TelevisionWeek Spotlight Series: A Conversation With Bob Wright

Oct 24, 2006  •  Post A Comment

TelevisionWeek: I’ve known this gentleman for a few years, and Bob was kind enough to say that he’d do this, so we’re just thrilled. So it’s going to be a conversation between myself and the Vice Chairman of General Electric and the Chairman and CEO of NBC Universal, Mr. Bob Wright. … I guess the obvious question coming out of that is you have done this 20 years. How much longer do you want to do it?
Mr. Wright: About another 15.
TVWeek: OK. So you’re pretty excited about the changes in the business.
Mr. Wright: Well, it is—this is a cycle that is just as deep as the one when I first came in. The one when I first came in was the issue about how is cable television was going to fundamentally impact the network business and does the network business have three or five years left in it.
TVWeek: Right.
Mr. Wright: That was the premise. And I had been on that cable television side so … now we have drifted all the way through that and we drifted through 200 cable channels—mostly digital cable channels—and all sorts of different models, business models, and satellite, and now we’re dealing with another issue here which is the Internet and other forms of media and advertisers’ interest in wanting to connect advertising with fulfillment, with direct requests, with being a part of selling goods or services or connecting directly. And that’s going to be a good chunk of time before that all settles out. So I don’t know if I’ll still be here at the end of that cycle, but it is an exciting cycle to be in right now.
TVWeek: Right. One of the things that’s very interesting …and you did this recently… you were talking just a minute ago… you were mentioning your interest in international and I know Mr. [Peter] Smith has just been appointed for you guys. Can you talk a little bit—I think he was quoted in Financial Times saying he was going to try and double the revenues from your various oversees ventures. If you can, maybe speak for a moment of that.
Mr. Wright: Well, when before we merged with Universal, we had a limited oversees business. It wasn’t for lack of trying. You probably remember, but … back in the early ’90s we went to Europe and Asia. We went to London and Hong Kong and we launched CNBC, and we also launched NBC International.
We had a version in China, and we had a version in Europe. And we were just ahead of ourselves on that one. We couldn’t get the advertising dollars. We couldn’t get the right connections. In fairness, we also couldn’t get the right programming in many cases to fit the market, and the terrestrial television was just so strong at that point in time, it was hard to break in with cable or satellite programming.
But when we merged with Universal, it gave us a good deal more heft because of their international theatrical distribution business, their international home video business and also because of the sale to television network stations around the world that Universal has been doing for years—packaging its own television product with its film product and now all of our products.
So Pete Smith is a very able guy. He was originally one of the Polygram people, like Rick Finkelstein. They tend to be very scrappy, very knowledgeable, and he’s been in the home-entertainment business for a number of years. So he’s going to head up our effort to grow and probably to try to coordinate some of our international activity, the rooftops, and try to make sure that we have the best home video and theatrical distribution we can have in Japan or Germany, critical countries where you often feel that there’s something else you’re missing.
TVWeek: Is it because of Universal’s involvement, or was there a particular tipping point in the various marketplaces that you see internationally that you think that this is really the time to go after those markets?
Mr. Wright: Well, there’s a lot happening in television and the model that we see here in the United States. The digital cable model is essentially what is happening, with terrestrial frequencies being auctioned off outside the United States, and there isn’t enough results of these. The only place that’s really done it is the U.K., but it’s still not long enough to really determine.
The question is, can you have a niche or a narrower service that only has advertising as its support and it has no other fees, no other revenue? And I think that in the United States that’s a tough model. It’s a very tough model, unless you have a very low cost in the program.
So you either are a very, very inexpensive producer, or you’re using library material or material that you otherwise own or control, with very little incremental cost. Because when you get down to these niche levels and you don’t have sub-fee support, it’s very hard. I was there at the beginning with CNN and ESPN, and we all knew that. It was like we all knew that. We knew that these cable channels could not operate on advertising alone.
So the cable industry came together and said listen, we need growth. If you people will provide some really good, different programming that isn’t on the broadcast networks, we’ll give you fees. We’ll financially support that because we know you can’t make it on the advertising alone. And that began a period where a wonderful model was established. And it was an advertising model, as opposed to the HBO premium-service model. And it has held up all these many years. But at some point the number of channels … The cable industry and the satellite people say, well, we aren’t prepared to provide all of you with fees, so … most of you if you want to come in now, you’re gonna come in on the fee-less proposition.
Some even pay then. Well, that’s going on now around the rest of the world, and most countries are looking at launching new services, auctioning them off, probably a lot of them will go to media companies that already exist or media companies who already licensed, and some of them will be auctioned off to others. Some of them you’ll be allowed to invest in, and trying to figure out where we fit into that is, I think, an important issue.
TVWeek: You mentioned satellite. There’s been a lot of news lately obviously of what may or may not happen between Rupert Murdoch and John Malone. From where you sit … you think John’s going to end up taking DirecTV and try to deal with Charlie [Ergen] and EchoStar?
Mr. Wright: Well, I really don’t have any particular knowledge about that, but I would say that’s gotta be a good chance. I’m sure that News Corp. would like to get that 19 percent—that’s a big chunk of stock, regardless of whether they’re a control corporation or not.
TVWeek: Right, which Liberty owns now.
Mr. Wright: Yeah, and I don’t [think] that Liberty can do anything with it really other than sell it back.
TVWeek: Right.
Mr. Wright: They could wait and try to deal with the family in some future point.
TVWeek: And John wants a tax-free deal as always, right?
Mr. Wright: Sure. And he’s been in the satellite business. He wanted to be in the satellite business, so it would not be surprising that he might do that.
TVWeek: Is it a good business?
Mr. Wright: Well, I think it’s certainly an operating business that he knows something about, and I think Chase Carey has done a very good job with it. It’s tough, I think, from an investor’s standpoint of a public company, because they’re always holding up this issue that gee, cable can—you know, is it triple or quadruple play? …
And you’re really a video play, and you have a hard time being a broadband play, and you have a very difficult time doing telephony and so forth and so on. So that issue has gotta kind of work its way through the system, I think to keep the investment moving along. And cable looks like it has an advantage, at least in the United States, because they have been so aggressive in these other forums. And they’re using essentially the same plant.
TVWeek: What do you think about the telco entry into video and other data that has obviously been happening over the last six, eight, 10 months?
Mr. Wright: I think all that’s going to happen. If you’re managing a public utility, a telco public utility, and you’re relegated to fixing phone services, I mean, the margin could slip away from you very quickly and the customers could slip away from you very quickly. So you’ve gotta do something, and you have a rightful place, if you will, being in this kind of communication, both commercial and residential. … I think it’s very expensive for them to do it, but I don’t think that they feel they have much choice.
TVWeek: I also wonder how they’re going to manage it. I mean, one of the problems is—I used to have a friend who worked at GTE, and he said, “I’m getting out of this business because it’s long distance, the race to zero.” I mean, the problem is that they come in and they just, you know, continually get in these battles with cable over price … Where does that leave them?
Mr. Wright: Well, you know, that’s like Chapter 2. That’s a hard one. But you know, they have long staying power, and they still have access to their public utility. They have a regulated rate of return for their base business. … So maybe they’re getting smaller, but they will be able to get a return on it because they have access to public utility commissions. So that’s an advantage for somebody that’s getting in a new business that’s very expensive, requires a high level of investment—they’re used to that. … And it has long-term profiles of return. So, you know, they’re not illogical being in that situation.
TVWeek: It makes sense. You’d mentioned international. I know one of the things that you have now is obviously a partnership with [Televisa] to do something in Mexico. Obviously, you want them to do another channel. Can you talk a little bit about what may or may not happen with that?
Mr. Wright: Well, we have a production facility in Mexico City that we’re expanding. And we have a very large production facility in Miami. And we want to be a factor in Mexico. It’s very difficult for us to get our novelas in particular distributed in Mexico. And so we’ve got to figure out a way to do that. We know that popularity is not the issue now; they’re very popular. We’re doing very well with ratings in the United States, and we need to take that expertise and those programs down to Mexico. And that whole issue of cracking that distribution issue is a tough one. … So that’s a focus. Televisa has all kinds of entangling agreements with Univision. … most of which are all advantageous to Televisa, so I don’t think they’re going to be out of those too soon. So the question is what can they do. And can they really want to do something with us or not? It just isn’t clear. I think they would like to do something. They’ve expressed that interest, but they have to sort of make up their mind whether they’re really going to be a part of that investment group in Univision or not.
TVWeek: And you think the government in Mexico would allow another channel?
Mr. Wright: I think the government would allow it. I don’t know that the people that petition the government would allow it.
TVWeek: OK, fair enough. Speaking about Univision and Telemundo, obviously as you said, novelas and Telemundo are becoming more popular, but … Univision really still is by far a No. 1 force there, as you well know. How do you see breaking that stranglehold?
Mr. Wright: Well, we don’t have to break that. We knew what we were getting involved in. … We also didn’t pay $13 billion. And that $13 billion has clearly improved the outlook of the investment that we made in Telemundo by probably a couple billion dollars. So we’re very happy about that.
Our issue is not to overtake Univision. This is a very fast-growing market that still has real disadvantages to the general market. And it still doesn’t have the pricing of the general market, it doesn’t have the volume, it doesn’t have the advertisers’ support that the general market has.
There are a number of companies that have become very active in Hispanic advertising, but there are many companies out there that are hesitant. They just haven’t either gotten around to it or they’re not sure what type of money they have to put into advertising in order to reach it. I think that’s a very good future. And that’s what we bought into. We have roughly about, I don’t know, 30 percent probably of the advertising business of the volume of the transactional business that goes on in Hispanic broadcasting.
So our target is let’s get to 40, let’s get to 50. But it isn’t really about trying to get Univision to be five from 80 or whatever. So it’s not that at all, but we have plenty of room to do that. And when we went into the business we did not plan to be the producers of all programming. …
We had a deal with Globo. We had a deal in Colombia. We had several others—we had another Mexican studio production arrangement, but we really thought we would be taking a lot of what would be a lot of licensing—a lot of Hispanic programming. And that just did not work out. And we had to make a very tough decision about two years ago, which was to go from a licensing model which has one set of business plans … to a production model. … So here we are today, we’re producing more programming for Telemundo than we produced for NBC. We produce four hours of prime time a night. And it’s fresh all the time.
TVWeek: Right.
Mr. Wright: There are no reruns.
TVWeek: Right.
Mr. Wright: And we’re getting very good ratings. So that’s a big accomplishment, but it’s also a different business plan. So what we need to do is to be able to take that programming and put it in other places. We need to probably look at it as more of a production company, and maybe we should have outside investors, or maybe we should partner with other people in Hispanic media around the world for the programming part of it. …
And that’s kind of what we’re thinking about. But it is a very comfortable position for us, and we see a tremendous amount of upside.
TVWeek: And you like the position of [unintelligible] with the younger people and what’s happening with them.
Mr. Wright: Yes. I think it’s—you just don’t want to get ahead of ourselves too much. But we’re very— there’s plenty of audience room in here. … And Univision primarily runs Televisa [programming]. … They don’t run it exclusively, but they primarily run that. …
So we know what that programming is because it appears on Televisa six weeks or six months earlier. … So our programming is a little different than that. It is a little more connected to the U.S. It is a little more—it’s the similar story lines, but it’s more connected here, so they really can’t do that probably—they won’t do that in Mexico. … So we kind of know where they are coming from, which is an advantage to them, and we have to figure out what our advantage is.
TVWeek: Right. What do you think about bringing the novelas to the American audience? I mean, obviously some of that’s happening with MyNetworkTV having been big numbers.
Mr. Wright: Yeah.
TVWeek: So thus far and such. Do you think that’s a workable model?
Mr. Wright: I don’t know. It would be interesting to watch our competitors doing that. We thought that now is not the time to do that, in our opinion. But you know it’s hard today. That’s a long history. It’s a long history of viewers having watched these programs in Mexico and other parts of Latin American. So we don’t have that here in the United States, and I’m not so sure that just overnight that they’re gonna fall in love with that format.
TVWeek: Right. Obviously there’s been a lot of talk about, as we move into the digital arena, some of the places for young people that are pretty hot—MySpace, the obvious example, Facebook and such. NBC and Universal obviously made the investment in iVillage. What I’m wondering, iVillage is an established entity, it’s obviously got its followers. Does it really have quite the buzz these days with the younger people that a MySpace and Facebook do, and if not, what does that mean for you guys?
Mr. Wright: Well, we never thought of iVillage as MySpace or Facebook. Its purpose was … iVillage is much more of an analog Internet company.
TVWeek: OK.
Mr. Wright: It’s more of a publishing/Internet company and it was owned … and investors were principally publishers. But they do have 14 million relatively well-connected women—principally women—with them and they do have a very good sense of themselves, they have very good advertising relationships. It’s a place where advertisers can go and feel very comfortable, that they know it’s got a traditional type of an audience and is just reaching it on the Internet. What we saw there was the opportunity to connect that with television. We felt that the advertising base that iVillage has and can have greatly expanded, almost identical to the same base that we have on the ‘Today’ show, as an example. …
And the ‘Today’ show’s audience composition is very similar to the audience composition, and they had no video on iVillage. … And we thought that we could combine the editorial viewpoint of the two, especially in the 8:30 a.m. to 10 o’clock period of the “Today” show, and that would be a service to both the “Today” show and to iVillage. And that’s the process we were into today.
TVWeek: Well, with your stations you’re going to do the iVillage live?
Mr. Wright: Well that’s a different—that’s a different animal. … That’s actually a show that we’re doing as an original television show aired on NBC… it’s a fully integrated show. And it has a full Internet scope and reach, and it’s tailored to a combination of the Internet and that’s going up in December. That’s going to be done in the Orlando studios.
It’s going to be very exciting. This is a full-tilt experiment that I think is looking very, very promising. That’s different from—it has the name brand iVillage, but it’s a different show than what we’re doing with the “Today” show.
TVWeek: Right. You think it’s smart to have the O&O’s producing more programming?
Mr. Wright: Yes, yes. Where it makes sense—they drove this themselves. … They wanted to do this. Again, that demographic of Facebook is not what we were focused on. We’re not really a teenage or a kid’s network in any real fashion. We have shows, yes. We’ll have a lot of young people, but that’s not been our focus. … We also looked at the issue of—you know, it’s very challenging. If you’re the vice president of marketing for one of the packaged-goods companies or automotives or fast-food companies that we deal with on a regular basis, I mean, you’re overcome with options here. …
So where do you go? And how do you connect the dots? And yes, they could spend a lot of money in a lot of some of the newer pieces of new media, but they have to get reach, they have marketing plans they want distributed around the country very quickly. They know eight months in advance, they know what they want to do. They have distribution agreements. They have to satisfy, they have affiliates, you know, whatever. So television has been wonderful for them. And they want to make sure their message is—they want to control their message, they want to be thorough enough. You know, television 30-second spots work very well for them and get that message across, they can move it around. Now the question is, can they still do that and yet reach a lot deeper. …
So we’ve come up with this program we call “360,” which is trying to connect an advertiser with all the new media plus the business that we’ve had with them traditionally. …
We offer all of our services, plus we offer Internet and mobile and wraparound and product placement for that matter and all kinds of different ways to do that. We did it at the upfront. It was actually very successful. I think some people were surprised that we had 100 thought-out options that we offered people and you could pick from the 100. …
I think some people said, you know, we really didn’t—we weren’t looking for that much. Well, we were looking for it a lot cheaper, one or the other. It is doable. We have to get our head around it. and I think it’s—I don’t think we have a choice to do that.
TVWeek: Well, let’s talk a little bit about the digital model. Also, I take it one of the issues of maybe a MySpace or Facebook is also the price, I mean now, anyway. Maybe a little cheaper when Murdoch went after it, but …
Mr. Wright: Well,… it’s very hard to assess what the value is. You have to make an assumption. If you’re going to do any of those, you have to make an assumption that that’s going to be there for a long, long time. …
And it’s going to be similar to what you’re buying. Now we felt in iVillage that it would be there—10 years old. And we were one of the original investors.
TVWeek: Right, I remember that.
Mr. Wright: There are some people in this room, I think, that were investors with us. And that’s gonna be here in 10 years: parenting, beauty, health, astrology. They’re not going away in 10 years, and I don’t think they have a 10-year window on it. … So the question with the others are, you know, are they Friendsters … which was a very popular site, and you know all of a sudden became unpopular. … Nobody knew quite why. … Is it a Google or is it something else? …
And that’s where I think Dick Parsons said something or somebody said, you have to be—it’s much more of a gambling mentality if you want to go into that acquisition.
TVWeek: Sure. As you migrate more and more of your programs to various digital platforms, I mean, is the idea that you want it primarily as promotional material? You know, get viewers eventually back to the TV set? What exactly is your strategy there?
Mr. Wright: No, that’s how it originally was being developed. But that’s not the point anymore. It has to be connected to whatever the advertiser is seeking when they came to us in the first place. Is it building product awareness? Is it reinforcing product sales? Is it launching new products? Is it getting people to make a commitment on some particular product or feature right now?
Whatever that issue is, digital is a way to help do that. So it has to be connected in there. One thing I think we’ve learned over the last couple of years is that some of the reality shows that we’ve been—now we have a … “Deal or No Deal” is a perfect example, you think of “Idol,” “Deal or No Deal,” “Survivor” to the extent that it’s been around now for a number of years, “Dancing with the Stars,” these shows truly connect with audiences beyond the television piece. …
They want to talk about it, they want to chat about it, they want to vote, they want to participate, they want to select pieces or whatever. They want to be involved in the production of the show. That is not the case for most of the shows, most of the scripted programs. And I think it’s crazy for us to deny that interest because it’s very, very strong. And that’s part of the whole new wave of television, and in some respects it’s going back in time. … You know, when you had programs that were fully sponsored, where the products of the sponsors were in the show, where the sponsors were in the show, literally. …
The president of the company might be in the show explaining that so all of that sort of connection is one level. The next one is to actually get viewers to intermittently be connected. And we have—I don’t know, I think we’ve had about 50 million, we’ve had 50 million callers, unique callers, into “Deal or No Deal” since it went on the air last spring. That’s unbelievable. OK, so that’s not a big a show as “Idol.”
TVWeek: Right.
Mr. Wright: “Idol” is in its own category. It’s a pretty big show, though, right now. And the same would be true with “Idol” and some of the others. And harnessing that and embracing it as, you know, a true value here. When we do that on USA, for reasons that are hard to explain, with our country-western context, we do OK, but we can’t generate that level. We just can’t generate that level of involvement. So broadcast seems to be a comfortable place. People seem comfortable that broadcast is the place for those kinds of shows and they’re willing to join in, in some level of participation.
TVWeek: As more and more of these shows migrate—some of them obviously without advertising—is there a time where maybe, I mean the consumer is going to tell us whether they want to see the shows with commercials and pay 50 cents or pay $1.99 without commercials. If it comes to a point where a lot of them have seen this without commercials. What is the implication there for the advertiser and for the model of traditional broadcasts?
Mr. Wright: Well, that would be a good implication. If a lot of people want to do that, we’ll be very happy to accommodate. …
I don’t think there’s a money issue in the advertising side. I think there is a selectivity issue. But if that’s what people really want to do, I think there is plenty of money to support the advertising to do that. I don’t know exactly where it would be coming out of, but I would guess it might be coming out of other forms of direct marketing. There’s plenty of other budgets out there that would be susceptible to that before you get to traditional television advertising.
TVWeek: Right. … Should the advertisers be worried that people are wanting to see their media, their content, when they want to see it and, you know, whether it’s TiVo or whatever, a lot of that is without advertisement?
Mr. Wright: That’s a factor out there. On the other hand, a lot of that, without advertising, has got a tough game going forward, in terms of how it makes money. …
So, you know, I really don’t worry too much about services that have no advertising and no fee structure, because my assumption is that long-term it’s not gonna be there. So I worry about people that have a good economic model and they’re taking viewership away—that’s a different issue. A lot of what we’re talking about is not that. It’s experimentation. People don’t realize how expensive good Internet sites are. They’re very expensive to operate. And streaming video is expensive. …
And, you know, you can only do streaming video for so long before you got to start—somebody’s gonna be paying the bills. … It’s not inexpensive at all. So I think inevitably you’re going to have advertising support for a lot of these services, or they’re not going to be around.
TVWeek: Right. What do you think the long-term prognosis is for TiVo, because I think you guys were one of the initial investors.
Mr. Wright: Right, we were. Still are. Still have a piece. Well, TiVo is a great—it’s a great brand, and it’s a great piece of software. It is. It’s software that’s in navigation, it’s in a lot of different aspects of television use. And I think the issue that Tom Rogers of the company has to make is to whether they really want to be an operating company or they want to be a licensing company.
You know you can make a case—I think it’s easier to make a case as a licensing company than it is as an operating company, but they’ll have to struggle with that and decide which of those—which one or the other of those they are. They have a lot of patents, and I’m sure they can exercise those patents in lots of ways in companies that spend a good deal of money, it appears to me,to try to get around them in terms of their offering. But they’re a good brand and they represent something that viewers, once they become accustomed to it, like. So I would think that software will be around with us for a long time. They just have to decide: Is it licensing or operating?
TVWeek: Were you surprised by how successful the iTunes phenomena has been—downloading to small devices?
Mr. Wright: A little bit, but I wasn’t surprised. I wasn’t shocked, but Steve Jobs came to us back in the fall of 2005—no, the spring. … He said he wanted to do this. And they had worked out a system that they thought was extremely elegant from a consumer standpoint, and they had some research that they had done that said that people wanted it. But I thought—what I was impressed with is that they really felt that this device, which they didn’t show me or show us, met all their criteria for consumer acceptance. …
When we saw it finally in the fall, it did. They delivered what they said they were going to deliver, and it worked from day one. And I think that’s half of the battle, because up until that point in time everybody was talking about watching pictures on a tiny little box that implied you have to be doing a lot of things to make it happen or whatever. I think it became slick and cool and efficient and wonderful.
TVWeek: His last announcement was the iTV, where you can take that and then transfer that to the television. Looking at your crystal ball, is that going to be a big hit or—
Mr. Wright: Well, I don’t know. That required some more equipment—there’s more to do that. You gotta take it over and plug it in, in here, there. We think that’s definitely gonna be a market—whether that device is instantly as successful or useful. The other thing we liked about Apple is that it was IP-friendly. And that’s a big issue with us. Cable and satellite have always been relatively intellectual property-friendly. And that’s very important. Now that I’m in the film business, I appreciate how important that is. And Apple has been pretty, reasonably good in that area. And so as you get into the next level of device where that’s another concern of ours, we want to support people who have devices with delivery systems which are IP-friendly.
TVWeek: Right. Change the subject and go to football. Explain for a few minutes why football became a bad proposition for NBC and then why it became a good proposition for NBC.
Mr. Wright: Well, eight years, almost nine years ago, we were offered football on Sunday afternoon for $550 million a season. This year, eight years later or nine years later, we accepted a proposition to do it in prime time for $600 million. So I think that answers your question. It took eight years to get the pricing right.
TVWeek: Did it also have—forgive me, I don’t remember—a relative position to where NBC was in the marketplace?
Mr. Wright: Well, it also was—that was kind of a glib answer, but that’s a cost issue. We just thought we would lose too much money and in fairness, it was an eight year, and you knew in the middle of eight years—they even told us, the NFL even told us that they had economic study that said that in a period of eight years there would be one major downturn. So I’m sitting there [unintelligible] you want us to sign this piece of paper, right? He said yeah, we’re just telling you. We’re going to tell you later we told you this. And I just said, well, we’re not going to sign that, we don’t want to do that. But this situation was more reasonable from a pricing situation, but it was also a different idea. They wanted a—they’re very, very good about protecting their franchise. The NFL is extremely good at that. It has proven to be very, very good at that.
They wanted to make Sunday the NFL day. They had such a share of audience all afternoon, and they had problems with “Monday Night Football.” They loved it for a long time as a broadcast property, but it was diminishing in terms of viewership. And they didn’t have the ability to switch games on Monday night because of stadium concerns. Different town, and that physical problem was a real issue for them. They realized that they if they were going to have a game of the week, they had to have some flexibility to make sure that they weren’t picking games eight months in advance that would turn out to be not exciting rivalries when they got there, and they had to have some way to fix that.
So doing it on Sunday became the option. And making Sunday a broadcast day where they would have huge shares of audience all during the course of the day. And that fit right in with what we needed. I mean, we’re trying to rebuild a schedule, we’re trying to do everything we can to build our ratings back, so having football as a cornerstone on Sunday night would take pressure off us from a scheduling standpoint, assure us of a very major property and a property that would be promotable. And it was also one where we were in sync with the NFL. Their objective and ours were the same.
TVWeek: Right.
Mr. Wright: [They] wanted to build a very premier property, utilize your Sunday night, and they have done everything they can to do that. They’ve come up with ideas. We’re really partners on this because that’s what they wanted to have happen.
TVWeek: Speaking of sports, in the past, obviously you’ve been very, very sanguine about the Olympics. I’m just wondering how you feel about that now. Obviously, there’s the drug element that’s been happening, you know, the drug testing that goes back and forth. Are you as sanguine about the Olympics as you’ve been in the past?
Mr. Wright: Well, yes. This is one of the scarcity issues too. These aren’t like Olympics II, you know, or III. In a world that gets more options, certain things that are really premium stand out. If you just look at the schedule launching new shows this year, it’s a little tough for us too because I don’t see anybody’s shows really breaking out, new shows. But shows that have already been proven are doing very well. “ER” had an incredible night on last Thursday. Surprised us how well it did.
TVWeek: Surprised everybody, yeah.
Mr. Wright: Now the Olympics—I couldn’t be happier with what we have here. Now we only have it every two years, so it’s not every week. But … the Olympics has always been way ahead on drug testing. They’ve always been controversial in the sense that they’ve done it before any other professional sports organizations in the world.
TVWeek: Right.
Mr. Wright: So that situation has been around for a long time. And they take it very seriously, and they’ve [been] very tough about it. I don’t think that’s an issue.
TVWeek: You mentioned launching shows. Obviously you’ve got a—I think you had a good development this year; I think objectively most people say that. How important is the success of “Studio 60” to your fall schedule?
Mr. Wright: Well it’s important because it’s … important for the obvious reason, it’s a big show, a big-time show, and we want it to do well. But I’ll tell you, internally, everybody loves this show.
TVWeek: Right.
Mr. Wright: Now maybe we’re too close to it, maybe that’s another issue, but we think the cast is just spectacular. We think [Aaron] Sorkin is just totally on top of his game. He’s the best writer of this type there is. The directors, Tommy Schlamme, it’s just an extremely terrific cast, characters, development, the whole thing. So we like it a lot. So we’ll be very disappointed if it doesn’t do well. And I’ve seen this episode that’s on tonight, and this is a very good episode. And we’ve given it a lot of promotion, and our expectations are very high about it.
TVWeek: Right.
Mr. Wright: And it did fine last week. These shows can’t hold on to an unscripted audience level. I mean, that’s true for “Idol”; it’s true for any of these shows.
TVWeek: Right.
Mr. Wright: But they can hold on to generally scripted audience.
TVWeek: Right.
Mr. Wright: And this is the launch of “Heroes” tonight and “Heroes” will precede it and we would expect that audience to stay with it, but it’s a big-time show. It’s a very big-time show. It’s funny, it’s got great acting and a wonderful cast.
TVWeek: One of your shows is “House” that’s produced by NBC Universal, but it’s not on NBC.
Mr. Wright: We were pretty smart on that one, right?
TVWeek: Well, that brings up a point, because I know Bill Carter opens up his “Desperate Networks” book with an anecdote about you talking to Marc Cherry and asking him if “Desperate Housewives” had been offered to NBC. How involved do you personally get in that kind of thing and, you know, like you said— who knew that “House” was going to end up to be what it turned out to be?
Mr. Wright: In fairness, when “House” was in development, we didn’t have the strength we thought we needed to launch that show. We were worried that the show required a lot of strength. Now, Fox trusted us in fairness. They trusted us enough that we were a competitor, but we had a good solid Chinese wall between the production of “House” in our own competitiveness, and we did. And we gave them the best show we possibly could produce, and they stuck it behind “Idol.”
TVWeek: Right.
Mr. Wright: They sat there for a few weeks. When it didn’t, it didn’t pop any huge numbers relative to the audience that I was delivering. As I said to you, though, you can’t give that audience to anyplace, it’s just too big.
TVWeek: Right.
Mr. Wright: But, you know, it was kind of a slow start and then all of sudden it just started to hold on. The audience got closer, and it’s become a very major factor all by itself now.
TVWeek: Do you believe, Bob, that there are certain shows that will do better on ABC, that will do better on NBC, will do better on Fox, or not really?
Mr. Wright: I think it’s a function of timing. I think a given show will do better on one of the different places at a point in time, depending on where it is, where it appears, what kind of promotions are available for it, what other shows are like it. I don’t think it’s a generalization that you can just say over a period. We think that, you know, “House” is actually kind of an NBC show. That’s why it was originally developed for NBC.
TVWeek: But you also had “Scrubs” and “ER” on the air at the time. So maybe you thought,maybe—
Mr. Wright: Enough, yeah.
TVWeek: Right.
Mr. Wright: It needed a lot of launching, too.
TVWeek: Let’s talk about Katie Couric for a minute. And, you know, if you could just relate to us, if you thought there was any way that you could have kept her there. Is there anything NBC, you know, the NBC Universal empire could have offered her? Talk a little bit about that.
Mr. Wright: Well, you know, we wanted her to stay. And she made a commitment to stay for four years when the last contact she had. At that time, if you would have asked me that question then, I would have said that she was going to leave to go into syndication because we spent a lot of time with her representatives talking about syndication. And I think she really felt that there was a window there for her, and I think she was looking at Oprah Winfrey and others and saying, you know, maybe the Jane Pauley experience was something in the back of her mind, I have no idea. But she went very away from the syndication issue within the last year or two.
At that point in time, we had already made our decision with Brian [Williams]. She knew that. She knew that going back several years and never really raised her hand to want to go in that direction. I don’t know if that—we just never had that issue. We wanted her to stay with the “Today” show. In any event, our incentives were all based upon her staying there.
But, you know, she just wanted to do something different. It’s really not that complicated. And Les [Moonves] came along and enticed her to go over there and gave her lots of money and options and all that sort of thing to do it. And it’s worked out you know … it’s worked out pretty well. Fortunately, it’s worked out well for us too, so I’m not complaining. It started out very, very strong and it’s still strong, but Brian is back where God wanted him to be at the number one. And he’s holding his own, doing very well there, and CBS has improved its position relative to where they were. And ABC is a little bit impacted, but not much.
TVWeek: And are you concerned—Meredith [Vieira] has started now—I mean, are you concerned about any impact on the “Today” show?
Mr. Wright: No. Meredith is—”Today” show has done very well all summer right up through the appearance of Meredith, and then it had some huge spikes for the three days, Wednesday, Thursday and Friday—that week were huge. But it has a clear—it is back to where God wanted it, too. It’s roughly a 50 share, and that’s an amazing thing to have after a show that was developed in the early 1950s. They have a 50 share of audience for a national program in the morning.
TVWeek: Right.
Mr. Wright: So it separated itself from ABC by a million-plus viewers, and that’s about as much as it ever has been or has been as long as I can remember, so.
TVWeek: Right.
Mr. Wright: Meredith, I think, brings a wonderful sense of comfort. She’s comfortable with herself. She’s comfortable with people around her. She’s very curious, she loves to ask questions, but she does it in a very nice way. She has her own style, and Matt [Lauer] is a true star, and everybody on that show is just—they all seem to be very much, very happy about the circumstances they’re in. Ann [Curry] is very good. She seems to be very comfortable. Al [Roker] is very good. The whole crowd of them just seem very comfortable and very anxious to succeed. We couldn’t be happier.
TVWeek: As I told Jeff, I think that was a smart move, Meredith as opposed to getting somebody new, somebody the audience—sort of Katie Couric-like. That was a very smart idea.
Mr. Wright: But she’s a totally different person.
TVWeek: Oh yeah, no.
Mr. Wright: I mean she has her own—she doesn’t have to copy anybody else.
TVWeek: Right.
Mr. Wright: She just does her own [unintelligible].
TVWeek: Exactly. Let’s just talk on late night for a minute. I don’t remember in our business where you really hear where someone sort of has taken themselves out of the game as far in advance as Jay [Leno] had decided to do and say Conan [O’Brien’s] gonna replace me. What’s going on with that situation now? What might Jay do when he’s done with “The Tonight Show?”
Mr. Wright: Well, hopefully Jay will stay with us in one of many capacities or decide that he doesn’t want to do a daily show. He’s a very hard worker. It’s hard for me to believe that he’d actually retire because Jay just likes to be active. But you know, he does a ton of dates in Las Vegas all the time.
TVWeek: Right.
Mr. Wright: And he’s in high, high demand. So, you know, there’s no way to answer that question right now.
TVWeek: Right.
Mr. Wright: And it’s also quite a bit of time away from here, so …
TVWeek: Sure.
Mr. Wright: But we will do our best to entice Jay to do any one of a number of different things, and. you know. he’ll make that call in terms of what he wants to do.
TVWeek: You had mentioned syndication a moment ago, and it seems to me daytime syndication—particularly the first run—is an increasingly tougher and tougher business, and I’m just wondering, what are the numbers given, you know, the cost of putting on a really good show when so many of the shows are struggling to get one rating?
Mr. Wright: Well it’s [unintelligible] I think it’s very difficult. And that’s why I think that daytime needs a whole shot of adrenalin. That’s why we took on this issue, the iVillage show—which is a very different kind of show, and it combines all kinds of interactive elements that aren’t forced, because the show is designed from scratch. You’re not forcing it into something that was going to appear to be odd. I think that may be the best future model of anything we’ve come up with. I agree with you, if your implication is that the syndication shows that we’ve known them, it’s a very tough game.
TVWeek: Right. I want to go back again, since this is your 20th anniversary with the company. I want to talk a little bit—when GE, I think it was back in ’79 is when you went to Cox [Cable Communications], right?
Mr. Wright: Yeah.
TVWeek: And you worked at Plastics, GE Plastics with Jack Welch and you were his legal counsel, if I have this correctly—
Mr. Wright: That was an earlier—that was another generation.
TVWeek: OK.
Mr. Wright: I was actually the head of marketing and sales for that business, which was a global business.
TVWeek: And then I guess at one point—because GE never did acquire Cox Cable—what happened there? Why was the decision made?
Mr. Wright: Well, there were a lot of regulatory issues involved in that transferring the licenses and the family—the Cox family—wanted it to be a tax-free transaction, so they needed a Treasury ruling that would be tax-free and the reason—they were GE, it had to be a very big company because they didn’t want to have any attribution because they had other media properties. They were retaining all of their business in newspapers, and cross-ownership issues could be a big issue for them, so only a few companies met that criteria. Exxon was like one of them plus.
So the deal was done. It was agreed upon, but the regulatory process took a long time, and there were all kinds of hearings, and there were objections and special interest groups. And what happened is in those two points in time, I wanted to go down there because I thought the cable television business was just a great idea and with satellite having arrived, it changed the whole complexion of it. So I had to actually raise my hand to be the GE person that would go down there. The Cox family had a little bake-off.
They selected their person, and I interviewed with them and their person interviewed with Jack and other people and we ended up—they divided it up. I took the cable television business and became the executive vice president of broadcasting, and Bill Schwartz took the broadcasting business and the print business to the extent that it was going to be folded in with it.
TVWeek: Right.
Mr. Wright: And became sort of executive vice president of cable. And then I had to leave GE because it was a separate company. And GE [unintelligible] a television station so they had to be a clean break and I went down there. What happened is cable took off even more. And the price that was negotiated in 1979 became too low by 1980. And they wanted to renegotiate it all and that process—and they weren’t getting exactly the Treasury coverage that they wanted in terms of [unintelligible]—and so things happened, you know, times change quickly. And all of a sudden they wanted a much bigger price, and Jack was just at that point in time running for office to become the new CEO, and I don’t think he felt that he wanted to renegotiate such a publicly held deal. So basically the deal didn’t happen.
TVWeek: Right.
Mr. Wright: And I stayed.
TVWeek: Right. Why did you end up going back to GE Financial?
Mr. Wright: Well, the cable business was actually public when I went there and they were buying it back, but it was a public company and after I was there for three and a half years, I really enjoyed it, but I really wanted—I didn’t want to be with a—I didn’t want to work for a privately owned family business.
TVWeek: OK.
Mr. Wright: It’s just that I was used to a big company and I was used to that—to the big, the public, private partnership that big companies like GE had—where there’s no—the owners are institutional investors, but nobody owns more than that percent of the company, and I like that whole dynamic. You are accountable, but you’re not controlled. And I had an offer to go back and to do something that I knew a good deal about, or I thought would be exciting and I had a lot of knowledge about consumer marketing and all that sort of thing and—
TVWeek: And then they ended up buying RCA and you were tasked obviously to come back and succeed Grant Tinker.
Mr. Wright: Right. At that time I was running the GE finance business with GE Capital which we call it today. And that was an acquisition we made from RCA, and NBC was the one item we really wanted to protect. And the rest of the businesses, over time, have all been sold off.
TVWeek: But it’s not intuitive that NBC would be a business that GE would obviously want to get into and obviously, if you remember, there was all this speculation when you came—you came, you know, Hollywood outsider, god forbid, etc., etc., coming over, and how is he going to ruin NBC. Did you feel some of that when you went over there 20 years ago?
Mr. Wright: Well, sure. But people forget that I had been three and a half years with Fox. Fox was one of the biggest affiliate station owners in the country and still is. And GE had been in the television business and the cable television business for 40 years. And when the merger didn’t take place, GE kept all of its television stations, its radio stations and its cable business. And so there was plenty of that. GE had plenty of that level of experience and since I was back, I was given all those businesses too. So it wasn’t that—it was probably more uncomfortable for the people at NBC than it was for me.
TVWeek: W is your passion over the last 20 years? Charlie Rose did a thing that was also broadcast at HRTS that I attended a few weeks ago with Les Moonves, and Les said, you know, that his passion to this day is still the creation of the shows and watching them take off. And that’s obviously not your background. You’ve always seemed to me—one of the things I think you really enjoy is analysis—analyzing the situation, seeing what the right move is. Tell us a little bit about that.
Mr. Wright: I love to grow a business. I love to see a business develop from scratch or near scratch. I love to see groups of people come together and get together against a common objective and really do something in matching up talents and matching up people that may appear to be, you know, very diverse and not good matches, turn out to be really complementary of each other and let things happen and watch success and to be part of that. I really—that’s what I really enjoy. And I’ve always put myself in situations in my entire career where I was always in a place where there was a tremendous growth opportunity or we had challenges that you could, you know, that you really get your head around. And certainly when I went to Cox we had—I mean, I was on the road all the time with the cable business. We were franchising all over the country. It was really exciting. And we were also in the television business.
That’s when “ET” was launched, and Cox was the other owner besides Paramount. But that’s what I really enjoy, so it’s the interaction with people trying to grow, trying to develop businesses with access to capital, and that’s what GE has brought to the table and supported. One of the things about GE that people don’t recognize is that all these things that people compliment GE on—their human resources, organizations, their finance organizations—those are really, those are great support mechanisms for people like myself. I don’t have to worry every night about whether my finance guy is going to jail, or whether he’s competent, or whether there’s a replacement, or whether I can get formal analysts, you know, if I need them. I have to go do it, but I know that the system is there to support that. That’s what you need to grow. You need to be able to have infrastructure. You need to be able to have smart people, talented people that can help the services. If business grows too fast without that, it can crumble on itself. I think that’s what a large company can do, and GE does that very well.
TVWeek: We want to take some questions from the audience if anybody has some. Think about that for a minute. I want to ask you another question. One of the things that’s fascinating about this business—television—is how cyclical it is. Obviously, NBC has been on top, and they haven’t been on top. Is that something that you steel yourself for? Is that something that you found difficult to cope with? At some times it must be frustrating knowing you’re riding on top and knowing that ain’t gonna last no matter what you throw at it.
Mr. Wright: Every business I’ve been in has had that kind of—some aspect of that. This is always tough, but you know, one of the things that happens when you’re in the programming side. You’re really talking about the network here.
TVWeek: Right.
Mr. Wright: And you’re talking specifically about entertainment, really.
TVWeek: Right.
Mr. Wright: Because it’s not really true in the cable side. It isn’t true on the news side necessarily, either, where you have long runs and they can sustain themselves, as evidenced in the “Today” show—and the film business is a lot like that—but it’s not all up and all down. But the difference is when you’re in the television side of the entertainment piece, these shows, you know, they get older. You know, they get very, very expensive and, you know, their audience is starting to slow. But you just can’t not—you can’t just stop.
TVWeek: Right.
Mr. Wright: Because they still have very big audiences, they’re still very attractive, and so you know that you’re probably staying too long at the table, and you know that maybe it’s hurting you in terms of being able to get replacement shows, and maybe you’re looking at trying to replace them. People keep coming to you with show ideas that are just like the ones you have on the air. That’s sort of an inevitable problem.
And you know, after all was said and done, we had so many shows fail behind “Seinfeld” or “Friends” that I can’t remember how many, but people kept developing shows that in their mind were compatible. … And so you do—success is a problem. We created success while the show was still successful, even if it’s in its later years, it’s tough.
TVWeek: Right, very good. Anybody have a question? Sir.
Audience member: Thank you. One of the things when you look at the landscape of television—and probably HBO had a big part in starting it with the quality of programming—”The Sopranos” and “Sex and the City,” now you look at what your network is doing, what ABC’s doing, and you look at Showtime now which has three or four terrific shows, there seems to be an unbelievably higher quality of product on television than in Hollywood. I don’t hear anyone talking about a quality movie, but I hear a lot of people talking about the quality of stuff on television. Television, like advertising, seems to take a lot of hits for it not being of that quality. Where is that gap? Is that just those sort of people who like to criticize television for the weak parts of it and not recognize the strong parts?
Mr. Wright: I think that’s a lot of it. The quality of the people involved in television production is, you know, it can be erratic, but it’s arranged from really extraordinary people, the people that are just trying out ideas. There’s no absence of really quality television production. I mean, this show we’re talking about is the absolute example of a “Studio 60.”
Audience member: Yeah, I watched it. It’s fantastic. I mean, the quality of production and the quality of acting and quality of writing is—and I’m saying I haven’t seen a movie as well done as that TV show is.
Mr. Wright: Movies are now individual projects. There are A-groups of writers, of screenwriters and A-groups of directors and A-groups of producers that float around that want to kind of control the movie business, but there’s a lot of people that enter the business. More people enter the movie business than enter the television business. It’s a bit harder to get into television, because you gotta sort of get into the queue. You have a show on the air; that means you probably have a chance to get another one on the air. The film business isn’t quite that friendly. You can start out from scratch and pitch somewhere and hopefully break through.
Audience member: One quick follow-up on it. Has the aftermarket in the movie business changed the quality of the product going in? Meaning that there is big DVD business, I assume there’s big rental business, as opposed to—we gotta make sure we do really well in the theater as opposed to there’s an afterlife that didn’t exist years ago.
Mr. Wright: You know, I don’t think people think of it that way. You cannot live on theater revenues. I mean, that’s the fact. So you have to have, you would not invest in a film if I gave you the film plan just based upon theatrical release because you’d be taking enormous risk. If I didn’t get there, I’d be giving you the 99 percentile success number to invest in, and maybe you have 1 percent of flexibility. So everything has to have a back-end, and all the back-ends—film, I don’t know, I think theatrical probably accounts for us and for everybody else about 22 percent of the revenue of a film.
So it’s a launching pad and [unintelligible] but you cannot lay off all the cost of a motion picture against theatrical. It has to go against other revenues, and DVDs are the most prominent, but television revenues have been big for films over time outside of the United States. International revenues are very important; now digital revenues have got to be important. I think the film business inherently has had a tremendous history of understanding that. You have to go through the whole chain of command in terms of when we do a green light on a film. We list all the revenue sources that that film is ever likely to have that are knowable today. And you plug in numbers and argue about it, and that determines the return on the investment that you’re putting in. But without all those other revenues, you don’t have a film.
TVWeek: Are you pleased these days with how, for example, Universal Films have been doing this year?
Mr. Wright: This is not one of our best years, there’s no question. We have smaller films here. I do give our—you know, we have a change of management too and that’s—it’s their time to get a new slate in. But they’re very good. They’re very good at adjusting ownership positions. Now there’s two ways of dealing with movies that you don’t think you’re going to do well with. One is don’t do them, which that would be the advised position. The other one is lay off as much of the ownership as you can. Reduce your equity in it, just as a risk issue.
TVWeek: “Titanic,” they did that.
Mr. Wright: Right, there’s an example. So and we have a very good group of that. They’re very smart about that. And they will adjust our ownership position continually in films that we don’t think are going to do as well as maybe we would like them to be. They occupy a position. For an investor it may be the same, maybe OK. But if we have a film that’s coming out at a particular time of the summer, we think it has to do really big business, and we don’t think it is going to do the business, we may lay off more of that ownership position. The film might still do OK at a lower rate of return, but we’ll take that money and put it into another film that we think really should be doing bigger business or something. So you can adjust the—we adjust the equity positions in those films quite a bit.
TVWeek: Two film-related questions. One of the things that people always mention about film are the always increasing marketing costs for movies as well as talent, obviously. How do you feel about those moving forward, first question?
Mr. Wright: I think you’re going to see a pullback in cost for both television programs and films over the next 18 months, I don’t know, maybe two years. Because in the film business, the DVD penetration and development happened very, very quickly, and that money—a great deal of that money—went to the studios. So it offset production costs, and it gave films a more respectable return than they otherwise would have had.
The penetration is flattened. There’s a lot of piracy, especially outside of the United States—both peer to peer and physical piracy—and that’s taking down pricing. We have to drop our pricing to deal with piracy, move windows up, do things like that. And I think the reality of it is deals that were done, say, a year ago or 18 months ago, which are now just coming in, would not be deals that you’d like to be doing today. And you’re seeing that. You’re seeing, you know, studios and producers saying, you know, I don’t want to do that deal again. I can’t do that deal, and I think you’re going to have to go through a period where, you know, people are going to pass on films. There was a big piece today in the—I remember it was The New York Times or The Wall Street Journal, and that’s kind of indicative of comedians, Jim Carrey and some others.
TVWeek: Right, right, right.
Mr. Wright: We’re going to go through that. We’re going to go through that in television too. Because in television we’re not going to have syndication being as much of a factor as it was. So the question is, are the digital back-end revenues, are they as significant as syndication has been or are they more significant? We don’t know yet. So there’s going to be a wait and see and in the meantime, you’re going to have to be careful how deep you get into your production investments when you can’t see the back-end.
TVWeek: What do you think about films being available to own—to downloading?
Mr. Wright: We’re running to do that a lot of places. People aren’t moving there as fast as I thought they might. I mean consumers. It may still appear to be a little awkward to people, or maybe we don’t have the pricing exactly right, but it’s all going to happen, and those windows are going to narrow.
TVWeek: Right.
Mr. Wright: I think the quality of films is—to this gentleman’s question over here is— there’s a vast array of quality and it can be extraordinary to not so extraordinary. And sometimes films are produced for different purposes. They’re produced for kids or they’re produced for global. They have to have global stars in them because they have to be distributed around the world. Animation films are very different. You have a great deal of choice in films. On network television your choices probably are a little narrower because you just can’t take some of these extreme positions you do in film.
TVWeek: The beginning of his question had to do with sort of premium television like and HBO or Showtime versus—
Mr. Wright: No.
TVWeek: Maybe you can relate the folks the letter that I think you sent a few years ago about “The Sopranos” and what happened then and actually how you feel about that now.
Mr. Wright: Well, a few years ago, when “The Sopranos” was in its second or third season and everybody, every time I would go to a meeting with our own people, they would be saying, you know, what a wonderful show “The Sopranos” is. So I sent a lot of on-air people, a lot of talent. I sent them a tape of an episode, particularly a dark episode, we’ve done many of those.
TVWeek: Right.
Mr. Wright: And I said, all right you tell me can we air this. You tell me if you think we should make this if you put this on. And it was amazing the responses I got back. Most people didn’t respond. Some people wrote really long responses. And the responses began with, you know, this is an absolutely wonderful, spectacular show, but I don’t think we can do that or the other thing. I think we could do this, that or this thing and we could change this character to do that thing and we could do this and then we would be able to air it. I’m going, like, this isn’t the same show. I was just trying to make a point that there—you know, we do have—there are sensibilities. There are kind of invisible hard-to-know lines that we can’t cross, or we cross at our own risk. In our case, we [have advertiser support]. So one risk is you cross over and you don’t have any advertising. You know, the 911 miniseries by ABC is not a game we want to be in.
TVWeek: Right.
Mr. Wright: It was wonderful for viewing, but it didn’t have any, because it didn’t have any breaks, didn’t have any advertising. So advertisers are one element. The viewers hold us to, they hold us to different kinds of standards of all types. They’re not one-word standards. And you just can only do certain—there are certain things you can’t do, and other things you have some license.
TVWeek: Yes, right here. This gentleman. Right here, all the way down.
Audience member: Since it’s Advertising Week, I thought I’d skew one in that direction. I think the game-changer event certainly was the ability for consumers to time-shift using a DVR box or a TiVo, and I think no one would argue the best experience from video is your flat-screen TV on your couch at home, so that’s still really the killer application for video entertainment, even with all the digital options coming, the 100 options that you guys are providing advertisers. But when DVRs and things like video-on-demand, the ability to time-shift, become the majority of the homes, more than 50 percent of the homes, where does the advertising messaging look like in your crystal ball two years, three years from now, when we’re at 50, 60 percent DVR penetration, and how do the major advertisers play beyond a bank of 30-second spots that everyone would skip once they have a box?
Mr. Wright: Well, I think you’re probably—advertising probably moves more into the programming in all kinds of different ways, hopefully imaginative enough so that it doesn’t interfere with the viewer interest. It may connect with the digital part of the program. It may be sponsorship. It may be a lot of different things. It probably suggests smaller pods or fewer commercials between or spaced differently. It probably also suggests that there’s going to be more attention to be paid to the actual ad versus the television program that it’s supporting, and we all know intuitively that the ads that are more closely related to the program are generally ads that people will watch as opposed to the other extreme, or the ads that aren’t related to the program because you didn’t come there for that purpose.
It’s the old golfing analogy: The golf ads are better than the golf program sometimes, because if you went through the trouble to watch a four-hour golf match, you’re probably dying to see new clubs. And they’ve been very smart in actually taking people right off the course and put them in the ads. So you’re actually seeing the people that are playing, in doing the ads and that seems pretty compatible.
So that analogy, I think at some point, you’re going to see drifting into that format. The idea of commercial ratings … it is one of the strange parts of commercial ratings… that we have enough trouble trying to take credit or blame for the program. But we’re in no position to want to have to be judging the quality of a commercial as viewed from a consumer as to whether the consumer likes the show, but doesn’t like the commercial. So there’s an awkwardness in that.
When you get into commercial ratings, then there’s going to have to be pressure to go back to the client to say, well, you know focus groups say they don’t like your commercial. You have a problem here with the commercial more so than they might have otherwise. So it’s going to be fun to watch this take place. But I also think we’re going to find out that the skipping mode issue is going to have a lot of different dimensions. And everybody isn’t going to fall into the same category.
There are many people—the way we’re headed right now, we’re putting a great deal of pressure on the spots by saying that the advertiser is not going to recognize any viewing that takes place on a set where there’s a DVR and the DVR is any way activated, like pushing—a phone comes and push the button for stop, that automatically takes you out of [unintelligible] that’s where we are right now. Same day, same minute. If you go right back in two seconds later, it’s gone.
If that continues, that will force enormous changes to take place, because, I mean, DVRs, they’re probably in 16, 17 percent of homes today. They’re not in every room, but they’re in 16, 17 percent of homes. But by the end of the year, that could be 18 and by the end of next year, it could be 23, 45, I don’t know. Then we will have to learn how many people are actually using them or whatever. So this could get to be a very nasty routine, collecting a lot of data, and Nielsen will probably be the potential winner on all this by the time we sort it out.
TVWeek: I think the woman in the white here has a question.
Audience member: If I’m correct on the following statistic, I think every seven seconds someone in the United States becomes a boomer, and I think it’s fair to say, looking at all the advertising that is going against them, Fidelity, JP Morgan, car manufacturers, there’s a ton of dollars against them, yeah, when you read either when you look at the content, but even not the content, if you look at all the analyses that The New York Times writes about television programs, you know, all the new programs that are starting, it’s always, you know, how did the programs do against 18 to 49 and particularly, 18 to 34. It seems like there’s a Catch-22 going on. Content people like yourself develop the program for them because [unintelligible] somebody, isn’t anybody looking about what’s happening in America? Vis-à-vis.
Mr. Wright: First of all, on a cynical basis, if I was an advertiser and I had an 18 to 34 audience that I was looking for, the show I’d be buying all the time is “60 Minutes” because I’d be getting a hell of a price for that. So, I mean, you do have to pick. You have to be reasonable about this. If you really have an audience in mind, you’re going to sell fourteen-dollar NBA sneakers to, you can pretty much know the ages of the crowd you’re talking about, so that’s a fair game. A lot of people have much broader audiences for their products and services, and in fairness we sell an awful lot of advertising to 25 to 54, and that has edges around it too. So 18 to 49 is the measurement we generally use. It represents the largest group of people that purchase advertising. That’s the audience they believe they’re targeting.
Whether it’s for reinforcing advertising, whether it’s to introduce new products or they feel that that’s just a buying group that they’re particularly interested in because of their own research, it’s hard to tell. But there is definitely—the audience levels in this country are getting a lot older and they will continue to get older, and medical health care—we all complain about how much it costs, but everybody is living longer. That’s probably the issue. So yes, but the negotiations sometimes gets bogged down in the numbers, and sometimes the client really does have a focus on a particular age with a particular product, and they’re entitled to do that and try to buy against that.
TVWeek: The gentleman on the aisle there with the white shirt.
Audience member: Mr. Wright, as you and your competitors are continuing to evolve your digital strategies, who would you say is really out in front right now, and if you peer back into your crystal ball, where would you like to see NBC’s digital platforms be in say the next 12 months?
Mr. Wright: Well I think that the out in front, I don’t think that there’s any competitor that is distinctly out in front. Time Warner—because it has AOL—has more knowledge in this area than we do, and depending on where AOL goes, but Google and Yahoo really dominate the energy level of this area in general. And MySpace and Facebook and others are, you know, symbols of what can happen overnight in here from a program. They almost look to us like programming hits. And whether they stay with—people stay there or not for three or four years, we don’t know, but they really are dynamite hits. So I would say that right now on that basis, that Fox has got a very big hit with MySpace. And whether it’s a model that we should all follow or whether it’s going to be there in four or five years, I don’t know. But I would say that very fortuitous purchase on their part puts them at the—they’re the tallest kid in fifth grade or something like that—I’m not sure what the right analogy is, but they are that right now. And Google is a giant, and we don’t know whether they’re a utility or competitor or exactly what they are. But in another 12 months, I would like to think that we have a—we have four or five hundred million dollars maybe more in legitimate digital advertising and support, that we have an integrated program offerings that have told us a lot about it. I would like to think that we’re offering movies in many, many countries on digital platforms, and we’re learning a lot about the pricing and the consumer acceptance in its broadly based [unintelligible]. But generally I’d like to think that we’re not avoiding any digital confrontations, and we’re trying to have a product in there for all digital applications and then we’ll sort out the ones that are really consumer—have real consumer interest, and have profitability for us. That’s where I’d like to be in 12 months.
TVWeek: Before we take any more questions, we’re almost out of time, but I wanted to give Bob a chance—Bob actually has an interesting little symbol on—he actually doesn’t know I’m going to ask this, but he’s holding a symbol, and he didn’t know I was going ask any of the questions, but he’s got a little symbol on his lapel there—in the current issue of Television Week there’s an ad which I don’t even think you saw this week yet on page 54, and it says “Odds of a child becoming a pop singer, one in 58,000. Odds of a child being diagnosed with autism, one in 166, and this is an issue that’s very close to Bob’s heart, and if you would talk about this connection, sort of the genesis of this ad and of this organization.
Mr. Wright: This is an Ad Council public service piece. We are autism—Autism Speech is an Ad Council representative. We have a campaign in March and April. I have a 5-year-old autistic grandson, and he has some very significant problems. I got involved in this with a little bit of knowledge about autism. My wife and I did a lot of homework trying to help him out, trying to get him diagnosed. And I was personally—I just couldn’t believe it. I couldn’t believe that autism is the most prevalent significant major child developmental disorder in this country. And it is in every other country that we can find statistics. And I couldn’t believe that—and the consensus is that it is caused by—there’s a genetic component, probably involving several genes, and there’s an environmental component that triggers these genes to act in a certain way in a subset of children that causes them to lose some or all of their communication ability. And just ability to communicate in everything between looking at you, writing, reading, doing anything.
And when this lady over here said, one every seven seconds, all I could think about is there’s an autistic child born one in every 23 minutes. And the thing that got me so upset is that you can’t have a genetic epidemic. So how could you have a disease that has a genetic base that is increasing at rates—that has been increasing at rates over 100 percent a year on a compound basis for the last 10 years. And how could you have that without recognizing that this substantial environmental aspect here that’s got to get dealt with too. And why was the medical community, the research community and the NIH all with their heads between their legs on this issue? I just couldn’t believe it.
So that’s how we got here. And I thank you, Chuck. Now, we have an organization, Autistic Speaks, Autism Speaks. We have 72 full-time employees now. We have about 210 volunteers. We operate in 21 different states and we raise a good deal of money, and my goal is to raise $100 million a year on an ongoing basis to make this a self-sufficient organization and get the kind of attention that leukemia has deserved and earned for many years, that cystic fibrosis has, that childhood diabetes has.
But the reason I can say all that, and this sounds brash, is because this is such a—there’s no comparison between the prevalence of this—and this can be with you the rest of your life. This is not easily cured, and you probably won’t die from it, but you will be incapacitated in some potentially extremely major way for the rest of your life. Become a burden on government, on society. When parents die, they can’t take care of their child anymore, so it is an enormously difficult issue that needs to get dealt with, and thanks to Television Week for running these. These are Ad Council ads. We have a number of them like this. One deals with baseball and the other deals with a mother with safety seatbelts and people—it’s one in a hundred boys, one in 400 girls, one in 166.
TVWeek: I know there are a lot of other Advertising Week functions that you probably want to attend the rest of the day. I want to thank you very much for attending, and I want to thank Bob.
Mr. Wright: Thank you, sir.

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