Zucker at UBS: Network Model Must Evolve

Zucker at UBS: Network Model Must Evolve 1NBCU CEO Jeff Zucker on Monday told attendees at the UBS Media Conference that the company is well positioned to weather the recession and thrive when the recovery arrives — but indicated that its broadcast network must evolve over the long haul.

Currently, 80 percent of the company’s profits are derived from its cable operations and film studio. And with double-digit growth expected for cable (USA, Sci-Fi, Bravo, Oxygen, CNBC and others) this year and next, Zucker believes NBCU can ride out the rough economy.

That said, the picture for the broadcast unit, which houses the NBC network and TV stations, is different — and changes have to be made or the business is in danger of failing, Zucker said. The network was down double digits in prime-time ratings this fall for a performance that Zucker termed “particularly disappointing.”

Zucker indicated that he still has confidence in Ben Silverman and Marc Graboff, the co-chairmen of NBC Entertainment. Still, he has major concerns about the business model for broadcast TV. “It’s got to be redefined,” he said.

The network must decide if it can continue to afford programming 22 hours a week in prime-time or all seven nighs peer week, as well as whether to invest in expensive news and sports going forward, Zucker said. “We don’t think we can operate local stations in the same way” either, he added, noting that ads for the depressed auto business have, up to now, accounted for about one-third of the revenue for many stations.

Zucker and his team are currently working out how to change the model. “Otherwise it will be like the newspaper business or the car business. We have to adjust in ways that the companies did not. I don’t want to be filing for bankruptcy,” he said.

His comments came just about the time today that Tribune Co. confirmed it was filing for Chapter 11 protection.

In his 20-plus years in the business, the current environment “is the toughest I’ve ever seen,” Zucker said. Last week, the company detailed plans for cutting 500 staffers, or about 3 percent of its workforce, to help achieve $500 million in cost savings.

Despite the problems, Zucker insisted the broadcasting business, with some adjustments, still works. “If you get something people want to see they will be there,” he said, noting the huge audiences that watched the Beijing Olympic Games this summer and the recent rating resurgence of Saturday Night Live thanks to appearances by Sarah Palin and Tina Fey.

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