January 18, 2008 / 10:22 PM / 10 years ago

NBC's Zucker looks at canceling annual ad bonanza

NEW YORK (Reuters) - NBC Universal, hamstrung by the Hollywood writers’ strike, is near a decision to cancel the glitzy presentation it holds every May to introduce new prime-time TV shows to advertisers, affiliates and the media.

NBC Universal Chief Executive Jeff Zucker, whose company reported on Friday a 10 percent rise in operating profit and 8 percent revenue growth, said he would still hold meetings with the advertisers, but was reviewing whether to call off the showcase “upfront” event at Radio City Music Hall.

“When people say the upfront, there are two things: One is the dog-and-pony show at Radio City and the second is the way we sell the inventory,” Zucker told Reuters in an interview.

“The way that we sell the inventory in an upfront selling period is not going to change. Whether we still need to do the dog-and-pony show is completely under review here and you can look for an announcement on that from us very soon.”

Asked if that meant NBC may scrap the upfront presentations and just meet one-on-one with advertisers, Zucker replied, “Yes, exactly.”

The upfronts, first established for auto makers to lock up commercial time back in the 1950s, amounts to one of the year’s most important weeks for both broadcasters and marketers.

NBC, CBS, ABC, and Fox unveil their prime-time lineups at star-studded events, then host expansive parties before signing roughly $9 billion in deals for prime-time advertising.

This year, however, the writers’ strike has clouded the landscape, halting production of scripted series and disrupting the period when pilots are being pitched and written. The result is that the networks may struggle to have lineups for 2008-09 in place for the event in May.

While the 10,500 screenwriters remain on strike, their counterparts in the Directors Guild reached a new contract agreement with the major studios on Thursday, averting a second labor walkout.

For now, ABC, CBS, NBC and Fox have filled their winter schedules with more specials, sports, game shows and reality TV shows that do not require the writers and often cost far less to produce.

NBC — which is 80 percent owned by General Electric and 20 percent owned by Vivendi — has weathered the strike with strong premieres of several new shows including “American Gladiators.” The network posted a rise in ratings over the first 10 nights of 2008.

“NBC’s prime-time performance has been far better than it was — we’ve run out of some of the lowly rated scripted programming and we’ve replaced it with much more highly rated unscripted programming,” Zucker said.

To the benefit of NBC Universal, audiences also appear to be testing programs on cable networks, where the media company holdings include USA, Bravo, Sci-Fi, MSNBC and CNBC.

Zucker said much of the increase in quarterly operating profit could be attributed to the cable division.

“It was the exceptional performance of our cable group — both entertainment and news. They just hit it out of the park,” he said. “Everybody gets confused about what this company is. They think it’s just NBC and Universal Pictures, they forget that more than 50 percent of this company is the cable group.”

For the year, the first with Zucker in the top job, NBC Universal posted record operating profit of $3.5 billion, up 6 percent from 2006.

Zucker said he still expects operating profit to rise 10 percent in 2008, when NBC is broadcasting the Olympics and the media company should benefit from political advertising.

The big challenge could be the U.S. economy. A troubled housing market, high oil prices and a potential recession have created concerns that advertisers will reduce spending as part of overall budget cuts.

So far, Zucker said, advertisers have yet to cut back on spending with the media company.

“We haven’t seen any signs of a slowdown yet, but obviously it’s one of the things we all have to be conscious of and manage for. We’re watching very closely.”


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