Steve Burke: NBC's Ratings Woes Hurting Revenues
In the midst of a major executive shake-up at NBCUniversal's film unit, CEO Steve Burke on Wednesday says that all is not well in the company's broadcast and cable TV divisions, either.
CBS, Fox and ABC make $500 million to $1 billion more than NBC does each year, in part because NBC sells advertising for about 20 percent less than its competitors due to smaller ratings, Burke said Wednesday.
Retransmission fees have gone from zero a few years ago to $200 million this year, Burke said, and there, too, NBC lags behind the competition.
"Retransmission consent is a big opportunity for broadcast, but more fundamentally, we've underperformed," Burke said. "We sell our ads at a discount -- about a 20 percent discount, which we're working on closing. Our ratings are lower than we would like them to be, and so, broadcast remains a very big opportunity."
Burke was speaking at the Bank of America Merrill Lynch 2013 Media, Communication & Entertainment Conference in Beverly Hills.
Speaking of cable properties like USA Network, Bravo, NBC Sports, MSNBC and others, Burke said: "I think there's a monetization gap, which is what we call it, between how those channels are doing and how they should be doing, measured by how peer cable channels are doing."
On the positive side, Sunday Night Football, Revolution, The Voice, the Winter Olympics and a few other franchises have set NBC up for a very good year, Burke said, which will set the table for higher advertising CPMs, and he vowed to keep investing in quality content.
"We don't want to cut our way to profitability," he said.
Burke mostly steered clear of discussion about the film studio, though he again noted that Despicable Me 2 is "the most profitable film in the 100-year history of Universal." A third film is in the works, as is a Christmastime spinoff about the Minions.
"The animation business, we think, is a very, very important part of our future," he said.
He also spoke of an effort to "try to clean up and reinvest in" franchises, using American Pie as an example.
Perhaps further eluding to reasons for management shifts at Universal, Burke said: "We're also very eager to improve our performance internationally, improve our performance in terms of digital, improve our strategies in terms of how we take our films and move them around the world. There are huge, huge opportunities in places like China."
He also said electronic sell-through for film is "in the first half of the first inning," so the opportunity for profit there is tremendous, especially when, some say, there will be 5 billion smartphones in the world, each representing "a seat in a movie theater."
That said, he still has confidence that the traditional movie theater business will remain robust. "As long as boys and girls want to get away from their parents," he quipped.