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NBC Shakeup: Game-Changer

Consolidation, Leno Show Stun Observers

When Jeff Zucker took over NBC Entertainment in 2000, he was all about supersizing. Now the buzzword is “right-sizing” for Mr. Zucker, who as NBC Universal chairman is in charge at a time when his broadcast network is undergoing some of the most radical changes in the history of the medium.

Over the space of 24 hours last week, Mr. Zucker’s deputies at NBC unveiled a series of on- and off-air changes that left industry insiders in all areas of the business stunned. When it was all over, the fourth-place network had blown up its entire development structure, fired nearly all of its senior creative executives and sharply reduced its programming costs by replacing nearly one-third of its prime-time lineup with a low-cost, hourlong comedy talk show hosted by Jay Leno.

“With all these moves, NBC has decided that the ankle bone is no longer connected to the leg bone,” one well-respected industry executive said. “There’s a chance they’re right, but there’s also a significant chance that NBC just took a sledgehammer to the leg bone.”

Another veteran executive summed things up succinctly: “This is seismic.”

Indeed, like a California temblor, last week’s developments came in waves, one right after the other.

First the news leaked out Friday, Dec. 5, that Katherine Pope and Teri Weinberg, the top creative executives at NBC Entertainment and Universal Media Studios, were being axed. On Monday, Dec. 8, NBC followed up by combining its studio and network operations, laying off most of the senior creative executives from both.

NBC Entertainment Co-Chairmen Ben Silverman and Marc Graboff had barely finished a round of interviews with reporters to discuss the reorganization when the biggest bombshell dropped: Starting in the fall of 2009, NBC—the network of “ER” and “Hill Street Blues”—would abandon scripted programming weeknights in the 10 p.m. hour in favor of a new comedy talk show hosted by Jay Leno.

While everyone agreed Mr. Zucker’s roll of the dice was big, there was no similar unanimity of opinion about what it all meant.

Some argued the moves—particularly the decision to strip Mr. Leno at 10 p.m.—represented a shrewd Hail Mary pass that will help NBC survive what promises be a rocky couple of years for network TV as shrinking advertising revenues and DVR-fueled ratings declines continue to batter the ancient network business model.

They see the downsized role for the broadcast network as appropriate, given the far more favorable money-making potential for red-hot NBC Universal cable networks Bravo, Sci Fi and USA.

“It’s good for their business, even if it’s bad for our business,” one agent said, referring to the money NBC might save by airing fewer scripted shows in prime time. One top network executive estimated the Peacock now spends about $150 million per season programming dramas at 10 p.m.; the cost of Mr. Leno’s show could be as little as $80 million. However, since Mr. Leno will produce new episodes during much of the summer, the overall price tag might be somewhat higher.

As for NBC’s new downsized development team, industry insiders predicted it could have more success finding hits, since the network’s needs have been reduced, allowing executives to focus on fewer—and presumably better—projects.

But at its core, NBC’s stunning week was about saving money at a time when many media organizations are struggling just to survive. One insider estimated that by combining the cost efficiencies gained by the studio-network merger and the elimination of 10 p.m. dramas, Mr. Zucker just saved GE shareholders as much as $150 million.

At the annual UBS media conference in New York last week, Mr. Zucker made it clear that he felt NBC had no choice but to do things differently.

“The broadcast model cost structure is going to continue to need to be redefined,” Mr. Zucker said hours before news of Mr. Leno’s new gig leaked. “If we don’t, then the broadcasting networks will end up like the newspaper companies or, worse, like the car companies. We’ve got to right-size our models today in a way that those companies and those industries did not.”

Skeptics, however, insisted that this month’s radical makeover of NBC Entertainment is anything but revolutionary. They consider it the latest in a series of short-sighted (and short-term) plays that have left the struggling division of the otherwise thriving NBC Universal severely weakened.

“NBC was an amazing network,” one top Hollywood agent mourned. “It motivated me to be in television.”

An executive at a rival network bemoaned NBC Universal’s seeming lack of passion for the show part of the business. “They look at TV like a widget business,” he said.

And at a luncheon panel in Hollywood last week, a number of producers were openly hostile toward NBC.

“I’m wondering if NBC is publicly transforming itself into AM radio,” said James Duff, executive producer of TNT’s “The Closer.” “They’re actively participating in their own demise.”

NBC executives insist they’re not giving up on scripted shows—or even spending less money on them. Instead, they promise to program more original hours at 8 and 9 p.m. by cutting back on repeats and having series share time slots, as they do on cable.

The mixed reaction to NBC’s shakeups isn’t surprising, given the far-reaching impact the changes will have across the TV business.

Financial analysts no doubt will applaud the positive impact the moves may have on NBC’s bottom line. Advertisers were already hopeful that Mr. Leno’s new role will offer more opportunities for prime-time product placement, since his unscripted format is far more amenable to integration deals than the quality dramas that once filled NBC’s 10 p.m. hours.

Hollywood types, however, saw little upside in any of NBC’s actions.

The merger of the network and studio put a slew of respected executives out of work. And the loss of the 10 p.m. timeslot to Mr. Leno will result in less employment opportunities for those who toil in the scripted world, a part of the business already under seige thanks to the rise of reality shows.

“Five hours of prime time lost means 50 writers and 50 actors and 50 directors are out of work,” a senior TV agent said.

However they greeted last week’s NBC earthquake, most industry insiders seemed to concede that given the general condition of the media economy—and the specific problems facing the Peacock—Mr. Zucker and his team probably had no choice but to act.

“They realized that the music was about to stop, and they didn’t have a chair,” one TV wag who’s run multiple networks said. “These moves are just a last-ditch effort to at least grab a section of a seat.”

Comments (4)

Jeff:

While I wouldn't mind having Jay Leno on one night a week(say, make an evening of it with "Dateline" at 8, "Law & Order" at 9, and Leno at 10 p.m. on Wednesday nights), I hope Mr. Zucker isn't treading into some dangerous territory by spreading Jay a little thin. For him to succeed, he would have to call up the spirits of Jerry Lester and Morey Amsterdam(alternating hosts of "Broadway Open House," precursor of "Tonight" in the early '50s), Steve Allen(original "Tonight" host, 1954-56), Jack Paar(his successor, who brought controversy to the job with his selection of guests, subject matter, and the occasional home movie, who netted a Friday at 10 timeslot for a couple years after 1957-62 on "Tonight"), and, of course, the venerable Johnny Carson(1962-92). All brought a needed variety and, certainly, creativity to the late hours. (Perhaps I should be relieved he didn't suggest Kathy Griffin, Bravo's in-house loose cannon, who holds forth on that channel with "My Life on the D-List," a wacky, almost no-holds-barred reality series set around her career and personal affairs. She gets bleeped more often than the late, great Buddy Hackett ever did when he guested on "Tonight" with Carson.)

Sanjivi!:

Interesting article.

NBC has not had a sound programming chief with both feet on the ground since the late Brandon Tarticoff.

Smart and savoy he was, but more so, he chose programs from a gut level. Does it breathe? Is there a heart beat to the project?

Jeff is a good corporate think caretaker who lacks forward vision.

This is not brain surgery to choose solid programming that people will watch...it just takes a genuine belly laugh or a heartfelt tear to know people will be touched...people will get it. Want more? Call me, no more for free.
Peter Bright

Michael Smith:


The articles says,

"One top network executive estimated the Peacock now spends about $150 million per season programming dramas at 10 p.m.; the cost of Mr. Leno’s show could be as little as $80 million"

I think this fails to state NBC's full current 10pm programming costs. What about the cost of Dateline at 10p Fridays?

Plus the $150 million drama cost estimate seems awfully low. Assuming $3 million per episode for a scripted drama, with 22 new episodes to fill a 52 week year with 28 repeats or preemptions, and 5 series to cover M-F, it would cost at least $330 million. Add to that all the development costs and the cost grow even higher.

So the Leno move could save NBC more than $250 million. Leno could do less than half the ratings of their current 10pm fare and they'd still increase their profit.

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