NBC clips pricey projects in wake of advertising shortfall
You’d never know from looking at him that Jeff Zucker just lost a billion dollars.In a May massacre worse than anyone at NBC imagined, advertisers penalized the Peacock’s pathetic primetime perf by cutting back their 2005-06 ad commitments by $900 million. And yet, walking around the halls of the Beverly Hilton in Los Angeles last week during the TV Critics Assn. summer press tour, Zucker was his usual confident self. He held court with reporters, joked with execs in private huddles and donned a polo shirt for a poolside party for Peacock drama “Las Vegas.” Behind the smiles, however, Zucker was blunt about NBC’s woes. Even though he insists the net’s upfront losses were smaller than what’s been reported — and that NBC had already prepared for drops of at least $400 million — “It was obviously more disappointing than expected,” he concedes. The pain is already being felt at the Peacock. NBC U CEO Bob Wright last week sent an email to staffers, first reported in the L.A. Times, making it clear that pennies need to be pinched. “I have asked operational and finance leaders to examine cost areas in every business across our company and rein in spending accordingly,” Wright wrote. “This action is necessary to get through what will be a very tough period.” Indeed, while Zucker was all smiles at the press tour, staffers were already seeing an impact from the downturn. In the sort of nickel-and-diming that will no doubt soon become common at the net, NBC execs were encouraged to park their own cars at the press tour rather than incurring hefty valet charges (though others say the GE-owned net has always discouraged valet parking). “We’re in a downturn right now,” Zucker says. “Whether that means things get worse before they get better, we don’t know. It probably doesn’t turn around in a year, or even two years.” NBC is already being more focused when it comes to setting aside money for programming — pulling the plug on several projects that the net decided didn’t make sense in order to reallocate those dollars elsewhere. Imagine’s $50 million-plus miniseries about 9/11 was shelved in June, just weeks after it became clear NBC’s upfront haul would be far worse than expected. And just last week, execs decided a planned celebrity singing competish from Granada America just wasn’t worth the coin the production company was seeking in order to rush the show to air in September. Bottom line: The May losses will mean many tough calls ahead for Peacock execs. While program development won’t be cut, execs may find themselves thinking twice the next time a bidding war erupts over a hot pitch. Longform development will probably be limited to low-cost movies rather than elaborate miniseries. “We’re looking every place we can to tighten the bottom line,” says NBC Entertainment prexy Kevin Reilly. Ironically, the severity of the Peacock’s problems has almost become a blessing for Reilly. Now that the net has nothing to lose, it has the opportunity to take some real chances. “It’s weirdly a monkey off my back,” he says. “There’s something about being scrappy, come-from-behind, that can be very freeing. It’s good for creativity.” But turnarounds don’t happen overnight. It took CBS eight years to recover; ABC is finally reversing a near-decade slide. So while New York bean counters will be looking for savings wherever they can find them, NBC execs on the West Coast say their bosses are well aware that now’s not the time to slash development or marketing budgets. Rather than cutting promo dollars — a common practice when nets suddenly feel the pinch — NBC has actually boosted its fall launch budget by 30%. And while a big chunk of the savings from nixing the 9/11 mini will be used to offset the upfront slaughter, some of the coin was flowed back into series development. Reilly was able to order two more midseason dramas (“The Book of Daniel” and “Windfall”), while giving early cast-contingent pilot orders to a half-dozen comedy scripts. Zucker and Reilly admit that it helps to be part of a conglom, which for now will be able to absorb the upfront sting. “The importance and beauty of the merger is borne out here,” Zucker says of his TV empire. In other words, the success of cable outlets like USA and Sci Fi are helping smooth out the overall NBC U TV picture. That’s not to mention the continuing profitability of other dayparts; “Today” and “The Tonight Show” have long stuffed NBC’s coffers. And the upcoming 2006 Winter Olympic Games could deposit extra dollars as well. Meanwhile, at the press tour, Reilly pointed out that the $900 million drop was a fraction of GE’s $161 billion in revenue. “They go through business challenges like this all the time in different sectors,” he says. “We’ve thrown off a lot of revenue for them over the last decade, and there’s an acknowledgement that this is a down cycle. “I’ve just been very heartened by the fact that there has not been this pouncing (on us), coming in with a dull knife to start hacking away.” That includes the lack of any layoffs — yet. Reilly insists the net has no plans to trim any staffers, although some posts may disappear through “natural attrition” and hiring freezes. If NBC’s new fall lineup doesn’t produce at least one or two successful skeins, however, things could get a lot tougher for both Reilly and Zucker. It’s no secret Zucker hopes to replace Wright in the next few years, but landing that promotion will be tough if the Peacock’s still plucked-over in primetime. The rumor mill already has Zucker contemplating a West Coast exec change come December — a concept the NBC U boss dismisses. Reilly “doesn’t need any reassurance,” Zucker says. “Those are just the games people play in this town.” For his part, Reilly calls the gossip “a character builder” that comes with the gig, and says NBC’s overall situation is far from dire. “Otherwise, I’d be in a fetal position,” he quips. “The wheels haven’t come off. I’m not despondent.”
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