Q&A: NBC’s Eck on What’s in Store for Affiliates
John Eck is just completing his first year as president of the NBC TV Network and Media Works. The 15-year NBC veteran recently sat down with TelevisionWeek National Editor Michele Greppi to talk about the company’s changing relationship with affiliate stations, what the Beijing Olympics mean to NBC stations and NBC Universal’s recent acquisition of the Weather Channel, which could affect the NBC Weather Plus joint venture between the network and the affiliates.
Mr. Eck expanded on the “frank discussion” recently initiated with affiliates about the broadcast business model, as well as NBC’s intent to begin charging reverse compensation as station contracts are renewed. He noted that despite the increasing financial importance of cable properties, NBCU and parent company General Electric remain committed to a thriving NBC TV network and strong affiliate relationships, even it means an end to the status quo.
TelevisionWeek: It’s a done deal for NBC Universal to acquire the Weather Channel properties. How will that directly affect your role as president of the NBC Network and Media Works?
John Eck: I don’t think it will affect it at all. The integration team is going to form [soon], just begin discussions about how you do this pre-closing planning and then how you’re going to operate it once it closes. That process just begins in earnest [with the formation of the integration team].
TVWeek: It always seems surprising that people wouldn’t have been exploring in an unofficial way the various ways they could make use of it while they’re working toward a deal. Are we naïve to think so?
Mr. Eck: That’s a good and fair question. You come up with hypotheses, but that’s like the dog chasing the car, you know. What does he do when he catches it? Now that we have it, we begin thinking very earnestly about what we’re going to do with it and how it’s going to operate with the rest of NBC Universal.
TVWeek: So if somebody asked, “What is your quick take about how the Weather Channel will fit in with broadcast and cable network pieces that currently include NBC Weather Plus, the joint venture with the affiliates?,” what would you say?
Mr. Eck: My role is as the president of the network—which is fundamentally the relationship between our programming departments and the affiliate body—and the Weather Plus business is not hands-on managed by me, so I guess that’s why I’m deferring the question. I have a role in organizing the distribution and being a go-between between Weather Plus and the affiliates, but it’s an independently run business inside of NBCU with a joint board with the affiliates.
TVWeek: At the meeting of network executives and affiliates in May, a “frank discussion” of the state of the television business and the affiliates’ role in it was a major order of the day. How would you boil that message down?
Mr. Eck: The message of the day was, the relationship between NBC and its affiliates has always been very important and will continue to be important, but that we needed to jointly have a frank dialogue about how we keep NBC thriving and all parties involved thriving for the long-term.
TVWeek: Do you have ideas about how to do that? You might not be surprised to hear that a number of affiliates feel that what they heard NBC say is that local stations and the broadcast model are not as important as the cable businesses and the maximization of cable revenues. Is that an incorrect message?
Mr. Eck: Yes. I’m not surprised that some of them may feel that way. I guess I understand sometimes when people say that, but the fact is that really we still believe that NBC is at the heart of what we do on the television side of the business. It is a very critical component to all of our success. … What we said was the cable businesses are an extremely profitable portion of our portfolio; in fact, our cable portfolio generates more than 50% of our operating profits. That’s really just a fact. That has nothing to do with effort, love, compassion [on the broadcast network side]. The company, including our parent GE, has been very committed to the NBC television network and has gone out of their way to make sure it does its part, to make sure the NBC network thrives. We wanted to convey that to the NBC affiliates, but it doesn’t mean the status quo is the way to go forward.
TVWeek: At what point will this dialogue move forward and perhaps effect some changes or proposals for changes?
Mr. Eck: The dialogue really happens on a continuous basis in many little ways. I’m not sure you’re going to see a defining moment in the next two or three months where you’re going to say, “Aha, that’s what they were talking about.” We have a good open dialogue. We had one with [previous chairperson] Marci Burdick and now we have one with [current chairman] Michael Fiorile, the leaders of the affiliate board. We have ongoing discussions with the affiliates about the state of our programming, the state of the business model, the state of the business and what we can do together going forward. That’s just an ongoing thing that we do.
TVWeek: Reverse compensation was one of the prospects that was raised at the affiliates meeting. What is NBC’s position on reverse comp at this point?
Mr. Eck: We think that affiliation fees are entirely appropriate. We take enormous, enormous risks on all of our programming. We think given the reality of the marketplace today, that affiliation fees are something that’s very appropriate for what we do in the Olympics and sports and prime time and in late night. We think that’s an appropriate part of the mix going forward. We’re not really alone in that viewpoint, but we were willing to say it publicly to the affiliates.
TVWeek: Is there any timetable for exploring this or instituting it or moving toward it?
Mr. Eck: Like I said, we have an ongoing dialogue with our affiliates, and our arrangements with our affiliates evolve over time, so it’s not a cataclysmic change, but it will be an evolution of the business and an evolution of our dialogue as we go forward. We have contracts with our affiliates and it’s a legal, binding document and it has a term. So as those contracts expire, we’ll, way in advance, begin those discussions and talk about what they want to do with the relationship, and we’ll talk about what we want to do with the relationship. That’s why I say it will be an evolution.
TVWeek: In 1998, NBC had considered asking affiliates to help the network shoulder the cost of “ER,” which in the ’98-’99 season was going to cost $268 million. It didn’t happen. But is it possible that NBC or another network might really soon have to resort to that sort of plan in order to pay for hit programming?
Mr. Eck: Every affiliate body, for all of the networks, has some sort of side deals with affiliates, particularly for their sports programming, so that’s really not an unusual request. There’s historical precedent for all networks in doing that.
TVWeek: The other network affiliate bodies have actual contracts in which there’s a quid pro quo in terms of exclusivity or that sort of thing. NBC at one point came very close to having such a contract, but then it didn’t happen. What can you say about how the affiliates actually help pay for “Sunday Night Football” now and whether that’s a formula that’s likely to change any time soon?
Mr. Eck: Like I said, just like all networks, we have arrangements where we go to the affiliate board, the affiliate body, and say, “Listen, we’d like to acquire this programming, or we have acquired this type of programming, and we think this would be a fair arrangement for how we do the inventory splits,” or something like that, in the spirit of putting the highest-quality programming in front of the widest audience we can put it in front of.
TVWeek: The Beijing Olympics are a month away now. Obviously it’s going to be a big boost to the network. How would you describe the potential for network-owned and network-affiliated stations in the lead-up to and during the Olympics? How big a boost can this be for them?
Mr. Eck: I think it’s going to be a great national and local event. At the same affiliate meeting we referenced earlier, Dick Ebersol yielded some of his time to Peter Ueberroth, who’s the chairman of the U.S. Olympic Committee, and he talked about the fact that there’s great curiosity about China, first of all, and secondly, we have a great team, probably our greatest swimming and gymnastics team we’ve ever had. He actually encouraged all the affiliates to make it their mission to make sure that their people in their market knew of all the great stories that were happening and the athletes from their market that were going. You’ve got an international story. You’ve got a national story. And in most cases you’re going to have inspiring local stories as well. There’s a huge opportunity. We have a catchy date, 8.8.08, and it’s a great promotional opportunity for our sports programming and our prime-time entertainment programming as we head into the fall season. It’s a great platform. There are so many great stories. NBC has been so pleased with the interest in the trials that we think that bodes well for the Olympics.
TVWeek: To wrap up: How would you describe for NBC and its local stations, affiliated and owned--the future, the outlook—because these are economically stressed times.
Mr. Eck: Of course. Right now it may be a little more stressful because of a general weakness in housing and in autos, and I think everybody feels that across the board. But we’ve had this 60-year relationship with our affiliates, and we think broadcasting is a cornerstone of what makes the media industry great, but we can’t afford to stand still. We’ve got to be proactive and we have to be honest with ourselves and with each other about the environment and how audience fragmentation and technology have changed the game. We’ve got to be proactive about how we want to define our business as we go forward. That can’t be done on a unilateral basis based on how our business is organized, frankly. It’s a bilateral discussion with the affiliates.
We do think that the business is, overall, good and strong. We do think there are some refinements that need to be made in the business model, and we remind our affiliates, as much as anything, that in spite of the fact that we have 50% of our profits coming from cable, on the NBC television side we’ve got the Olympics, we’ve got “Sunday Night Football,” and we’re No. 1 in news, and the “Today” show and “Nightly.” We’re No. 1 across the board in late night, have been and will continue to do that going forward.
We bring a lot to them and they bring very important things to us, and frankly our relationship with our company, with GE, and the financial support that they have given us in the broadcast base and the fact that we have cable, allows us to have such exciting properties as the Olympics. If we didn’t have our cable portfolio, we wouldn’t even have a shot at the Olympics. You have to have those multiplatforms in order to make sure that you’ve got the great programming. All of the best content from the Olympics, the premiere events, will all be broadcast on the NBC network in prime time.