Zucker: NBC underinvested in development

Will continue as NBC Uni CEO under Comcast

NEW YORK -- NBC Universal president and CEO Jeff Zucker on Monday said the media and entertainment industry is continuing to make slow progress in making money off content in the digital space.

He also said his team has underinvested in the NBC network, but has started correcting that as it looks to reverse NBC's fortunes.

"We have underinvested in development (at NBC Entertainment) over the last few years," he said. "That has been a mistake." He expressed hope for a turnaround in the coming years and said that would be an important goal with or without a sale of NBC Uni.

Zucker closed out the first day of the 37th annual UBS Global Media & Communications Conference, which Comcast chairman and CEO Brian Roberts had opened, to a full room.

One investor asked for an update to Zucker's famous comment a few years ago that for every analog dollar, media companies are making only digital pennies, which he had updated to dimes instead of pennies last year.

"We are making progress," Zucker said, but added the industry isn't quite at the level of digital quarters yet. "I'll give you a quarter, but I'll need a little change," he said, adding that the industry is doing better every 6-12 months. "It's just not where it needs to be," he concluded.

After Comcast top executives earlier in the day said the system of local TV affiliates won't go away, one investor reminded Zucker that he had previously suggested there may be no more affiliates in five years.

"The affiliates system has served us incredibly well," but "has been under assault these last few years" as the digital revolution has taken its toll, he said. In the end, he signaled he may have to extend the time horizon he had mentioned in his previous comment.

Asked by reporters about the future of the "Jay Leno Show" after his formal remarks, Zucker said "we are not going make any quick decisions," even though his team will continue to look at the situation.

Zucker spent much of his on-stage appearance at the UBS conference touting the opportunities of the enlarged NBC Uni that last week's deal with Comcast, which is planning to take a 51% stake, would create.

"We will be a better company because of this move," Zucker vowed. "It gives us a bigger chess board to play with."

He did, however, not provide specifics beyond once again hinting at cross-promotion opportunities, getting more out of the combined sports networks and the ability to try out new business models in the digital age.

Speaking of sports: "Nobody should think this is another ESPN," Zucker said, echoing earlier comments from Comcast COO Steve Burke, to whom he will report, when asked if the combined NBC Uni and Comcast sports networks can take on Disney's sports juggernaut.

 ESPN is "best in class," but capturing more money in the attractive sports business is still an upside opportunity for the enlarged NBC Uni, Zucker said.

He also gave his studio business a vote of confidence. While acknowledging the need to turn around Universal Pictures, which "had a bad year this year" because it spent too much on films that underperformed, he highlighted that the studio had its best and most profitable two years in 2007 and 2008. Overall, he predicted it will return to a strong performance.

Zucker also said his General Electric bosses have been "great stewards," but he is excited to work for a majority shareholder that is "100% focused on media."

Confronted with rumors that he may not stick around as CEO too long under Comcast's leadership, Zucker said: "They have asked me to stay on as CEO of the company...Yes, they have asked me. Yes, I have accepted. And yes, I am looking forward to it."

He said he knew the Comcast team before the deal, but got to know them really well over the past four months.

Zucker also faced the question of whether content and distribution can mesh well under the same roof due to failed past media mergers. Just because content and distribution haven't worked together in certain cases, it doesn't mean a combination can't work if managed right, he said.

He didn't answer if the Comcast-led NBC Uni will be the best-positioned media company beyond saying it will be "very well positioned."

Asked about NBC Uni's focus in recent years on building out its cable channel business, Zucker said the cable network business is a "superior" model, but the firm hasn't gotten full credit for that given the first three letters of its name. The company wouldn't have grown as nicely as it has if his team had not made the transformation, he added.

Zucker also drew some laughs when he congratulated UBS media and entertainment banking head Aryeh Bourkoff for helping to keep the Comcast deal under wraps for most of the year. UBS was a co-advisor to Comcast in the deal that had over the past two months become the industry's worst-kept secret.