Slight shift despite lower ratings
NBC Universal chief Jeff Zucker said Thursday that despite lower ratings at NBC, upfront ad sales would be flat with last year, indicating a slight uptick in ad rates as the industry shifts from live to DVR-incorporating “Live Plus Three” commercial ratings as the basis for ad deals.
Speaking to an audience of financial analysts who cover NBC U parent GE, Zucker predicted that NBC would book $1.8 billion-$1.9 billion in ad commitments during the upfront and that the net would look to pre-sell 75% of its primetime inventory — about the same volume as last year.
But his big message to Wall Street is that the performance of the once-dominant Peacock no longer drives the bottom line of NBC Universal. Cable TV has become the biggest and most-important part of the conglom’s media portfolio.
“We just finished in fourth place in primetime; it’s a problem, and we know it,” he said. “The network represents less than 10% of our earnings — closer to 5% — but it is key to our public perception.”
Zucker’s prediction came on the heels of an announced $1 billion advertising deal with WPP’s Group M, the largest aggregator of TV advertising dollars. Accord includes network, cable, Spanish-language, Internet and product integration deals.
Neither side disclosed the ad rates, or the amount of NBC commercial inventory the deal represents, but Zucker assured analysts that ad rates were “positive,” even after the conversion from live program ratings to “Live Plus Three” commercial ratings, which includes ads viewed via DVR playback within the first three days of live broadcast.
He said the company expects to book $4 billion in ad revenue across all its ad-supported media properties in similar deals during the upfront sales process.
Zucker assured financial analysts that the company had already taken the financial hit from dropping from first to fourth in the ratings during the past three years.
“We believe there is upside going forward,” he said.
The event in Gotham, held in the “Saturday Night Live” studio at 30 Rock and relatively rare for the company, is designed to further educate Wall Street on a company whose recent financial performance has been singled out as a drag on GE’s portfolio.
Zucker assembled all the heads of various business units within NBC U for the event, including U chairman Marc Shmuger and co-chair David Linde, news prexy Steve Capus, cable topper Jeff Gaspin and NBC Entertainment co-chairman Marc Graboff.
Absent was Ben Silverman, the former Reveille topper tapped to shake up the Peacock’s primetime strategy.
“There were many suitors for Ben,” Zucker said, adding his hire represents “the surest sign we can give you that we are not satisfied with where we are.”
Zucker touted the NBC 2.0 cost-cutting initiative, which saved the company $600 million-$700 million last year, and said further cuts of $300 million-$400 million are planned for the coming year as the company seeks to transform what he called its “analog cost structure.”