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Speaking at the Bank of America Merrill Lynch Media, Communications & Entertainment Conference in Beverly Hills in a session that was webcast, he also touted recent digital media investments and said they would help make the company smarter about getting content distributed online.
“We are in the fifth or sixth inning,” or about half-way through the baseball game, he said when asked about how much financial upside NBCU had at this point. Financial growth has been 14 percent since Comcast took over NBCUniversal, he highlighted and said he believed that was the fastest growth in the sector, adding that his team wants to continue that. “We are still underperforming in a bunch of businesses,” he said. “The growth is going to continue.”
Comcast took over NBCU four and a half years ago. “We were very fortunate that we bought NBCUniversal when we did,” Burke said. He said the economy and advertising market at the time were weaker before bouncing back. That has also helped theme parks attendance, he said. He predicted $6.4 billion-$6.5 billion in operating cash flow for NBCU this year, about double the figure at the time of the acquisition.
“Nothing different has happened in the past month,” Burke said when asked about media stocks’ sharp declines in recent weeks, saying it was an “overreaction” by investors. He emphasized that viewership fragmentation remains high amid the many networks and other entertainment options. He said he had called out traditional viewership declines last year and predicted slower cable networks unit growth in the coming years then. Cable networks groups “will just have lower growth rates,” he concluded.
He on Wednesday also lauded the overall growth in video consumption though and said cable networks would continue to be a “good business.” Burke predicted that the company’s overall cable networks group would see ratings declines, offset by affiliate fee and international gains and revenue from digital licensing deals. That should end up amounting to single-digit percentage growth, he said.
“We need to get better about taking our existing video content and bringing it to consumers directly via the Internet,” Burke said in explaining the recent decision to invest in BuzzFeed and Vox Media. “We are not as strong as we need to be, we are not as smart as we need to be” in terms of bringing video to consumers in digital ways, he said.
He said the company needs to get “smarter” and better at this, mentioning The Huffington Post and Vice as companies that also caught NBCU’s eye. He said the deals could help its web sites with news, Olympics and other content.
Scripted programs that are reruns are the key driver of ratings weakness on TV networks, Burke said. “By and large it has not occurred at live programming,” he said. Burke explained that live sports, such as the Olympics, are the “safest bet” that audiences will tune in live.
Burke on Wednesday also predicted that the proliferation of original programming would slow after the push into originals by many players in recent years. He predicted that “the sheer volume will not continue to increase at the pace” it has seen as “people are starting to realize there’s too much here.”
He said retrans revenue this year will come in at around $500 million, compared with zero when Comcast took over NBCU, adding the company was still behind broadcast peers. That means there is a monetization gap in terms of retrans, but also in terms of ad dollars. A gap of more than 20 percent a few years ago has closed about half-way. “But still there is no reason” for the number 1 network in key demos to be below competitors, he said, adding that was a multi-$100 million upside opportunity.
Telemundo is “one of the biggest” opportunities for upside as it looks to further grow its audience share, worth hundreds of millions of dollars, Burke said. He said the Spanish-language network business has at times even beaten Univision in terms of news ratings in New York and L.A.
Burke also said he expects the theme parks unit to have a decade or two of growth ahead of it.
“The entire company creates” an event before a movie’s launch, he said in explaining the strength in the company’s film unit, citing Jurassic World as an example, which saw a TV ad during the Super Bowl a year before its launch.
He said the company has 20 percent of U.S. eyeballs and creates roadblocks and creative promotions, such as having dinosaurs running across the ticker on CNBC’s Squawk Box. With such promotions, suddenly “in the psyche of America, Jurassic World is on their mind,” Burke said. He lauded the culture of collaboration. “Scale is a unique advantage,” he explained of the culture his team is looking to instill. “Ultimately you world for NBCUniversal, not Bravo.”
The film unit will see a record year, he reiterated, saying financials will be up 50 percent-60 percent from the previous record year. He said repeating this year’s success will not be easily repeated ever again, but said the studio is looking ready to “fly at a higher altitude” in the future than in the past five to 10 years. Strong management and the right culture are important ingredients that Universal has these days, although “good fortune” remains a key factor in the hit-driven movie business, he said.
Only about 20 percent of NBCU’s revenue comes from international, Burke also said Wednesday. That is below that of peers, he said. “We see that as a huge opportunity” over the next 5-10 years, whether via acquisitions or organic developments, he said, citing a planned theme park in Beijing as one example.
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