×
You will be redirected back to your article in seconds

Zucker says Apple deal rotten

NBC U says iTunes revenues meager

NBC Universal topper Jeff Zucker warned Monday that new digital business models are turning media revenues “from dollars into pennies” and revealed that NBC U booked just $15 million in revenue during the last year of its deal with Apple’s iTunes.

Interviewed by the New Yorker’s Ken Auletta at a benefit for Syracuse U.’s Newhouse School, Zucker described the impasse that led to NBC U’s decision not to renew its current iTunes deal, which expires in December.

NBC U wanted to explore higher pricing for hit shows such as “Heroes” by raising the price from Apple’s standard $1.99 to $2.99 on an experimental basis.

“We wanted to take one show, it didn’t matter which one it was, and experiment and sell it for $2.99,” he said. “We made that offer for months and they said no.”

In lieu of more flexibility on pricing, NBC U sought a cut of Apple’s hardware sales.

“Apple sold millions of dollars worth of hardware off the back of our content, and made a lot of money,” Zucker said. “They did not want to share in what they were making off the hardware or allow us to adjust pricing.”

NBC Universal programming accounted for 40% of iTunes’ video sales. Zucker used iTunes as an example of the kind of digital business model that, he asserted, is corrosive to the media business.

“We don’t want to replace the dollars we were making in the analog world with pennies on the digital side,” he said.

Apple did not return calls for comment.

Zucker’s comments came on the day of the beta launch of Hulu.com, NBC U and News Corp.’s joint venture that aims to compete with iTunes for whatever online demand exists for studio-produced TV and films online.

Auletta pressed Zucker on Hulu.com, pointing out that user-generated clips and shortform programming — not necessarily full-length episodes of TV shows — had taken off on the Web.

Zucker argued that the 50 million streams of TV shows that had been accessed on NBC.com during the month of October prove there is a demand for traditional TV series on the Web.

“It’s extraordinary,” he said of NBC.com. “It’s like a small cable channel in our universe that is becoming very successful.”

Zucker took on a wide range of questions from Auletta and the audience, including whether NBC U would be spun off from GE and what he thinks of the newly launched Fox Business Network.

On the potential spinoff, Zucker chalked up the talk as fashionable in media circles but with no basis in reality. “If it made sense for GE to sell NBC U, I would be all for it; I’m a major shareholder,” he said. “The fact is we have had a very good year, and a lot of those whispers have quieted down.”

Zucker said he had given CNBC’s new competitor, Fox Business Network, a look and that he liked what he saw.

“CNBC is a very serious-minded financial news network, and what we’ve seen thus far from Fox appears to be not as investment-focused or financially focused, and that’s good for us,” he said. “From a performance standpoint, it has had no impact (on ratings) over the last few weeks.”

Like News Corp., Zucker said NBC U had looked at a potential Dow Jones acquisition at least four times over the last decade and examined it again during Rupert Murdoch’s latest bid.

“The fact is at that price it makes absolutely no economic sense for anybody but Rupert,” he said.

More Digital

  • Gena Konstantinakos - Topic

    Topic Hires Viceland's Gena Konstantinakos as VP, Development and Video Programming

    Topic, First Look Media’s entertainment studio and digital destination for original content, hired veteran producer Gena Konstantinakos as VP, development and video programming. Konstantinakos hails from Vice Media’s Viceland cable channel, where she was executive producer, development and current series. At Topic, she reports to Ryan Chanatry, general manager of Topic. Konstantinakos is tasked with [...]

  • Martin Kon - YouTube

    YouTube Hires Consultant Martin Kon as VP of Strategy

    Google’s YouTube tapped Martin Kon, who has worked as a tech, media, and telecoms consultant for more than two decades, as VP of strategy. Kon, based at YouTube’s headquarters in San Bruno, Calif., reports to chief business officer Robert Kyncl. Kon will work with YouTube senior execs to help formulate the long-term vision of the [...]

  • Sonos One

    Sonos Sues Competitor Bluesound for Patent Infringement

    Smart speaker maker Sonos has sued Lenbrook Industries, the company behind the audio brand Bluesound, for patent infringement. It’s the second such lawsuit from Sonos against a competitor, which has also been using its patents to gain concessions from the makers of voice assistants. In the lawsuit filed late last week in a California court, [...]

  • tubi tv roku

    Ad-Supported Video Service Tubi Tops 20 Million Monthly Active Users

    Ad-supported video service Tubi broke its own audience records in May: Tubi, which positions itself as a free alternative to Netflix, surpassed 20 million monthly active users last month, the company said Monday. The service’s users viewed more than 94 million hours of programming in May, according to Tubi, which also claimed to have brought [...]

  • First Media - Chris Athanassopoulos, Jocelyn

    First Media Names Chris Athanassopoulos CFO, Jocelyn Johnson as SVP of Brand

    First Media, the media company focused on millennial women audiences whose brands include BabyFirst TV, announced two new members of its executive team as it eyes expansion in 2019. Chris Athanassopoulos, previously Twentieth Century Fox’s VP finance for worldwide TV distribution, has joined First Media as its chief finance officer. (First Media’s previous CFO, Karl [...]

  • Chris Thorne - Beats

    Apple's Beats by Dre Taps Chris Thorne as Chief Marketing Officer

    Beats by Dr. Dre, Apple’s audio-products subsidiary, announced Chris Thorne — whose past gigs have included stints at EA and Jessica Alba’s The Honest Co. — as its chief marketing officer. Thorne takes on the CMO role after the departure earlier this year of Jason White, formerly Beats’ EVP and global head of marketing, who [...]

More From Our Brands

Access exclusive content