaper industry or something worse.
Did the writers’ strike and the collapse of Wall Street magnify or even exacerbate the troubles in the network television business?
I don’t know if the collapse of Wall Street had that much to do with this. I really think it’s much more the factors I just went through. I don’t think the strike was helpful.
But the projected falloff in 2009 revenues for all of us in media has to be a factor in decisions like these.
Look, obviously 2009 is going to be difficult for everybody, but what we’re trying to talk about here is not meant to be a short-term solution to what’s expected to be a difficult year. And we’re not trying to say we know all the answers or we have all the prescriptions for what ails the business. Probably the most overriding factor in what we’ve chosen to do here is that Jay Leno was the one who was available. When you combine [the possibility] that Jay was going to go somewhere else with all the structural changes in the business, it made sense for us.
There have been very few new hits in broadcast television in recent years. Is it just becoming less possible for a broadcast network to make a big hit that justifies spending on the misses?
It used to be that one hit paid for all the misses; it’s much harder to justify that today. That’s not to say there won’t be hits in broadcast television; they always come along. I think what’s fundamentally changing is they no longer cover the costs of all the other failures, and I think that’s probably the big change. You have to start asking yourselves tough questions, and I think we’re not afraid to ask those questions and answer them.
But part of this decision would seem to be an admission that NBC cannot develop 22 hours of solid entertainment programming.
I think it’s very difficult in this day and age to develop 22 hours of programming for anybody, and that’s why I think ABC has been so smart about Saturday nights and Fox has been so smart in the way they’ve used American Idol. It’s very difficult for anyone in this day and age to develop 22 hours of primetime programming and justify the business model behind that.
Did your constant struggles in primetime make this decision easier?
Sure. When you are flat on your back, sometimes you see the world a little more clearly.
How disappointed are you in the fall for NBC?
Obviously it’s been a disappointing fall for NBC, and we need to do better. I take some pride in the fact that of the 10 TV shows that were nominated for Golden Globes, only three air on broadcast TV and we produce all of them [The Office and 30 Rock on NBC, as well as UMS-produced House for Fox]. So we obviously have some ability to produce good programs; we just need to do more.
Are you going to re-sign Ben Silverman to a new contract?
Ben will continue to be here at NBC, yes.
Do you anticipate giving any time back to your affiliates in 2009?
No. I think [stripping Leno at 10] is what we thought was the best way to try to start to get at the questions about the broadcast business.
ABC apparently also considered putting Jay Leno at 10 p.m. if they got him. Do you think anyone else will alter their primetime delivery strategy in any way?
I don’t know the answer to that. My gut, now that we have done this, is I think people will wait at least one more year to see if it is an opportunity for them to take advantage of it.
Do you care that it seems many agents and producers are pissed off that you took five hours out of primetime network television?
I would say a couple of things. First of all, I think there is going to still be a lot of opportunity on NBC, and frankly now you may have to earn your way onto the schedule. Mediocrity won’t be good enough, and the rest of the schedule should now be filled with the best programs. I actually think this can clear out the mediocrity.
Secondly, NBC Universal still has more opportunities for the creative community in that we have the highest-rated cable network on television in USA, and the opportunities that will exist for great 10 p.m. dramas probably just went up.
Do you consider this a personal victory, keeping Leno? You took quite a personal bashing at an industry event in Los Angeles last week by Peter Tolan and a group of producers.
No. I think anyone who has any understanding of today’s business understands what’s going on here. I’m just pleased for the company.
Are you surprised Jay took this deal?
[Pause] Umm, I was very pleased. I think Jay wanted to continue to work, he liked NBC and he fully appreciated how the dynamics of television have changed and why this made sense. So in the end I was thrilled.
I understand this show can make money at a 1.2 rating, but how will the battle go perception-wise?
You know, we want to have the best programs on the air, and we want to run a good business. And I think those who understand both of those pursuits will understand what we are after here.
Sure, but for the most part you will be seeing stories that Leno finished in second or third or fourth or whatever. Does that potential perception problem bother you?
You are right, but honestly, if we were driven by perception, there’s probably a lot of things we wouldn’t do. But we’re not.
Is late night as a daypart in trouble? Is there enough payoff to warrant the risk for others to get in right now at 11:30?
I still think we can be a dominant business in late night. I think it’s hard for new entrants to get into the game, and that’s been borne out over the last decade, and that’s another reason we wanted to protect what we already have.
How does this fit into your previous comments about wanting to program more low-cost options at 8 p.m.?
I think that was a conversation that was completely misinterpreted at the time. I’m not backing away from what we said; we were just saying we didn’t believe that under the current economics and viewing patterns, we could continue to produce 22 hours of primetime programming. I don’t think we articulated it very well at the time, but perhaps now people understand what we were trying to say.
What are you hearing overall from your affiliates?
We had an affiliate board meeting [on Dec. 10], and I think coming out of that meeting the sense of the affiliate board was positive. They are going to be involved in helping us to work through some of the best ways to maximize the format for them. These things are scary when you change, but let’s not forget that the largest owner of stations on the NBC network is NBC. We have stations covering more than 20% of the country, so this affects us more than anybody.
So we’re not going to do anything not in the best interest of the stations. We understand the concern out there, though. And let’s remember if you ask 10 affiliates for their opinions, you’ll get 12 different answers.
How are relations right now with affiliates?
We greatly respect them, and don’t forget that our affiliates have actually had a pretty good year. No one can touch us in news, and we delivered the event of the television year in the Olympics. So our news and sports delivery has been fantastic. With regard to primetime, obviously they are disappointed, as they should be. We have not hidden from that or pretended otherwise.
Also at the UBS conference, Moonves said that “down the road” the network-affiliate model could break down. Will the relationships with the affiliates change over the course of the year?
I still think the network-affiliate relationship is one of the best distribution systems that has ever been developed. People believe the NBC affiliate in Indianapolis is NBC, and there is a lot of value in that. I think it will continue for a long time to come.
After a round of layoffs, a disappointing fall season and even having to sell a long-awaited Super Bowl in a crippling recession, was keeping Leno a much-needed victory for the network?
This was really about keeping Jay Leno in the family. It served to protect Conan O’Brien and it also came at a time when we were asking tough questions about the broadcast model.