Upfront Q&A: Zucker on Going First
All eyes are on New York this week as the networks unveil their fall prime-time lineups at the upfront presentations and prepare for a blitz in which they sell the majority of their advertising time.
NBC, which traditionally opens the week with a big show at Radio City Music Hall, laid out more than a year’s worth of year-round programming lineups to advertisers and the press in April at what it called an “infront” and began selling time earlier than usual—and earlier than its competitors.
This afternoon, the mall and concourse at 30 Rockefeller Plaza will become the “NBC Universal Experience,” through which advertisers, agency representatives and members of the press can wander and interact with examples of the company’s broad array of assets.
TelevisionWeek National Editor Michele Greppi recently sat down with NBC Universal President-CEO Jeff Zucker in his sunlit 52nd-floor office, chock-full of family photos, for an interview covering an equally broad number of topics. What follows is an edited version of that interview.
The subjects ranged from why NBCU no longer considers ratings the chief factor in determining whether a show stays on the air and the complexities of the sales process, to where he expects to see the continued fast growth NBCU craves and why flagship station WNBC-TV in New York is going into competition with an established 24-hour cable news channel.
TelevisionWeek: Your “infront” presentation to advertisers is several weeks behind us now. What have you learned? There are always a lot of imponderables and a lot of optimism.
Jeff Zucker: It went far better than we could have even imagined. We didn’t know for sure if it was the right thing to do, but we’ve learned it’s absolutely the right way to conduct business. The feedback from the advertisers and the agencies has been overwhelmingly positive. And it’s not about the scheduling. I think this is the point that some of our competitors have missed. It was more about the dialogue that we began with these advertisers and agencies. In this world where it’s much more complicated than just buying a 30-second commercial, the conversation is so much more complicated. The extra time to have these conversations has proved to be invaluable. We have begun writing business, so getting that head start has proved to be helpful. We feel very comfortable with our decision to have gone this way.
TVWeek: Are the deals broader or more complex than they would have been in the past?
Mr. Zucker: Yes, they are, because it’s no longer just about the 30-second commercial. It’s about advertisers being part of the program. It’s about the digital extension. It’s about the premiere episode. You have to do 10 more things for the same amount of dollars.
TVWeek: It seems ironic that the digital and new technology that expands all the possibilities seems to be making it a much more hands-on, labor-intensive process.
Mr. Zucker: It is, for the sales force especially. Ten years ago when you were at the networks you picked up the phone and answered the call and booked a :30. ... No matter how strong your shows are or aren’t, that’s not the way it works any more.
TVWeek: You announced last week that iVillage will be added to Lauren Zalaznick’s turf as president of Women and Lifestyle Entertainment Networks.
Mr. Zucker: That’s her title. I wouldn’t characterize it as a division. That’s her title, which encompasses all the pieces that report to her.
TVWeek: Ms. Zalaznick also will oversee Women@NBC, a new cross-brand sales strategy.
Mr. Zucker: It’s really a go-to-market strategy. We think we can do certainly as well as anyone in bringing to market a panoply of assets that reach women across all demographic age breaks. When you think about Bravo, you think about Oxygen, you think about iVillage, add in the other assets of the company including four hours of the “Today” show, it is a targeted go-to-market that I think gives us a leg up in the marketplace.
TVWeek: It’s hard to know whether the question is, “Why target separately the demographic that drives so much viewing and programming decisions?” or “What took you so long?”
Mr. Zucker: Look, sometimes good ideas take a long time to come to fruition.
TVWeek: One of the things Ben Silverman talked about was going straight to series commitment without having any surprises. Granted, this is the beginning of the changes in the process, but at this point, “Monk” and “Psych” don’t seem to be holding up well, and Tom Fontana turned in scripts that were much darker than everybody thought they were going to be, so he’s gone. Isn’t part of that always going to be the same as it always was?
Mr. Zucker: I don’t know what “Monk” and Psych” have to do with that.
TVWeek: It’s sort of a surprise that no one’s changed the schedule.
Mr. Zucker: I think that’s the point. Of course this isn’t an exact science. First of all, that was a stop-gap measure that was born out of necessity because of the strike. We’re in an era where—we’ve made a commitment to our advertisers to a schedule. Advertisers have an expectation. It’s not just about the ratings anymore. It’s about our relationship with our advertisers and what their expectations are. That doesn’t mean that we won’t change schedules. Of course we’ll change schedules if we have to, because it remains an inexact science. But we’re not going to knee-jerk change schedules just because the ratings aren’t what somebody else expected them to be. It’s really not just about the ratings anymore. It doesn’t mean the ratings aren’t still important.
TVWeek: When you say you’d made a commitment to the advertisers…
Mr. Zucker: That they were going to get two dramas there Sunday 8 and 9.
TVWeek: … Even if they’re not drawing a significant audience?
Mr. Zucker: I’m not saying they won’t change the schedule if they think it’s appropriate. They may very well, certainly by the time this comes out. It’s hard for people to understand us talking about this, because they would say that if we were in first place we wouldn’t be having this conversation. I understand that. Which is why we’re not getting out in front and saying, “Look, we were the ones that led the way almost 15 years ago on the transition to 18-49.” Then eventually the entire industry followed suit. Look, we would also say that we’re no longer bound by, on the network side, the NBC side, by the ratings from September to May as the regular season. We would say that from the top of the mountain, except that people would say, “You’re only saying that because you’re now in first place.” You understand what I’m saying? If we were in first place, I’d want to say it. It’s no longer about September to May. The commitment to our advertisers is for 52 weeks. We are in a slightly stronger position to talk about that next year. Or maybe we should do it the year after, because we have the Super Bowl next year. But we want to get away from this idea that we’ve talked about for so long, that the season is September to May. That’s not the way we want to play anymore. But people will be cynical about our motivation.
TVWeek: What’s good about sticking with a lineup that has smaller expectations than it once might have?
Mr. Zucker: The advertisers make a long-term commitment to us in marketing their product, and we need to make sure that we’re as committed to them as they are to us.
TVWeek: Has your inner voice adapted to what Thursday night lineups look like when the fast nationals come in Friday morning and you can see the 18 to 49s?
Mr. Zucker: We only look at the 18 to 49s.
TVWeek: But there was a time when you got your socks knocked off by the size of the overall audience, and if you have a bigger audience you have a bigger 18 to 49.
Mr. Zucker: The 18 to 49 was larger than it is today. Our expectations are entirely different. Because we’re running it as a business. We’re not running it on who’s winning the weekly ratings.
TVWeek: What does that mean?
Mr. Zucker: We want to have great shows. We think we do with “Heroes,” and “Law & Order: SVU” and “The Office” and “30 Rock” and “Friday Night Lights,” you know, up and down the line. But we’re managing for margin, not for ratings. So it’s the expense of our shows, the consistency of our shows being on the schedule. It’s not determined by the size of the ratings, because the size of the ratings of a show we cannot afford is not going to do us any good anymore. This is not because we do not have the outsized hits that we once did. This is because we are in a different environment where the difference between the first and fourth or second and third is incredibly minimal.
TVWeek: In the old GE world, you were supposed to be No. 1, certainly no worse than No. 2, in your business. Will you be able to do that?
Mr. Zucker: NBC Universal, this company as a whole, is doing great. Our cable portfolio is as strong as anybody’s. Our film division is on track for another very good year. Our theme parks are having a very good year. And within the network, which is comprised of entertainment, news and sports, our news division couldn’t be more on fire. It’s probably stronger than it’s ever been, and I know because I worked in it for a long time.
TVWeek: When you say stronger, how are you defining that word?
Mr. Zucker: From a bottom-line, business-footing standpoint. Our sports division is about to enter an incredibly exciting 12 months between the Olympics, the NFL and the Super Bowl. And then our entertainment division, where we are not No. 1 in the ratings and we’re not No. 2 in the ratings, but we are managing in a way that is incredibly appropriate for today’s environment.
TVWeek: Have you got any upfront selling assessments, projections, predictions?
Mr. Zucker: No. I’m not going to get into expectations, other than to say we think it will be a vibrant upfront. We think it will be a good upfront. There’s certainly been a tremendous amount of interest in our product from NBC and all of our cable properties. We think it will be quite good, but that’s all I’m going to say.
TVWeek: Will you be making any late-night announcements?
Mr. Zucker: I’m not going to comment on that.
TVWeek: Are the Olympics as scary as they are exciting right now for NBC Universal?
Mr. Zucker: The only thing daunting about these Olympics is the size and the scope of them. We’re going to be producing 3,600 hours of coverage. We’re going to be producing more hours of coverage than we’ve ever produced in all the Olympics combined. In terms of the climate, I think actually that’s not scary to us at all. I began my career working on the ’88 Olympics in Seoul. The Olympics are always used in modern days as a platform for people who want to get their political agenda heard. That was the same in Korea in the run-up to those games. It’s really no different here. We’re incredibly confident in the Games. All of our research points to huge awareness of the Olympics in China and very little concern on any part of the viewing public or advertisers about the issues that some have raised in recent weeks.
TVWeek: A 10% starting price increase to $3 million for a Super Bowl spot? How was that decided? And how much do you think the last-minute spots will go for?
Mr. Zucker: I’m not going to suggest—I don’t know what the last spots will go for. Look, it is clear the Super Bowl is the preeminent program in all forms of popular culture, and the advertising prices are set according to what the market will bear. It’s clear that there’s nothing anywhere in the same league with the Super Bowl, and that’s how the rates get set.
TVWeek: When the first-quarter earnings results were reported recently, NBC Universal looked better than much of the parent company. As you look ahead, where are the best opportunities for growth that gives you at least a taste of instant gratification? For example, the cable channels are doing well, contributing a lot, but there’s a lot of infomercial time on the cable channels. Where will there be your quickest growth?
Mr. Zucker: I think our growth will continue to come out of cable, both entertainment and news. That’s largely because of the great ratings growth at every one of those networks. USA, Sci Fi, Bravo, Oxygen, CNBC and MSNBC have all experienced terrific ratings growth, and we don’t see that slowing, Then on the international side is really where we see great opportunity, our cable channels around the world. By the end of this year we’ll have almost 100 networks, 100 channels around the world. We see growth coming out of that sector.
TVWeek: There have been the rumors that you and CBS are both interested in bidding on The Weather Channel, although everybody seems to agree that [the reported asking price of] $5 billion is just way too much and that the Web site is much more valuable than the channel itself. But it seems the channel would make much more sense for NBC, which has the digital Weather Plus partnership with your affiliates.
Mr. Zucker: I’m not going to comment on any specific things that we’re looking at. I think we’ve been aggressive in the last year in continuing to change the portfolio. We added two key international acquisitions, Sparrowhawk Media and NDTV, a stake in the India network. We added the Oxygen cable network. We made two acquisitions for our Local Media Division: LX.TV, which is really, really doing well, and Skycastle. LX.TV I think has been an underappreciated acquisition for us. We’ve done all of that in less than a year. We’re going to continue to transform the portfolio in that respect. I don’t know that it continues at that speed. We launched Hulu in the middle of that, too. We launched CNBC.com in the middle of all that, too. We’re going to look for the right things. I think on the interactive side, things are still overpriced. We’re not going to make silly acquisitions just to make acquisitions. I think the organic growth of things like CNBC.com and NBC.com has really been very heartening. It just shows that there’s an ability to do some of that on our own, as well. When you think about MSNBC.com, which is clearly the No. 1 news and information Web site by a humongous margin in terms of video streams, and then you add to that the great growth we’ve had at CNBC.com in just the last year … it heartens us to think we’ve got a real news and information digital strategy.
TVWeek: On the cable side, is there any way to talk about the balance between basic advertising revenues and the time buys?
Mr. Zucker: It’s not any more than it’s been. I don’t think the percentage between the two is really going to change much. It really hasn’t fluctuated much at all. It’s just one of the staples of cable.
TVWeek: How do you describe where you are with NBCU 2.0? The rumors remain that there’s going to be another level of cuts.
Mr. Zucker: First of all, we don’t refer to it as 2.0 any more. I think if we could do it all over again, we wouldn’t use that moniker for it because it only leads to questions like you just asked. So I think it was a mistake to put that label on it. Having said that, first of all, I don’t think there’s ever going to be a time where we’re not going to look at how our infrastructure is designed. That will never end. That doesn’t mean there’s any companywide actions planned at all. There’s not. On the other hand, every division continues to assess its structure continually. I think there’s frankly way too much prurient interest in this, when you think about it from a corporate America standpoint, when you think about what’s going on at investment banks and other media organizations and newspapers and magazines and auto companies and airlines. We’re running a business, just like everybody else is. To think that there’s going to be a moratorium on looking at our infrastructure is just naive.
TVWeek: Some of the moves that you have made recently, including putting Miami and Hartford stations up for sale, selling the land in Burbank…
Mr. Zucker: That’s an old decision.
TVWeek: When do you begin to see the financial effects?
Mr. Zucker: What we’ve said all along is that we’re going to transform the portfolio from slow-growth assets so we can invest in the faster-growing assets. It’s why we bought Oxygen. It’s why we bought Sparrowhawk Media and NDTV. Yes, we put Miami and Hartford up for sale, but we’ve invested in Local Media. We invested in buying LX.TV and Skycastle. And we’re going to continue to do things like that. If we’re in a slower-growth business that we don’t see upside for, then we’re going to continue to transform that business.
TVWeek: But are there patterns? Might we see another station and then another station put up for sale?
Mr. Zucker: We’ve said we decided, in terms of our local television stations, we thought it was important to be in the top 10 markets. Really that’s where we are, other than San Diego, and that’s tied to the Dallas joint venture.
TVWeek: Doesn’t it hurt to think about selling Miami, given the trend of the Hispanic population and your ownership of Telemundo and the prevailing wisdom of the efficiencies of duopolies?
Mr. Zucker: No decisions are easy and …no decision is made in a vacuum. On the other hand, when we look at Miami, look, it’ll be a great station for somebody. For our strategy, owning the top 10 was the key, and the fact that we have a flagship Spanish-language station in Miami continues to be part of our strategy, especially as it pertains to Spanish-language media.
TVWeek: Is this turning out to be a reasonable environment in which to sell these stations?
Mr. Zucker: We have tremendous interest in these two television stations. I don’t think there have been stations of this size on the market in a long time, so the interest has been incredibly hot.
TVWeek: How far is the Local Media Division from seeing the structure, the shape and having all the pieces in place that you want it to have?
Mr. Zucker: The Local Media Division is in an evolutionary period. We don’t just want to be local television stations anymore. The local television station is an incredibly important component of the local media strategy, but it’s no longer the only piece of it. We are in a transitory period. We’re going to continue to transition that division, concentrating on the top 10 markets, transforming each of those television stations into local media plays, not just television stations. We’re really only at the beginning of that transformation.
TVWeek: When Pope Benedict was in town, the thought occurred that one of the things we thought digital channels offered was a way to expand programming alternatives. And maybe someone should have said, heavily promoted: You get nonstop looping coverage of the pope. You could have offered it to all the owned-and-operated stations for their digital channels. On that subject, references to WNBC’s digital channel 4.4 remain confusing.
Mr. Zucker: This is a great question. You’ve hit on exactly what the transition in local media needs to be. We are in the absolute process of figuring out, refining that strategy. Part of the problem is what does 4.4 mean, does anybody really understand that, what channel is that? To be very frank about it, I think there are six cable systems in New York City. I think we have 6 million homes for 4.4, but it’s on six different cable systems, which means it’s on six different channels. It is complicated. We’re trying to figure that out. But the transition is not just from being WNBC/channel 4 to being several channels. The LX.TV acquisition is going to play a very big role in the growth of Local Media and what they’re able to do. We’re going to transform every one of those channels over time. And that’s not about 2.0. It’s about acknowledging today’s marketplace and the realities that we’ve got to evolve.
TVWeek: The grand vision for WNBC-TV was announced last week. One of the key points is a 24-hour hyper-local news channel. Aside from covering the broader tri-state area, what will make it a more attractive alternative to the more established NY1 local news channel operated by Time Warner Cable? Local Media Division President John Wallace said it will launch in November and you will know by second quarter whether your local channel is “successful.” That sounds very ambitious and as if you know how to beat NY1.
Mr. Zucker: NY1 is a very strong and very capable outlet. I don’t think that means there’s only room for only one. If there were, there wouldn’t be three cable news networks, two business news networks and five local news broadcast [outlets]. I don’t think we’re going to cede the ground to anyone, though we acknowledge, obviously, a very capable competitor already in the space. There’s room to grow there. What it really is about is acknowledging that local television stations can’t survive with just the traditional 5 a.m., 5 p.m., 6 p.m. and 11 p.m. newscasts. They have to become much more of a full-time content provider. Part of that for us is establishing this 24-hour, seven-day-a-week news service, but it’s also about all of the other things we’re doing with our content with regard to our content: out-of-home, at the gas pump, in a taxi, at a supermarket, on your phone, providing news and information wherever you go. In a much broader sense, it’s just an acknowledgment that local television has got to change. They have to become much more of a full-time content provider.
TVWeek: Can you talk about particular roles LX.TV and Skycastle will play in this plan?
Mr. Zucker: Already you know about the shows LX.TV is producing, “1st/Look: NYC” and “OpenHouse NYC.” They will certainly be part of the 24/7 news efforts. In terms of specific things they’ll do for that, it’s not that I won’t say, I don’t have any specifics other than that LX.TV will be a part of that.
TVWeek: Local station executives say that every day they feel more and more cautious about digital revenues. One of your mantras has been a caution about trading analog dollars for digital cents. Are you at a point where you can see the digital channels making money? Are they in the black?
Mr. Zucker: We don’t really run them separately. If we’re going to make this transition, we’ve got to transition the whole thing. WNBC is not going to go away, I’m not suggesting that, but we’re going to have to do WNBC differently in order to make it go with whatever 4.4 is going to be called. We have a second multicast channel here, so we have three channels. We’re going to have to figure all that out. Is it any different, really, than ESPN and ESPN2 and ESPN3?
TVWeek: Talk about the recent Green Week, what it added up to, how you see it continuing.
Mr. Zucker: We’re committed to green both because it’s the right thing to do and because it turns out to be very good business. We think it’s important to get that message out about being environmentally conscious and conscientious. … Advertisers want to be part of such programming. They pay us a premium to be part of such programming. It’s incremental money with new advertisers. It’s turned out to be both a good idea and good business. So we’re committed to at least two Green Weeks a year across the networks, and we’ll be selling that in the upfronts.
TVWeek: Sold as part of a package, separately or both?
Mr. Zucker: I think Green will be sold separately.
TVWeek: What is the biggest lesson or epiphany since you moved into this position?
Mr. Zucker: The sheer breadth of the company and just how many great brands and pieces of content, whether TV shows, films or the new “Simpsons” ride at Orlando, that we have. Until you really have responsibility for all of it, it’s really hard to quantify.
TVWeek: Are you able to keep some semblance of a personal life?
Mr. Zucker: Yeah. I love my job. I’ve loved the first 16 months and I’m still on the Little League baseball field every weekend, all weekend. [My son’s team, the Scorpions, are] 16-0.