SANTA MONICA, Calif (Reuters) - Traditional television viewing patterns are collapsing and the industry needs to quickly figure out how to profit in a world where people can watch TV shows anytime, anywhere, NBC Universal's TV chief said.
The challenge now was drawing viewers to network shows at designated times when people can either record those shows or turn to online outlets to watch at their convenience, said Marc Graboff, Chairman of NBC Entertainment and Universal Media Studios.
Networks need to figure out how to make their content more immediately available in a lucrative way, such as by charging viewers to stream episodes shortly after airing -- narrowing viewing "windows" -- or providing them to multiple outlets, he told an industry conference.
The biggest U.S. networks are currently struggling with declining advertising revenue, dwindling viewership and rising production coasts.
"The audience is so fragmented at the expense of television shows. Windows are starting to collapse," he said at the Variety Entertainment and Technology Summit, echoing comments from other TV industry leaders such as Dana Walden, chairman of 20th Century Fox Television.
Graboff was coy about a potential deal to sell NBC Universal, now majority owned by General Electric Co, to Comcast Corp. They are reportedly in talks and a deal is expected soon.
Asked how such a deal would affect NBC, Graboff said while such a marriage was still "speculative" at this point, he believed Comcast was also considering ways to better monetize content in ways outside the traditional models.
"At some strategic level, Comcast must be thinking, 'if we own a content company, we can help drive how the model changes usage.' That must be one of their motivations for doing this," he said, referring to a hypothetical case.
Analysts believe that if Comcast were to succeed in its overtures, it would likely try to experiment with windows.
"If alternative windows start generating revenue, then they may make up for the holy grail (of network viewership)," said Graboff. "The way to counter it (high costs and declining viewers) is to make a show more immediate, such as streaming it for a dollar the next day," and then offering it in various other media.
He said NBC's investment in popular video-viewing site Hulu was a step in the right direction but admitted its content owners may have been hasty in offering the programing for free on the popular video-viewing network to counter piracy.
Graboff said the network's controversial move to shift "The Jay Leno Show" to prime-time five weeks ago was doing "better than expected." Company officials on a conference call last week said the show was exceeding ratings estimates.
He admitted that the network's 11 pm newscast, immediately following the show, has fallen in ratings, but noted other network's 11 pm news had also seen ratings drop.
NBC's decision to shift the late night talk show host to 10 pm has been described as a strategic business move enabling NBC to use a low-cost program at the slot instead of more expensive, scripted shows.
Leno averaged almost 12 million viewers during the first week of his new show, but averaged only about 5.6 million viewers last week, according to reports.
"It's doing better than projected we'd do, but right now it's too soon to tell," Graboff said.
Editing by Muralikumar Anantharaman