Zucker Weighs In On Leno, NBC's Future
"What does No. 1 in prime time mean anymore?" he asked, adding that the traditional measuring stick has lost relevance.
DVRs, online video and other factors have moved the needle. A more appropriate metric is aggregate viewing across on-air, online, VOD, iTunes, etc.--a gauge where the NBC hit "The Office" performs well.
"I don't think we'll ever be able to say, 'NBC is No. 1 in prime time,'" Zucker said at an industry event.
Any aspirations were effectively thrown out when NBC made the decision to go with a Jay Leno-fronted show weeknights at 10 p.m. Zucker said ratings there won't approach even what the network's current crop of struggling dramas are doing in the hour.
Still, he said the Leno move is not a white flag--just a reaction to new dynamics. "We're not proclaiming defeat," he said. "I don't think anyone thinks Fox is any less of a network because they program two hours in prime time."
Fox has been touted as the top network in recent years, but it has seven fewer hours a week to fill with hits than its three leading competitors.
Zucker reiterated that the Leno move was made partly to keep the comedian on NBC, but also in response to changing viewer behaviors that necessitated new business models. He acknowledged, however, that NBC may not have taken the gamble if prime-time ratings were as healthy as they were throughout the 1990s and beyond.
"Sometimes, you see the world more clearly when you're flat on your back," he said.
But he said the broadcasting industry needs "to be honest" with itself about the hurdles it faces and not "wish it were 1987."
Newspapers that ignored warning signs and failed to adapt to new technologies should serve as a cautionary tale. "We can bury our heads in the sand, and then I'll know we'll be defeated," Zucker said.
Broadcasting--a business supported only by advertising--was in flux due to DVRs and audience fragmentation even before the recession. Now it is facing further uncertainty, which is likely to continue through the coming upfront. Zucker said he expects the market to "move slowly," and signaled that NBC won't sell as much inventory as it has recently.
The economy has not only impacted the NBC network, but even more drastically, the local stations NBCU owns. Zucker said the company is buoyed by its portfolio of cable networks, which derive revenues from more stable affiliate fees as well as advertising. And despite the turmoil, he said, each cable outlet is on target for record ratings and financial performance in 2009.
"First and foremost," Zucker said, NBCU is a cable-network business. Some 60% percent of operating profit comes from the sector, estimated at $520 million in the 2008 fourth quarter. With that orientation, the company has recently added Oxygen and a controlling stake in the Weather Channel.
Among the cable portfolio is MSNBC, and Zucker said the news/opinion network is looking to add a signature show from a fourth personality to its prime-time lineup that features Chris Matthews, Keith Olbermann and Rachel Maddow.
In regard to new business models, Zucker has frequently spoken about the need to find a way to monetize online video and avoid trading analog dollars for digital pennies. A revenue gap between on-air and online remains vast, but he said it has closed slightly.
"I think we're at digital dimes now ... but there still is a long way to go from those dimes to dollars," he said.
Still, even if online ad dollars never eclipse those from traditional sources, Zucker said tinkering with the cost structure may still allow NBCU to come out on top.
He said NBCU supports ubiquitous distribution, and will be focusing over the next two to three years on developing an economic model that supports it.