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NBC Confronts Reality

Oct 23, 2006  •  Post A Comment

Airing cheaper programming at 8 p.m. may help NBC’s bottom line, but advertising buyers said it’s unlikely that the other broadcasters will follow the network’s lead.

The move to offer unscripted shows, such as reality and game shows, rather than more expensive scripted fare early in prime time is part of a $750 million cost-cutting initiative unveiled by NBC Universal last week. The company said it plans reduce its staff by 700 and consolidate some of its news operations as part of NBCU Television Group CEO Jeff Zucker’s so-called NBCU 2.0 plan.

For a decade, NBC was the dominant network with comedies and dramas that attracted a large and upscale audience. Those shows got old, their replacements didn’t thrive, and in the 2005 upfront advertising market, NBC’s ad commitments dropped by about $800 million to $1.8 billion.

This season, the network launched several big-budget shows such as “Studio 60 on the Sunset Strip,” but most of them have disappointed.

“If they had got out of the gate infinitely better than they have been, maybe they wouldn’t have to make moves as dramatic as they’re now saying they’re going to,” said Shari Cohen, president and co-executive director of national broadcast for MindShare North America.

Betting on unscripted shows lets NBC aim for a big hit similar to Fox’s “American Idol” while keeping costs in check. Already, NBC’s “Deal or No Deal” and “1 vs. 100” are helping to buoy the network’s ratings. But the genre has been marked by flash-in-the-pan successes, and some ad buyers point out that other networks are winning their gambles with scripted programs in the 8 p.m. hour.

“In some ways they’re taking the economically safe path by saying that there are shows that they paid a lot of money for, and they’re not working, so why not set ourselves up and try something different from a cost standpoint that might be better,” Ms. Cohen said.

NBC’s shift to reality in the 8 p.m. time slot comes in the context of struggles at other NBCU businesses. MSNBC perennially places last in the ratings among cable news networks, and the company’s new syndicated talk show featuring Megan Mullally is overshadowed by competitors.

The cost cuts announced last week make sense in the context of media companies’ need to adjust to a changing business, Ms. Cohen said.

“They’re trying to position themselves for where the greatest upside is, and clearly the upside is not necessarily with NBC television networks, it’s some of their other assets and some of their digital platforms,” she said. “Content is living on a variety of different platforms.”

Still, networks and advertisers are feeling their way along as they adjust to new technologies. Out of the $1.9 billion that NBC took in at this year’s upfront advertising market, just $250 million in deals contained digital components.

“In an ideal world, we’d have high-rated shows that are top-quality, that are synergistic with our clients and their brands and lend themselves to living across many platforms,” Ms. Cohen said. “But that’s few and far between.”

NBC’s decision to favor less-expensive reality programming in the 8 p.m. hour may be helped by a shift in advertisers’ perception of a genre that some once snubbed.

Historically, advertisers preferred the toney environment of scripted shows.

“Reality shows are now part of the network landscape,” said Ray Dundas, group director of Initiative’s national broadcast department. “Advertisers aren’t as turned off to reality programs as much as they once were.”

The change in perception has been helped by a movement away from cutthroat competition, said Sam Armando, senior VP media director for Starcom.

“Now we’re seeing clean competition,” Mr. Armando said. “Think of things like `Extreme Makeover: Home Edition’; you see a heart-tug reality.”

Even if advertisers buy in, it’s unclear how much reality can help NBC in the long run due to the short life spans of some reality shows.

Ad buyers took issue with NBC’s contention that advertisers don’t support 8 p.m. shows, one of the network’s justifications for cutting costs in that hour.

“We’ve never had a client come to us and say we wanted to avoid a specific hour,” Mr. Armando said. “We buy programs, not time slots.”

Mr. Dundas noted that because the number of homes using television in prime time is lowest at 8 p.m., it’s more challenging to attract an audience. Nevertheless, shows like “Survivor” and “American Idol” and new programs such as CBS’s “Jericho” and ABC’s “Ugly Betty” are drawing substantial audiences in the 8 p.m. hour.

That kind of success shows that good programs will find an audience, Ms. Cohen said, noting that even obscure cable networks have breakout shows.

“It’s hard to put on quality, but people will gravitate to quality no matter where it is,” she said.

That means NBC may be alone with its reality at 8 p.m. strategy.

“I don’t think the other networks will rush to do the same,” Mr. Armando said.

NBC will field its 8 p.m. reality shows in a television environment much different from when the network enjoyed ratings glory with shows like “Friends.”