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Super Bowl, turned a profit on the London Games despite sniping from critics who scoffed at the seemingly outdated notion of airing events in primetime on tape, and rebranded the cable network Versus as the NBC Sports Network, venturing onto turf dominated by ESPN.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.
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?
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.
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