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NBC Universal TV: NBC Acquired Leverage, Wiggle Room With Uni’s TV Properties

May 30, 2005  •  Post A Comment

When Kevin Reilly was negotiating with NBC in 2004 for the job of president of entertainment the merger with Universal “was in the long-shot category,” he said, but as it turned out, the creation later that year of NBC Universal Television Group couldn’t have come at a better time.

When Mr. Reilly officially joined the company in May 2004, the Universal acquisition was a reality, bringing together NBC Studios shows such as “Will & Grace” and “Crossing Jordan” with Universal programming such as the “Law & Order” franchise and DreamWorks Television product.

The addition of the new broadcast properties provided something of a corporate buffer for the once-dominant network that was preparing to lose signature NBC hits “Friends” and “Frasier” (both sitcoms signed off last year). This season NBC has dropped from No. 1 to No. 4 among the broadcasters in the adults 18 to 49 ratings demographic.

“We would be extremely exposed right now under the old structure,” Mr. Reilly said, noting that with Universal’s TV properties and their resulting profits both part of the company’s broadcast television business, the television group overall is no longer so heavily reliant on NBC being the dominant network.

“We definitely have pressure trying to reposition the network now,” he said. “It’s nice to know some of the other guys are carrying the ball and [are] hopefully giving us some wiggle room.”

“Diversification has allowed us to make the merger a positive,” he added.

While the buffering aspect of the deal may appeal to Mr. Reilly, Hollywood insiders said the acquisition’s most significant benefit to the network is the shift in leverage when it comes to the prime-time powerhouse that is “Law & Order” and its spinoffs.

The creator of “Law & Order,” Dick Wolf, previously was based at Universal. With the acquisition, he is now based at NBC Universal, so now NBC is negotiating with-and paying-itself when it extends a “Law & Order” franchise for additional seasons.

Renewals of popular series can get contentious and expensive for a network, especially for a franchise of this magnitude.

So not only is the network saving itself the pain of renewing an outside company’s series, its bottom line also is reaping the benefits of the series’ back-ends.

“[Bringing Mr. Wolf’s series into the corporate family] alone was a $500 million value,” the agent said.

In recognition of the combined volume of NBC Universal Television Studio, Mr. Reilly has divided his development staff, with a team focused on in-house production and another team working solely with studios outside NBC Universal.

“The business itself has undergone a very radical transformation over the past five to 10 years with vertical integration, but we have pretty much the same development structure, development cycles,” Mr. Reilly said.

Mr. Reilly said that while consolidation within the industry has its corporate benefits for companies such as NBC and Universal, it can have a downside when it comes to the creative process of developing new programming.

“For the talent, one of the challenges of vertical integration is everything funnels up to less access points,” he said. “If a particular writer has fallen out of favor with particular executives, it’s possible that talent could be locked out of the system.”

The goal, Mr. Reilly said, is “to get more hooks in the water” and allow executives to make programming decisions that are good for the network without worrying about the larger corporate impact.

“They have no other agenda than bringing in the best product to NBC,” he said of his executives who are focused solely on projects from outside companies.