NBC puts profits above ratings

More money trumps being No. 1 at Peacock

The same day Ron Meyer told the New York Times that Universal’s film operation should be judged based on profitability, not market share, the studio chief’s colleagues at NBC echoed that philosophy.

“You need to look at your business and your bottom-line margin,” NBC Entertainment co-chairmen Marc Graboff and Ben Silverman told TV critics regarding the network’s fourth-place status, endorsing “a revenue view” as opposed to bragging rights over ratings.

In a sense, there’s nothing new about this bottom-line mentality. Years ago, then-CapCities/ABC chairman Tom Murphy — as savvy a businessman as the TV industry has produced — was asked how he kept score versus his competition. “Making more money,” Murphy responded without hesitation.

Sure, good idea. Networks can buy ratings for non-economic sums, after all, paying billions for sports rights that lose gobs of money. Like all the nets, NBC has understandably endeavored to balance the pricetag for its primetime lineup with cheaper reality fare, such as “The Biggest Loser,” and noted that “Friday Night Lights” — shot relatively inexpensively in Texas — doesn’t need to deliver the same ratings to remain viable as the sci-fi extravaganza “Heroes.”

Moreover, there are so many new platforms for cashing in on content — cable replays, DVDs, Internet downloads, cell phones, product-integration deals — that strictly from a business standpoint, foam fingers boasting “We’re No. 1!” provide a myopic view.

Yet switching to a profitability index raises a few issues — both for the writers that cover studios as well as those hoping to get rich selling them scripts. Because as “Law & Order” producer Dick Wolf — no friend of the Writers Guild — acerbically put it while interviewing two studio bosses during a July 17 industry forum, if the new starting point for guild negotiations is profitability, “Could you define ‘profit’ for the people in the room?”

Hollywood’s infamous accounting practices are one reason TV writers are terrified to come to terms over new media, since any formula relies on a fair breakdown of revenue. A line attributed to Mel Brooks sums up the paranoia on this score, saying that every studio has carved on its gates in ancient Hebraic, “The money is here; we dare you to find it.”

Perhaps foremost, though, measuring profitability entails knowing not only revenue but production costs — information that studios treat like war secrets, the kind of precious data Winston Churchill said must be accompanied by a “bodyguard of lies.” In addition, deciphering expenses has become more difficult as conglomerates are able to bury results for various operating units within their financial reporting.

Loosely translated, then, GE’s combined message was “Judge us by our profitability, and you’ll just have to take our word for what that is.” Not much makes Nielsen ratings and football’s Bowl Championship Series resemble well-devised systems, but that just might qualify.

There is also another, more intangible point about the “We’re No. 1” impulse.

Certainly, there’s something dated, even childish, about such proclamations, which in TV have grown more inane as cable networks join in — claiming to be “first” within tiny niches and trumpeting inconsequential rating milestones, sometimes within made-up demographic segments like “boomers” and “tweens.”

The competitive drive to win, however, speaks to more than an idle boast, but rather a competitive fire that helps translate into that sought-after profitability. The urge can occasionally be blinding, but more often than not a guy like CBS Chairman Leslie Moonves benefits from his take-no-prisoners attitude and impatience with bookkeeping alibis.

Don Ohlmeyer had a similar mindset during his tenure overseeing NBC’s West Coast operation, saying there were two reasons to want that job: “You desperately want to win, or you want people to like you and invite you to parties. And the two are mutually exclusive.” As I recall, during those years when NBC was No. 1, its profits flowed pretty freely.

Finally, even if NBC and Universal are right about applying more sophisticated analysis to Hollywood’s business machinations, it’s simply an inopportune time to make that argument — tainted as it is by the perception of trying to alter the rules for scorekeeping because you’re behind in the game.

Personally, my favorite description of winning comes from “Conan the Barbarian,” in which Arnold Schwarzenegger barks the secret of happiness to a gathering of warlords: “To crush your enemies, to see them driven before you, and to hear the lamentations of their women.”

Granted, that sounds bloodthirsty and a trifle sexist, but if “We made a profit” is really NBC’s preferred alternative to “We’re No. 1,” maybe it’s time to invite a few barbarians to GE’s next corporate retreat.

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