5% Off-Air After the DTV Transition?

Jeff Zucker, President and CEO of NBC-Universal hearkened back to a NATPE speech some 13 years ago given by his predecessor, Bob Wright, who suggested that NBC was not in the television business, but instead was in the video-in-the-home business.  Today, Zucker added to that by saying that NBC is in both the video-in-the-home and video-out-of-the-home businesses.  The video-out-of-the-home business includes offerings such as mobile video, digital signage, video to gas stations, grocery stores, etc.

Thus, Zucker believes that it is important for what was once television content to have ubiquitous distribution, regardless of media or device.  He stressed that in this tumultuous world, the industry will need to be more creative in their marketing to avoid turning analog dollars into digital pennies.  A third area of critical importance to NBC-Universal surrounds the regulatory part of the business. 

He said that, “Policy-makers need to step up and recognize the changes since 1996.”  He did not dwell on specifics but did suggest the rules that define cable and broadcast networks need to be refined. 

For a company where broadcast is only 5% of its bottom-line, an inordinate amount of his speech focused on this topic.  Things like the Writer’s Strike, the transition of online video to mainstream and the looming DTV transition, are causing NBC Universal’s broadcast business to undergo, as Zucker put it, “a big shift.”

One of his predictions is that the number of households receiving only Over the Air broadcasts will drop from approximately 10% to 5% after the DTV transition.  He said that it is imperative that the networks and the stations engage in new behaviors to make up for this significant change.  Some of the examples of the change in business include:

          They can no longer ignore new media and must embrace new distribution

          They must work with advertisers and give them better metrics

          Figuring out how to make multicast pay

          De-emphasizing pilots (he suggested $500 M was collectively spent on pilots by the networks in 2007, which resulted in only 2 shows being renewed for the 2008 season)

It is clear that Zucker is not abandoning the broadcast affiliates that built the NBC network.  At the same time, the affiliates will no longer be the exclusive distributors of content for NBC or the other networks.  NBC believes that they have to evolve the local market and use 2008 to get ready to move beyond the 2009 DTV transition date.  Some of the implications are a lot more micro-local from the broadcast affiliates and content from NBC that could help them add niche channels in their multicast.   

Look for more Viodi View coverage of NATPE and how other speakers at the show reinforce Zucker’s view of a quickly changing world for all involved in the media industry. 

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