A Gold Medal Year for Lazarus

With Super Bowl and Olympic triumphs, NBC group chief earns B&C annual Sports Exec honors
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Mark Lazarus has had a busy first year as chairman of the
NBC Sports Group. He oversaw a record-setting Super Bowl, turned a profit on
the London Games despite sniping from critics who scoffed at the seemingly
outdated notion of airing events in primetime on tape, and rebranded the cable
network Versus as the NBC Sports Network, venturing onto turf dominated by
ESPN.

Things went well enough that Lazarus was named B&C
Sports Executive of the Year. "We had an excellent year," he says. "I think we
exceeded our expectations and met our hopes and dreams."

Lazarus talked about his plans with B&C business editor
Jon Lafayette. An edited transcript follows.

The high point of NBC's year had to be the London Games. The Olympics
had been a mixed bag for NBC, getting a lot of attention but losing millions of
dollars. When did you know that this year was going to be different?

The Olympics, in a way, were a bit of a punctuation. We
spent last year doing a bunch of rights deals and getting in position heading
for 2012, which we knew would be a big year for the new NBC Sports Group, with
the rebranded NBC Sports Network coming out of the gate with the [NHL] Winter
Classic, and then the Super Bowl.

We knew we were going to be in good shape on [Olympics]
revenue. We knew that we had a smart plan to manage costs, not to spend more
than we needed to. And we had a plan to surround the consumer with content. We
made a bet that the combination of all the content being available online and
streamed, and the significant amount of live cable and live broadcast content
throughout the day would satisfy and enhance people's desire to watch the
primetime packaged show that really is the hallmark of NBC's storytelling
history.

That was our gamble, and I think in some ways it was a
sizable experiment, and it paid off. We were able to satisfy consumers, and I
think by all accounts, from our research and from what we've read, people kind
of got wrapped up in the Olympics in a very big way. The more we gave them, the
more they wanted.

1203 Cover Story NBC Sports Group chart

Have you started planning for the 2014 Sochi Games?

We have. About three weeks ago I was in Russia. It was my
first trip over there. I'm very impressed by the venues that they have built.
They've been running some test events in their venues. So yeah, we are in heavy
planning for that now. As the federations fine-tune their schedules, we're
going to continue to work with them on how we're going to present the games.

Any big changes planned? Or do you feel you have a pretty good
playbook?

I think by and large our playbook is solid. But we will
continue to try new things and alter things that we think can enhance the
consumer experience. We don't have anything to announce yet. It's still 15 months
out, but sometime in the first quarter of next year we'll start to lay out what
our plan will be. We're debating a lot of different ideas. That's the
environment we like to have here at NBC Sports: We're never going to stand pat
with what we're doing. We're going to continue to change and evolve our
coverage and as technology changes, we have to.

You still have a time-zone difference, so the issue is still how much
stuff do you stream or broadcast when they're live as opposed to holding back
for primetime.

It's a nine-hour time difference, so it's a super-charged
time difference. Listen: We will not go backwards making everything available
by live stream. So what we hold and how we program the television network is
still what we're discussing. But also we need, from a business point of view,
for primetime [to attract viewers]. Our primetime ratings are still the
centerpiece of our financial model.

And probably still will be in 18 months, even though things change
pretty quickly these days.

I think one of the big learnings that came out of London is,
television is still king. We set all kinds of records with our streaming and
our apps, but television still drove the majority of the viewership and, thus,
the revenue.

Speaking of television being king, you had the Super Bowl. The audience
was huge. Was that partly because the game was so close?

A close game always helps. One of our key strategies for any
event, and it's one of our hallmarks, is that we make big events bigger. When
events and properties come to us, we work very hard to grow the ratings. We
surround the main event on our other platforms. We also have a great company
spirit here at NBCUniversal where we work together and utilize each other's
assets to promote and market and build events. On things like the Kentucky
Derby or the Super Bowl, we have E!, Style and Bravo all participating on our
air but also all promoting the Super Bowl to bring in casual sport fans.

The NFL is a big deal. Sunday Night Football now is the No. 1 show in primetime. Is there still upside for pro
football?

Oh I think so. We take great pride in our broadcast as well,
with Al [Michaels] and Cris [Collinsworth] and Michele Tafoya making the game
interesting and accessible, not just to core football fans but to casual fans
as well.

But I do think there's upside in the NFL. I think the
scarcity of product-that it's only on a few days of the week-and our exclusive
window is very attractive to us and to our affiliates, and we try to make every
Sunday night special and a big event.

Where is the NBC Sports Network in terms of where you want it to be?

I've said all along it's a long-term plan. It's going to
take us five years. Certainly it's a little slower going than I would have
liked. I think that's always the case anytime you're trying to grow something.
We had a ton of momentum in the first half of the year with the NHL, with the
Tour de France, with the signing of our Major League Soccer deal and that
getting started, and with the Olympics. I think our deal with Dan Patrick to
run The Dan Patrick Show from nine to
noon each day gives us daily relevance with a star on our air for three hours
every morning.

How big a problem is not having hockey because of the lockout?

It's down. We've been filling our primetime with some good
college basketball and some good college hockey, but the NHL is a staple of our
primetime lineup from October until May, and not having it is definitely
harmful to us.

Any idea how or when that might get resolved?

I wish I did. I can tell you that we are disappointed that
the players and the owners have not been able to come to an agreement, and it's
not good for our business or their business. In terms of making strides on how
we're going to grow this business over time, we've now signed a Formula 1 deal,
an English Premier League deal, and we feel as those begin next year and as
hockey comes back and the Tour de France is renewed for a long time and the
Olympics every other year, we've got the pillars of a growing network, and
that's what our goal is, to grow our footprint, grow our advertising relevance
and grow our ratings.

And how do you see that network fitting into the competitive landscape?
You've got ESPN at the high end, you've got something bubbling up from Fox,
you've got CBS lying in the weeds. What does the national cable sports business
look like in your five-year plan for NBC Sports Network?

It's competitive. We want to continue to grow this business
and have a long-term asset that's profitable, and that's our intention. We also
have a very strong business in Golf Channel. So we have multiple national cable
plays. Golf ratings were very strong. We think, again, that's part of our big
event strategy. We surround events and are helping grow the game. So as far as
the national landscape, we think there's a role for that kind of business. But
for a multi-sport network, we're going to continue to grow NBC Sports Network.
It will work closely with NBC broadcast sports, and we think that one-two punch
is a very strong player in the national sports space.

Add to that our regional play, which is in 50 million homes
with the NBC Sports regional networks, which carry the Comcast SportsNet name
with the peacock on them. We just launched in October in Houston. We have seven
NBA teams, six Major League Baseball teams and four NHL teams that we're
partners with. And it's a good business and supports our overall strategy of
being able to show local games and events and then promote to the national
events on both the national cable and national broadcast net.

It seems that to grow in this business, you've got to be willing to
make big bets and write big checks. Do you get a sense that management-[NBCU
CEO] Steve Burke and [Comcast chairman] Brian Roberts-are comfortable writing
those big checks?

We've probably written 16 or so billion dollars in checks in
the last 15 months, so the answer is an unqualified yes. Between the NFL
renewal, the Olympics, the NHL, EPL, PGA Tour, Formula 1, we have signed
sizable checks. And add to that the FIFA World Cup for Telemundo. So we are
investing in sports content. I have absolutely felt the support that they have
provided to the sports division. We won't do it recklessly but we are
investors.

Speaking of big checks, you saw the money that's being paid for local
broadcast rights to the Yankees and Dodgers. Do you think the economics of the
regional sports business are changing and supportable?

I think that remains to be seen. We believe in the models we
have, the businesses work, and I think they are fair deals for the consumers
who have to support them. If prices keep going up in an exorbitant way, could
that lead to consumer issues? It may. Again, we will invest, but not
recklessly. Those deals don't kick in for a little while, but you have to
admire the way Fox is aggressive in attaining their goals.

Do you think there's a way of channeling their big regional investments
into some sort of a national presence?

They haven't tipped their hand. I think the way we support
our national businesses with our regional sports networks, they will do the
same. But those rights don't travel. From a regional point of view, they've
collected a set of assets, and I'm sure they're evaluating their options.

How will all the networks in the NBC Sports Group work together?

The producers, the marketers, the programmers for both the
broadcast side and NBC Sports Network are the same. We don't differentiate. We
schedule things where we think they have the most value to us and to consumers
and marketers. So from those businesses, there's complete alignment. The same
holds true for how we think about golf on the broadcast network and Golf
Channel. They work seamlessly together in a vertical business that Mike
McCarley leads out of Orlando [Fla.]. I think the best example would be what we
did during the Ryder Cup or the U.S. Open this summer. The event is on NBC, and
we certainly promote leading up to an event. And Golf Channel spends their week
there working hard to promote the event. Additionally our regional sports
networks in those markets go on site, and they work with both Golf Channel and
NBC to bring great content locally. And they work with the organizers to
promote the event locally and for ticket sales and for local viewership.

The next evolution of all that for us is to be housed in one
place. Golf Channel will remain in Orlando, but currently we have four offices
in three states between New York and Pennsylvania. Come springtime we will all
be moving to a new facility that's being built in Stamford, Conn. So we will
have an NBC Sports headquarters there that will allow for a combination of
great idea exchange, best practices, seamless integration of our businesses and
operational efficiencies.

In the newspaper business we talked about how the sports department was
the candy store, and in the TV business, for a long time, sports was a loss
leader. Is sports a money maker in the grand scheme of things for a media
company?

It should be. It is for us absolutely. If it's not you
should rethink your strategy.

Speaking of doing new things, the business has gotten more and more
digital. It's not just broadcast anymore. Do you see more opportunities to put
more content online and create multiplatform environments?

We do. The Olympics was a great example of that and we will
continue to work on that. Every set of rights we're acquiring has TV Everywhere
rights and gives us the ability to create multiplatform content. The English
Premier League deal in particular is what I call a complete set of Olympics
rights. Of the 380 games that are played each year, roughly 200 of them will be
available live on a linear channel. The other 180 will be made available online
or in other packages through MVPDs. That complete set of rights is appealing to
us and to consumers.

Listen, our competitors do a good job of that. I think ESPN
in particular does a very good job of creating content for wherever the
consumer may be and that's the same strategy and thinking that we're planning.

How do you monetize the digital? Will it continue to be ad supported?
Or is there a pay-per-view opportunity?

As we make deals with the MVPDs, people shouldn't have to
pay for things twice. I don't think that's part of the ecosystem. I think we
all have to protect the pay TV model. And I think there is advertising support
for these digital eyeballs, and that continues to grow and in conjunction with
the TV audience, we think it's completely additive. Again, I'll go back to the
Olympics example. The more we surrounded people with content, the more they
wanted to watch. The more access we gave them, the more they used. The more
devices they had with them, the more TV they watched. That's based on research
that I think is invaluable to all of us. The more devices people used to
consume the Olympics, the more Olympics on TV they watched. And that's
something we think is going to be part of the sports media landscape off into
the next generation.

When you got there, you had the Super Bowl and the Olympics on the
horizon. You had your predecessor Dick Ebersol come in and do some consulting
for you. Is he still consulting?

That ended after the Olympics. It was very valuable to us and to me and I
very much appreciated his willingness to be part of it. It was a very good
transition for our product, for our staff, for me and I think for him. He's
relaxing right now.

Now you're getting [former Today
show executive producer] Jim Bell full-time, right?

We're very excited about that. Sochi is 15 months away and Rio right on the
heels of that and having he and Gary Zenkel, who is the president of NBC
Olympics, lead our daily charge into the Olympics world [is great]; it's a huge
investment for our company and it demands constant and expert attention. Having
Gary and Jim and those folks all focused on the Games is a really smart
investment on our part and going to be very good for us as we move into Sochi
and then into Rio.

Talk about everything going right, even Notre Dame football has had a
good year. Can you credit NBC with any part of that good year?

We're in the final couple of years of a 25-year relationship
with Notre Dame. I don't think we could take credit for their success, nor
would we ever attempt to do that. I think we have worked very well with the
university to promote and market their program and their university. We had
three different specials that ran on NBC Sports Network and had some visibility
on the broadcast network.

And the winning brings higher ratings, right?

For us, the benefit is clear. We had higher ratings this
year. We'll be able to sell off that success for next year. That's very
positive for us and for them. We think we provide them with a unique platform
in all of college sports where they have essentially their own set of assets in
NBC and NBC Sports Network with which to work and have a great partnership with
them.

Did you make a play for Major League Baseball's national baseball
rights to boost NBC Sports Network?

Yes, we had a discussion with them and their incumbents agreed
to up the ante and pay a sizable chunk of money. We're good partners with Major
League Baseball. But we were interested and we didn't get to a place where we
could do a deal.

Is NBC Sports Network profitable?

Yes. Absolutely.

Even with the NHL cancelling its games?

Yes. That doesn't impact the short-term profitability of the
business.

What are your goals and priorities for 2013, the year between Olympics
and Super Bowls?

We need to stay on track and continue to grow our business.
We need to execute on all this wonderful investment we've been able to make and
continue to produce the highest quality product. We have a great group of
production people. We have-I call them the Mount Rushmore of broadcasters. I
think we've got a terrific group of people that consumers love to watch, that
tell great stories, that make smart programming and make it accessible not just
to core fans but to casual fans. So we want to continue to do that. And I think
for next year, launching our Formula 1, our English Premier League deal and our
new Michelle Beadle show next year I think are our programming priorities for
NBC Sports network and NBC Sports.

In the newspaper business we talked about how the sports department was
the candy store and in the TV business, for a long time, sports was a loss
leader. Is sports a money makes in the grand scheme of things for a media
company?

It should be. It is for us absolutely. If it's not you
should rethink your strategy.

NBC as a broadcast network is recovering. Is there anything else that
sports can do to help with that recovery?

I think we are trying to do our share and that encompasses
two things; first, continue to deliver strong ratings when we are on the air.
And I think we do that with Sunday Night
Football
. We do that on weekend afternoons when we have our events. We do
that when we do primetime events like the U.S. Open last year, or the Kentucky
Derby or the Breeders Cup, which bleed into primetime. So in terms of
delivering strong ratings for the network, that's a goal and something we've
been able to do this year.

Additionally, it's our obligation and desire to promote the
other products on the network as best we can to help them deliver their biggest
audiences. I think in the Olympics this year, we promoted our fall schedule and
we focused a lot on Revolution and Go On, both of which are doing quite
well. And growing. And are good shows for the broadcast network. I think we
continue to try to do our share. Again, the hallmark of this company is working
together and it's unique. It's a very healthy environment and everyone here
works together willingly and we all have a common goal to make NBCUniversal the
best company it can be. It's a collaborative company and that is fostered by
Steve Burke and the way he approaches business.

E-mail comments to jlafayette@nbmedia.com and follow him on Twitter: @jlafayette

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