5 Comcast-NBC Game Changers
The announcement of Comcast’s deal to acquire control of NBC Universal was in some ways like President Obama’s speech on his strategy in Afghanistan: No surprises, but plenty of questions, large and small, left to be answered.
Comcast needs to fend off government regulators to get the deal closed—a process that could take many months—so its executives behaved very prettily and raised no red flags. But what comes after the deal is done is likely to affect what Americans watch and how they watch it. Five of the big looming issues:
One veteran executive says the Leno experiment will end, and “it’s only a question of when.”
What is to be the fate of NBC? Comcast CEO Brian Roberts said the company is committed to continuing free, over-the-air broadcast television, a statement that suggests the company has no plans to turn NBC into a cable channel—at least not yet. That option could be alluring because cable channels make money from two revenue streams, subscribers and commercials, while broadcast channels depend solely on advertising. But for now, Comcast’s story is that it wants to return NBC to its long-lost status as the No. 1 network. And that makes sense; the broadcast model is under strain but it’s not dead yet.
What will happen with Jay Leno? Probably nothing, in the short term, but it seems impossible for NBC to return to No. 1 with Leno at 10 p.m. One veteran executive says the Leno experiment will end, and “it’s only a question of when.” The ratings have been affected not only at 10 p.m. but in late night, too.
• Thaddeus Russell: The Return of the Black Saint What will happen with Conan? NBC used to mint money on The Tonight Show. O’Brien isn’t working well in that slot. So does NBC say farewell to Conan and try to reinstate Leno? Could Leno even replicate his earlier success in the late-night slot? Would he want to try, or would he leave and launch a competing show, say at 11 p.m. on Fox? “They’ve got serious problems there,” says an observer. “It’s been screwed up and I don’t know what they do.” (Wow. That Afghanistan analogy goes further than you might expect.)
What about Jeff Zucker? The head of NBC Universal will report to Comcast COO Steve Burke, who knows a few things about the television business. (He was an ABC executive in an earlier life, and his father was a television-industry pioneer.) It seems possible that Burke is one of the many in the industry who have marveled while Zucker’s trajectory climbed, even as NBC’s ratings slid. Yes, Zucker gets some credit for NBC Universal’s mighty cable channels, including USA and Bravo, which are the real jewels that Comcast is after in this deal. But surely Burke has noticed that USA is programming a whole lot of NCIS and NCIS: Los Angeles reruns, meaning that CBS is counting money that could have stayed in the family coffers—if NBC produced strong dramas that were desirable for those slots. Many press reports have said Zucker will remain in place; apparently ensuring that was an issue dear to GE’s Jeffrey Immelt. So Comcast said yes—but if Zucker were a stock, it would be tempting to short him. And it isn’t just about NBC. There have also been big problems at Universal Pictures on Zucker’s watch.
What about Universal Pictures? What about the movie business? Comcast has no particular experience with movies, and its management of Universal is fraught with a certain amount of peril. One thing the Comcasters were clear about is their plan to release movies on-demand to their cable customers the day they’re released on DVD. It has been customary for studios to wait four weeks after DVD release before making films available on-demand, and eliminating that practice will upset big-box retailers—Wal-Mart, Best Buy, and Target—which sell the vast majority of DVDs, another business that is fading but isn’t dead yet. Perhaps those stores will retaliate by refusing to stock Universal movies. Also anxiously watching are theater owners. Comcast did not say whether it would speed up the release of films on DVD or on-demand (now the studios theoretically wait four months after movies open in theaters). But with a library of thousands of films and all those cable pipes, it will surely be tempting for Comcast to offer movies sooner after their release. Theater owners fear that if movies are available on-demand too soon after their initial release, their business will suffer. If Comcast fails to protect that theatrical “window,” the company could do serious damage to its studio and the film business generally.
For now, with the regulatory hurdles still to be cleared, Zucker is reassuring staff that “it remains business as usual” at NBC Universal. For some of them, at least, that’s not especially reassuring. No doubt they are hoping that Comcast will be a better steward than GE turned out to be.
Kim Masters covers the entertainment business for The Daily Beast. She is also the host of The Business, public radio's weekly program about the business of show business. She is also the author of The Keys to the Kingdom: The Rise of Michael Eisner and the Fall of Everybody Else.