NBCUniversal CEO Steve Burke acknowledged that the struggling Peacock broadcast network is leaving a billion dollars on the table each year as parent Comcast rebuilds it “brick by brick.”
Meanwhile, Disney CFO Jay Rasulo warned investors of a $50 million writedown coming from the Mouse House next quarter following the decision to pull the plug on a stop-motion pic from filmmaker Henry Selick. Both execs gave presentations to Wall Streeters Thursday at the Bank of America Merrill Lynch Media Conference.
Burke conceded that NBC’s financials lag its Big Four network rivals by anywhere from $700 million to $1.5 billion, “and there’s no reason for that.”
“There are four companies that each have the same infrastructure, spend the same money, and one company is making $1 billion a year less than the other companies,” Burke said.
On the bright side, it’s an opportunity. “It’s hard to find any business where you could add $1 billion in operating cash flow just by doing things better,” Burke said. NBC, monetizing cable and keeping theme parks fresh are priorities along with franchise films for Universal Pictures. “We would like to see a ‘Ted 2’ as soon as we can,” Burke said. Stepped up animation production, as in two pics a year vs. one every 18 months, will renew the park biz, he said, taking a page out of the Disney playbook.
“Despicable Me” and “The Lorax” are both park attractions. “To keep that cycle going, if you want to have a great entertainment company, you want to have a great animation group and a great theme park group and you want them to work together,” Burke said.
Otherwise, “I think the film business, of all of our businesses, is certainly the toughest. It’s not for the faint of heart. There’s no way to fully take the volatility of the film business out. Our strategy is to take advantage of whatever we can,” he said. Universal dusted off the “American Pie” franchise with “American Reunion” and put out “The Bourne Legacy.” “We’re encouraged, and you’ll see future ‘Bourne’ films,” he said.
In cable, Burke said affiliate fees for NBCU’s top-rated nets like USA are substantially less than rivals like TBS and TNT and that CPMs are 25%-30% lower. He expects the gap to narrow a the company renegotiates deals.
Rasulo told investors that the film writedown would amount to “a short-term, fourth quarter impact” on the Mouse’s earnings. The decision to the pull the plug on the Selick pic in August was among the first major decisions made by Alan Horn after replacing Rich Ross as chairman of Walt Disney Studios in June.
Horn is focused on the moviemaking and on examining the studio’s size and efficiency.
In TV, Rasulo said the fast-growing Disney Channel, which has successfully challenged Nickelodeon for tots’ eyeballs with shows like “Phineas and Ferb” and “Doc McStuffins,” may well have become Disney’s biggest international franchise. “Our strategy is to expand it and get it deeper and deeper around the world in a multichannel way.”