Chrystia Freeland, Financial Times US managing editor, interviewed Jeff Zucker of NBC Universal. This is a transcript of the interview, which you may watch here. In this segment Mr Zucker discusses new media and Hollywood.

FINANCIAL TIMES: With the rise of YouTube and other video websites, is the TV business facing the same kind of threat of disintermediation which has done such damage to the music business?

JEFF ZUCKER: Well I think, hopefully, we’ve learnt from the music business and we won’t repeat the same mistakes there. I think we are clearly in a time when we are making the transition from the analogue world to the digital world, and really that’s what I think my job is today, and what -

FT: Is that your most important challenge?

MR ZUCKER: Well, I think it’s what I think about the most, yeah, and I think it is the biggest challenge. Because we don’t want to replace a business model that’s built on being paid dollars for viewers with a model where we’re being paid in cents for those viewers.

FT: And is that what’s happening right now – the digital penny?

MR ZUCKER: Yeah, clearly right now the economics of the digital world are not exactly commensurate with where we’ve been. Now I think they will get there, and I think it’s our job to make sure that we make that transition properly, and that’s what we’re doing, I think that’s what everybody in this space is working on.

FT: Part of your answer is this new site that you’re creating, do you think you’ve been right to make it rather exclusive?

MR ZUCKER: The idea behind the new site is for all of our content to be available there.

FT: Other people’s content?

MR ZUCKER: We want everybody’s content to be available at the new site. This is not about NBC Universal and NewsCorp.

FT: Including user-generated content?

MR ZUCKER: The goal at the beginning here is to have a place for the premium, quality content that the networks and channels are producing that clearly advertisers are clamouring for. They are not, necessarily, clambering to be allowed to advertise on user-generated content.

FT: So do you think its still possible and will continue to be possible to draw a really clear distinction between professional content and user-generated content?

MR ZUCKER: Well, I do. I think that there are only a few companies in the world that can produce a drama of the quality of Grey’s Anatomy or House or CSI. That requires a huge amount of investment, and there’s only a few companies that are willing to put up that amount of money to do so.

So I think that we’ll be able to differentiate ourselves from user-generated content in that way. Which is to take nothing away from user-generated content. User-generated content has a place, is very important in today’s society and clearly has a huge following. But there is a distinction between that and great quality content, and I think that’s where we offer the real advantage to advertisers who want to send their message and deliver their products in an environment that is safe, conducive for their clients and with a real quality.

FT: Do you have a name for the new site yet?

MR ZUCKER: We don’t have a name for the new site but we are just a couple of weeks away from that.

FT: What about the Viacom approach to these issues - a little bit more hostile and litigious? Why not take that path?

MR ZUCKER: Well, look - we are very sympathetic to Viacom’s position here, which is that we all believe that we need to be paid for our content, and that the piracy and pirating of copyrighted content should not and cannot be allowed to stand. And, you know, listen - I applaud what Viacom is doing. We’ve certainly supported them, both publicly and privately, in what they are doing. The fact is we’re continuing to work Google and YouTube to see if there’s a solution that we can come to.

FT: Is there a technical solution, do you accept the view that’s its really hard to do and we’re really sorry?

MR ZUCKER: No. There is clearly a technical solution to this, and it’s a question of Google and YouTube’s will to make good on that, and that’s what we’re trying to work with them on and hopefully we’ll come to a satisfactory answer. If we don’t then, clearly, we’d have to think about our other options, but -

FT: You can see yourselves moving into a more hostile position?

MR ZUCKER: Well, I don’t want to move into that position. I hope that it doesn’t come to that. We are sympathetic to what Viacom is doing and we’re, at this point, trying to work with those companies to make good on the technology that’s available. It is clearly available. The fact is - let’s look at it. They have the ability and the willingness to block out pornography from YouTube. Well, you know, if they have the ability to do that, they clearly have the ability to filter out other content that shouldn’t be up there. So its just a matter of will.

FT: Do you have a deadline in mind?

MR ZUCKER: There is not a firm deadline but we are continuing to work with them and I think that if we don’t see enough progress by early fall, then I think we’ll have to reconsider our options.

FT: Some people in [Silicon] Valley have suggested to us that these various efforts by the traditional media companies are really just about establishing a better negotiating position vis-à-vis Google and YouTube? Is that fair?

MR ZUCKER: With regard to what we’re doing with the new site and it being a negotiating tactic, we’re investing a lot of money for it to be a negotiating tactic. The fact is, you know -

FT: How much?

MR ZUCKER: Well, I don’t – we’re not really prepared to talk about that.

FT: More broadly, given the changing advertising model, are you going to have to more radically change the way you produce content, and the cost structure then?

MR ZUCKER: Well clearly its something we’ve been talking a lot about, we’ve been talking about it for the last year. The cost structure cannot remain the same. But I think everybody who’s producing content sees that and is trying to deal with that in their own ways. You know, we’ve been public about that. It’s clearly got to change and I think the integration of marketing and products within that content is also a new way to deal with it, and I think that we’ve all got to come to grips with that.

FT: Do you see yourself, in some way, moving more towards a movie-style blockbuster profile?

MR ZUCKER: On the television side?

FT: Yes.

MR ZUCKER: Well, it’s clear that blockbusters on the television side are what drives everything else. But I think it’s always been like that to a degree, it’s just a little harder now to carry those shows that are in the middle. And so, you know, the blockbusters are very important, there is no question on the television side.

FT: Is it possible to make this really excellent, compelling, professional content, just more cheaply than has been the case historically?

MR ZUCKER: You know, I do. I think a program that’s on NBC that most people feel is – you know, some people feel is the best show on television – Friday Night Lights – it’s a show that hasn’t attracted as wide an audience as we’d like yet, but we are hopeful that it will. But that is being done on a relatively good economic model that makes a lot of sense, and the whole reason it’s back for its second year, even though it didn’t do as well in the ratings as we would have liked, is because it made economic sense, so it is clearly possible.

FT: Do you think Hollywood is prepared for this really radical change coming up?

MR ZUCKER: Well, look – there’s a lot of mansions built in Hollywood based on the old system, and so there is a huge desire to protect what’s always been. And change is hard, and driving change in Hollywood is probably the hardest. Maybe Hollywood and Washington are the two hardest places to drive change. It’s hard in Hollywood. But I think it’s clear that people are coming to the realisation that there’s got to be some change.

FT: And they are not hostile, maybe particularly towards you, as an agent of that change?

MR ZUCKER: Well, I mean, look – there’s always going to be people who are protective of what’s come before, and they are going to want to protect the system that has built those mansions in Hollywood. So there’s always going to be some degree of pushback. But, you know, nobody ever said change was easy.

FT: Thank you very much.

MR ZUCKER: Happy to be with you. Thank you for having me.

FT: And now, Jeff Zucker places his bets on Long/Short.

FT: And now, Mr. Zucker, we’ll play long/short. Are you ready?

MR ZUCKER: Ready to go.

FT: The evening news?

MR ZUCKER: Long.

FT: Daily newspapers?

MR ZUCKER: Short.

FT: Rupert Murdoch?

MR ZUCKER: Long.

FT: Yahoo?

MR ZUCKER: Long.

FT: DVDs?

MR ZUCKER: Longish.

FT: Reality television?

MR ZUCKER: Long.

FT: Hollywood?

MR ZUCKER: Long.

FT: A cure for cancer?

MR ZUCKER: Long.

FT: Fred Thompson?

MR ZUCKER: [laughs] I like Fred. [laughs] No comment.

FT: Paris Hilton?

MR ZUCKER: No comment.

FT: Thank you very much.

FT: That was Jeff Zucker of NBC on new media and Hollywood. You can also hear him discussing NBC Universal, Katie Couric and Paris Hilton. Next week, you can watch Knut Kjaer of Norges Bank Investment Management reviews the news on video for FT.com’s View From the Top.

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