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Marianne Paskowski



NBC’s Seismic, Shifting TV Economics

March 26, 2008 12:39 PM

I was more than surprised to see that NBC Universal chieftain Jeff Zucker told the Los Angeles Times that its USA Network is “probably the single most important entity within the entire portfolio.”

That’s a wow moment. According to this article, USA, cable’s highest-rated network, posted profits of $700 million last year, compared to NBC, which posted profits of about $300 million.

Who could have predicted a cable network would ever surpass a well-established broadcast network?

The economics of a cable network’s dual revenue streams—fees from distributors that carry their shows plus the additional pop of national advertising sales—are making a major impact. I wouldn’t be surprised to soon read that other popular cable nets are surpassing other broadcast networks.

That’s a stunning fact, especially when you toss in the fact that USA also has eclipsed The CW broadcast network in viewership for the first time this quarter.

More startling, perhaps, is that NBC is selling two of its owned-and-operated television stations, WTVJ-TV in Miami and WVIT-TV in Hartford, Conn.

Not that long ago, broadcast O&Os were the cash cows for large media companies, often spinning off profits margins of 50%.

More evidence, I say, that the mass-market broadcast model is officially dead.

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Comments (5)

Jason:

NBC is such a disaster on so many levels. I love how they're rolling out their lineup next week. Too bad no one will believe that they'll keep it that way. I'm sure by the 4th of July we'll have seen lineup number 4 come through.

Marianne Paskowski:

Hi Jason,

Afraid you're right. I didn't get into half of it's woes. I think the Olympics in China will be a disaster, given the unrest and advertisers' real fears of boycotts.

Also think that parent GE will sell off it media holdings after the Olmypics.

Thanks for your thoughts,
Marianne

Marianne,

I'd have to agree with Jason. NBC is a train wreck, largely, I believe, due to the General Electric mania for cost cutting. Television was and is a hit business. One of USA Network's great engines of growth is the "Law & Order" franchise. Where was it developed? On NBC over almost 20 years. NBC's local news in New York is down the tube? Why? A progression of cuts makes it look like TV news from the 1960s.

In television, our product is not news, entertainment, or sports... It is eyeballs in front of the TV. The programs are just the bait.

A multi-network, multi-platform environment makes creativity and a willingness to roll the dice all the more important. If your bait smells bad, the viewers have plenty more places to find bait that does not.

In TV, one can only cost-cut one's way to profitability up to a point. Beyond that point, it becomes a self-defeating exercise.

This is not a business for pishers or bean counters.

Cheers,
Ted Faraone

Jason:

Thanks for responding Marianne!

Marianne Paskowski:

Hey Ted,
Long time no hear, thanks for your post. I think GE should sell NBC and do everyone, especially its shareholders, not to mention viewers a break.

The stock is a train wreck. Let them stick to their industrial roots and give a real media company this bundle of properties a chance to fix it.

TGIF,
Marianne

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