NBCU Sold on One-Stop Shop for Network, Cable Ad Sales

May 30, 2005  •  Post A Comment

When NBC last year acquired the cable television assets of Vivendi-Universal, it combined the ad sales operations of its broadcast and cable units. In doing so, it became the only major media company to put such natural opponents under one umbrella.

It’s a strategy that is “working very, very well,” said NBC Universal Networks Group President Randy Falco, who devised the structure and intends to keep it that way under Keith Turner, president of NBC Universal Sales and Marketing. Mr. Turner reports to Mr. Falco and has overall executive responsibility for NBC Universal’s TV sales.

In an effort to create a unified, one-stop shop for TV ads, NBC Universal has standardized some significant elements of selling television advertising. Among the changes since the Universal acquisition is the company’s extension to cable of its broadcast policy of not accepting liquor ads.

Also in the year since installing the new structure the executive lineup has started to evolve. Jeff Lucas, who was senior VP in charge of ad sales for NBCU’s entertainment networks, left the company at the beginning of May to become head of ad sales for Comedy Central, and Hannah Gryncwajg, the head of sales at Bravo, left in April. They both will be replaced.

The rivalry between the broadcast and cable sectors in recent years has grown increasingly intense as cable has begun demanding-and getting-more of the advertising pie, to the detriment of broadcast.

But putting the adversarial ad sales operations together at NBC Universal was hardly a radical decision, Mr. Falco said.

NBC already had a couple of small cable networks-MSNBC and CNBC-and those sales operations had been combined with NBC’s setup.

“It occurred to me at the time that it was a much easier and customer-friendly approach, because the dirty little secret in our business is that customers really don’t like to buy cable as much as they speak to the contrary. It’s difficult. It’s a little clumsy. There’s a lot of different people to talk to because there are so many different networks. There’s a lot of inventory to keep track of,” Mr. Falco said.

“What I was trying to do was just create a more user-friendly environment for our customers and also make it easier for us to manage the inventory from within, because it gives you the ability across all those different platforms to identify where the unused inventory is,” he said.

In the case of the liquor ads, it meant a change for the cable networks, which were able to sell ads for liquor before the merger but can’t now under NBC’s policy. If a cable network had a deal in place, it was honored, but USA, Sci Fi and Bravo are now among the minority of cable networks not taking liquor ad dollars.

NBC Universal’s unified sales operation presents “one face to the customer, and we also thought that in a time when people are shopping for solutions, in a time when people are looking to break out of the clutter, that we would be in a better position if we had one view of the marketplace and one view of all of our content to be able to satisfy our customers’ need for different solutions,” Mr. Falco said.

But in recent weeks, some of the faces at some of NBCU’s cable networks have changed.

“What we try to do is have a go-to person for the people who run those channels,” he said. “So somebody like Bonnie [Hammer, president of USA Network and Sci Fi Channel] will have somebody like Jeff Lucas, who would be the go-to person on the sales side. It’s organized in a way that every one of the managers or brand managers will have somebody on the sales side as a go-to person.”

Too Little Autonomy?

Some observers said they look at the executive departures as a sign that the ad sales consolidation has given NBCU’s cable ad sales staff too little autonomy and authority.

Mr. Falco disagreed. “If I thought that it did and we weren’t operating in the most efficient way, then we would change.”

He said NBCU’s cable salespeople aren’t sitting back while their broadcast counterparts do all the work. “Basically, Jeff Lucas, he ran his own shop. He had the entertainment cable properties and the only issue was he collaborated with the rest of the sales organizations to see if there were other things that we could do with customers beyond just what he was selling,” Mr. Falco said.

While there are differences between selling cable and broadcast, “We do have the same customers. That’s really the most important thing,” he said. “What we thought was important was that people understood that if they wanted to buy a certain demographic or a certain kind of a customer, a certain kind of a viewer, that you could offer them that same viewer across the NBC television network in prime time and maybe even in Bravo and maybe in certain shows on the USA network-that they didn’t have to go to five different people to get the same answer.”

Having a unified sales operation also means NBCU has no need for a unit that specializes in multiplatform deals, such as Viacom Plus or Disney Unlimited.

“That’s the differentiator. I don’t really think in the end a separate cross-platform group is really the way to go. I don’t think that’s what customers are looking for,” Mr. Falco said. “The best way to do it is with one face to the customer, and the best way to do it is to have an organization that has a single view of the marketplace as opposed to several different or separate views of the marketplace that are never shared with their colleagues.”

Mr. Falco said he thinks NBC has gotten its fair share of the multiplatform business, even though NBCU is rarely in the news for those kinds of multimillion-dollar packages. NBC’s deals are not “the big cross-platform P&G multimillion kind of deals because in the end, those tend to be discounted deals, and that’s not what we’re interested in. We try to provide solutions to our customers that are in their best interest and in our best interest.”

NBCU is looking at having its salespeople cooperate beyond advertising, whether they sell cable networks to cable operators or DVDs to Wal-Mart.

“We tried to get everybody around a table that we call the commercial council and also talk about all the deals that were being done in the company,” he said. “How could we best satisfy customers? Are we being as efficient as we possibly could? Could we help each other out? Is there a piece missing that a customer is looking for that somebody across the table could help you with, both in terms of content, or maybe a commercial solution or a marketing solution?”