Zucker Sees Bright Side at NBCU

By Michele Greppi

The view from fourth place isn't bad, according to NBC Universal President and CEO Jeff Zucker, who told financial analysts Thursday that NBC prime time is looking up and that NBCU could take in nearly $4 billion during the advertising upfront selling season. That would leave NBCU flat year-to-year at worst and up slightly at best, thanks to such growth drivers as the company's cable, film, digital, Hispanic and international sectors.

The company finally kickstarted the upfront this week, with a $1 billion deal that includes all NBCU platforms and is based on commercial ratings up to three days after the spots aired.

Noting the drop in NBC operating profit from $900 million after finishing first in 2004 to $100 million after finishing fourth in the just-wrapped season, "That hit to our bottom line is behind us," Mr. Zucker said.

He also said the network's current stint in the prime-time cellar does drive perceptions about the state of NBCU and must be fixed, but he said it is "not the drag on the bottom line you might think."

The prime-time weakness precipitated the recent exit of Kevin Reilly from his position at NBC Entertainment and the appointment of NBCU veteran Marc Graboff and longtime supplier Ben Silverman as co-chairmen of NBC Entertainment and the newly renamed Universal Media Studios.

Mr. Zucker identified several other major "headwinds" affecting NBCU: Its DVD library is not as valuable as it once was and, until NBCU operations are completely digitized, outdated analog structural costs are a drag on the bottom line.

Mr. Zucker said new targets for cost-cutting will raise to $1.5 billion the total efficiencies achieved since beginning the transition to digital and other synergies.

"We're going to continue to make necessary changes," he said of cost-cutting and more upbeat strategies. "We are really clicking."

(Editor: Horowitz)