NATPE ’08: NBCU CEO Zucker Calls for Change

Keynote Speech Addresses Demise of Pilot Season and Upfronts, Analog-to-Digital Shift
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The writers' strike’s most lasting legacy will likely be the way it finally pushed the broadcast networks to reinvent their businesses, said Jeff Zucker, president and CEO of NBC Universal, during Tuesday's keynote speech at the annual gathering of the National Association of Television Program Executives in Las Vegas.

"Maybe what we are going through now is our industry's version of a forest fire. We didn't ask for it, and it is unfortunate to live through. But if we are lucky, it may very well leave behind fertile soil, clear ground and the opportunity for robust growth," Zucker said.

Two major initiatives NBCU is likely to get underway this year: the demise of pilot season, with NBC Entertainment placing most of its orders direct to series, following the company's more successful cable model; and the elimination of a formal upfront presentation, with NBCU executives instead visiting all major advertising agencies personally.

"This is not about making less programs: It's about making less waste," Zucker said. "We will still make a few pilots a year -- maybe five instead of 20. And it's about ordering direct to series the ones our creative executives believe in. The odds of success are just as great going straight to series as they are in making all of those pilots."

Zucker noted that NBC Entertainment West Coast co-presidents Ben Silverman and Marc Graboff would implement the plan, about which Hollywood has been talking for a few months.

"I know the argument … you never know where that hidden gem is going to come from. I'm hoping it will come from that gut decision that orders the series straight to air. For the price of that one $10 million pilot, we can order a full six-episode series. It's about time we start."

As for upfronts, NBC will continue to sell upfront ad inventory, but the way the company goes about that task will change.

"We believe the big show is a vestige of the last decade. Every year, the big question at the upfront presentation of our new schedule is: How fast can the show be over?" Zucker said.

"What matters is the new schedule and the rationale behind it. No one these days makes their buying decisions until they see the schedule and eventually see the shows. I can tell you we have not made a final decision, but we are very close. And again, we are looking to our own cable networks as a guide. Like those networks, if we do scrap the big presentation, we will be committed to going to every one of the major advertising agencies, in person, and every one of the major advertisers, to explain the schedule, explain the rationale and deliver episodes."

Meanwhile, Zucker said, NBCU is rethinking three broad areas: distribution, marketing and regulation.

NBCU needs to be everywhere, Zucker said, pointing out NBCU's multiple distribution outlets, such as Hulu and NBC.com. "Our challenge with all these ventures is to effectively monetize them so that we do not end up trading analog dollars for digital pennies,” he added. “This is the No. 1 challenge for everyone in this industry today."

Following that, the industry's next biggest challenge "is to work with our advertising clients to create the next-generation video-advertising model," he said.

"We are evolving the commercial form, with DVR-friendly [digital-video recorder] formats, pod innovations and new approaches to product integration,” Zucker added. “We are building on our 360 sales efforts, with expanded Internet extensions and vertical ad networks encompassing TV and the Internet."

Finally, Zucker called for a "new and improved regulatory framework," including an overhaul of the Federal Communications Commission.

"We need a careful policy review that looks at our system of national programming networks linked to strong local voices and asks about its present and its future --about its health and its vitality,” he said. “But we have not seen this. Rather, we have seen a series of isolated and disconnected responses to regulatory passions of the moment.”

Zucker continued, “From my perspective, they appear to be ad hoc and reactive, based on outdated assumptions about broadcast networks and broadcast stations, rather than comprehensive, forward-looking and rooted in the reality of today's marketplace."

What is certain is that NBCU has embraced the coming digital shift: "We are in the middle of a wrenching analog-to-digital transition, marked by game-changing technological developments and profound shifts in consumer behavior,” Zucker said. “All of that demands a re-engineering of our businesses from top to bottom, both at the network level and at local stations."


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