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Zucker to Studios: Think Web, Phones

Mar 13, 2006  •  Post A Comment

Jeff Zucker is putting television producers on notice: NBC Universal expects them to deliver shows with a package of content suited for mobile phones, video-on-demand and the Internet.

Mr. Zucker, CEO of NBC Universal Television Group, is trying to burnish his networks’ appeal to advertisers and audiences by finding new ways to distribute programs. When NBCU presents shows to ad buyers this week, it plans to demonstrate some of the new formats in hopes of spurring interest.

“What it really means is producers can no longer just come in with a TV show,” Mr. Zucker told TelevisionWeek. “It has to have an online component, a sell-through component and a wireless component. It’s the way we’re trying to do business on the content side, giving the consumer ways to watch their show however they want to watch it.”

NBCU’s push to deliver shows in different ways reflects a struggle by television networks to grab viewers who expect to watch programs when and where they want. It also sets the stage for a conflict between networks and producers over who will profit from new forms of content. Mr. Zucker’s initiative, dubbed “TV 360,” may give him a way to bolster advertising sales as the broadcast network languishes in fourth place.

NBCU’s plans for its program development presentation this week reflect Mr. Zucker’s priorities. For the first time, Jeff Gaspin, president of cable entertainment and cross-platform strategy, will join NBC Entertainment President Kevin Reilly on stage to address advertisers.

“We’re looking at our upfront this year in a much different way than ever before,” Mr. Gaspin told TVWeek. “This is an opportunity to show them some of our new platform, new media ideas before we’re certain which shows are selected.”

The initiative advances the twin goals of building television audiences and finding new sources of revenue, Mr. Zucker said. The company is also considering making some shows available on NBCU’s Web site, offered in either a pay-per-view format or supported by ads, he said.

Mr. Zucker is building on other efforts to distribute shows through new channels, including sales on Apple Computer’s iTunes Music Store, interactive features on some of NBCU’s cable networks and last week’s $600 million purchase of the iVillage Web site, which targets female audiences.

With new forms of delivery may come new fights over who will profit most.

News Corp.’s 20th Century Fox, which produces NBC’s hit “My Name Is Earl,” isn’t willing to cede revenue that the show may generate through new distribution channels, a studio spokesman said.

Fox, which has a mobile entertainment unit that has produced cellphone content based on “24” and “The Simple Life,” would probably insist on reaping the financial gain from any material based on “Earl,” the spokesman said.

Currently, most digital projects generate little more than they cost. NBCU’s iTunes sales generate “incremental dollars,” Mr. Gaspin said. Text messaging also generates revenue, but phone companies take the biggest cut, he said. With “Deal or No Deal,” the producer, Endemol USA, split revenue with NBC after the phone companies were paid.

The networks and studios sometimes split expenses, Mr. Gaspin said. The new content doesn’t necessarily cost much because short format pieces can be fashioned from takes that would have ended up on the cutting room floor.

“For many, many shows you overshoot-reality shows in particular,” Mr. Gaspin said. “To some extent there’s no additional costs because there is so much content.”

NBCU has paid NBCU Television Studio-the producer of cable hits “Monk” and “Battlestar Galactica”-for costs incurred to produce Web episodes.

“You’re not producing these in the same way you produce a series; you’re not doing multiple takes,” he said. “You’re not making sure it’s perfect because to some extent the rawness is what the content on the Web is about.”

Show outtakes currently are property of the studios, and networks negotiate the right to use them as promotions.

NBCU’s demand for Web, cellphone and Internet programming will force some producers to change how they do business. Not every show will be accompanied by cellphone and Internet material, Mr. Zucker said.

“I don’t want to make it a hard-and-fast rule, but certainly I think everybody knows that that’s what we’re looking for and it’s really the way we’re trying to do business on the content side,” Mr. Zucker said.

Studios more often than not understand the promotional potential of new forms of distribution, Mr. Gaspin said. Putting episodes of “The Office” on iTunes helped create buzz for a show that needed a ratings boost. Soon after NBCU began selling programs through the online store in December, “The Office” accounted for about one-third of the company’s content sold on iTunes.

“The Office” chalked up record ratings Jan. 12, shortly after becoming available on iTunes and shifting to Thursday nights.

Last week NBCU had three shows in the iTunes top 10: “The Office” at No. 3, Sci Fi’s “Battlestar Galactica” at No. 5 and an episode of Bravo’s “Project Runway” at No. 7. The company has also promoted “Conviction” and “Top Chef” on iTunes, offering free episodes to stoke audience interest.

Mr. Zucker’s cable networks have led NBCU’s attempts to engage viewers who want entertainment on the television and other gadgets. “Project Runway” offers viewers a text-messaging feature that lets them know what contestants are thinking at the same time the show is appearing on cable. USA’s “Monk” features Web episodes and online games.

Those features may have helped boost ratings at NBCU’s cable operation, which as a whole posted a 9 percent increase in ratings among adults 25 to 54 during the fourth quarter, according to Nielsen Media Research.

Mr. Zucker wants to extend that success to his broadcast network, which last season fell to fourth place among audiences from first and which had to lower prices during last year’s upfront, resulting in about an $800 million decline in advertising commitments compared with the previous year.

“We’re looking to have some 360 opportunities with some of the new programs that will come on in the fall,” Mr. Zucker said. “Everything is part of the new deal when the deal for the script is made. We’re incorporating each of these aspects into those deals, and I think everybody is understanding this is the new way of doing business.”

Advertisers are eager to reach consumers on cellphones and the Internet as viewers drift away from scheduled network television. Zucker’s push to reach those audiences makes sense, said Joe Uva, CEO of media buyer OMD.

“I do believe that’s the kind of thinking that is going to help companies keep dollars within their portfolios,” Uva said. “If money is going to leave the mothership, as it were, make sure that you’re catching it and it’s staying within your coffers.”

Delivering shows on cellphones, the Internet and VOD fits a new paradigm of advertising in which audiences are defined more by their interests than their demographics.

“Today it’s about ‘Who did I just transact with and what can I sell them tomorrow?'” Mr. Uva said. “I know they love ‘Earl,’ so I know the more ‘Earl’ content I can give them, whether it’s on a PDA or a cellphone or a Web site or a blog or on TV, I can capitalize on that.”