Last updated: February 7, 2007 2:38 am
Last October, NBC Universal revealed the difficult state of the network television business when it announced plans to lay off 700 workers and consolidate operations as part of a $750m cost-cutting effort.
But just as shocking as the numbers was an admission from the head of its television group, Jeff Zucker, that the model that had sustained the business for decades was, if not broken, then certainly under severe pressure.
As he takes the reins at the General Electric-owned media conglomerate from its long-time chief executive Bob Wright, the television business is just one of the challenges that Mr Zucker will have to address. He will be confronted by a film business whose main source of revenues – DVD sales – is slowing after years of double-digit growth.
The business also faces the threat of piracy, the need to find new growth abroad, and to accelerate its efforts on the internet, where it and other traditional media companies face competition from upstarts such as Google’s YouTube and News Corp’s MySpace.
“All the media companies are facing this challenge – which is to keep their core businesses thriving at a time when audiences and advertising dollars are migrating to new media,” one former network executive said.
It has not been an easy balancing act and it has already led to shake-ups in the industry. Just a month before NBC’s restructuring, Sumner Redstone, chairman of Viacom, dumped Tom Freston as chief executive.
Jeffrey Immelt, GE’s chief executive, said he settled on Mr Zucker as Mr Wright’s successor in part because he “liked the way he approached change”.
Mr Zucker, for his part, vowed that there would be more to come. “There will probably be more changes in the next five years than there have been in the last 50 years,” he said.
Known as a brainy and hands-on executive, Mr Zucker made his name in television. Starting as a researcher on NBC’s 1986 Olympics coverage, at 26 he became the youngest producer of the network’s dominant – and lucrative – morning show,Today.
He then went to Los Angeles to head NBC’s entertainment division where his greatest achievement may have been prolonging the Friends franchise.
“He single-handedly kept Friends on the air for the last two years,” one rival said, admiringly.
But his tenure there was not without bumps. Some viewed him as a New Yorker who was disinclined “to play the Hollywood game” of reaching out to top agents and writers.
More importantly, Mr Zucker failed to replenish the network’s cupboard after Friends and other hits ran their course, leading NBC to plunge from its decades-long perch atop the prime-time ratings.
NBC has improved this season with hits such as Heroes and The Office. Nonetheless, Jack Welch, the former GE chief executive, recently quipped to New York magazine that he might have fired Mr Zucker if he were not retired.
The television business has only become more challenging in recent years. Production costs have soared, and digital video recorders that allow consumers to skip commercials have undermined the traditional advertising model.
In response, NBC Universal has said it will try to reach consumers on all platforms. It has been selling programmes through iTunes and through video-on-demand.
Last year, the company paid $600m to acquire iVillage, a health and relationship-focused website geared towards women that focuses on health and relationship[ issues.
So far, it has not proved to be the digital springboard NBC executives had hoped.
“I don’t think you should look for any major acquisitions,” Mr Zucker said, although he noted that NBC was planning to roll out social networking applications across its internet properties in the next few weeks.
As he takes up his new post, Mr Zucker also said he was unlikely to soften his sometimes outspoken manner. “I don’t think people necessarily change or change who they are because that is the essence of leadership, and results in success,” he said. “You have to be true to who you are, no matter who you are.”
“They really don’t have a big digital presence,” one media investor said.
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