04 December 2009

Zucker Needs To Prove Himself To New Bosses From Comcast


Jeffrey Zucker, NBC Universal’s chief executive officer, may have as few as nine months to prove himself to his new bosses at Comcast Corp. while the biggest U.S. cable operator seeks regulatory approvals.

Zucker, 44, will continue to run NBC Universal during a regulatory review period, executives of the Philadelphia-based company said yesterday on a conference call. The process to acquire control of the General Electric Co. unit may take nine to 12 months.

Profit at NBC Universal has slid 27 percent this year. Under Zucker’s watch, the company’s cable channels lifted results while the last-place NBC broadcast network sank lower in ratings. He moved talk-show host Jay Leno to prime-time, drawing scrutiny from analysts and industry executives who question whether he’s the best choice to lead NBC under Comcast.

“Wall Street will go insane if Zucker keeps his job,” Laura Martin, an analyst at Needham & Co. in Pasadena, California, said in an interview. “Wall Street views Jeff Zucker as value destructive. He has many excuses but few value- creating results.”

Zucker wasn’t available for an interview, according to a spokeswoman for New York-based NBC Universal.

Since Zucker became CEO in February 2007, NBC has fallen further behind rivals CBS, Fox and ABC in prime-time ratings. Zucker renewed Kevin Reilly’s contract in 2007 and replaced him shortly afterward with TV producer Ben Silverman as chief of NBC Entertainment. Silverman left in September of this year, after helping Zucker to engineer the Leno move from late-night.

Weather Channel

Zucker pared 500 jobs one year ago and consolidated operations to cut costs as advertising sales fell. He expanded NBC’s holdings by buying the Weather Channel for $3.5 billion with private-equity partners Bain Capital LLC and Blackstone Group LP. Fairfield, Connecticut-based GE reduced the value of NBC Universal’s stake in the Weather Channel in the third quarter, the parent company said in October.

Should the deal be approved, Zucker will report to Stephen Burke, Comcast’s chief operating officer, the cable company said yesterday in a statement.

Comcast, the largest U.S. cable-TV provider, yesterday agreed to form a $37 billion joint venture combining GE’s NBC Universal with its own media assets. Comcast will own 51 percent of the new entity.

Zucker “has helped lead other large acquisitions for NBC, successfully transforming their company,” Comcast CEO Brian Roberts said yesterday on a conference call. “We are looking forward to Jeff and his team doing the same here again.”

Regulatory approval may take 9 months to 12 months, Zucker told NBC employees in a memo.

‘Business as Usual’

“For now, it remains business as usual,” said Zucker, who has been named CEO of the new venture. “I expect this will be the case for the vast majority of you even after the deal closes.”

Comcast, which raised its dividend yesterday, rose 22 cents, or 1.4 percent, to $16.13 at 4:06 p.m. New York time today on the Nasdaq Stock Market. GE gained 20 cents to $16.20 and is unchanged this year on the New York Stock Exchange.

NBC, where ratings have dropped for seven straight seasons, hasn’t recovered from losing “Seinfeld” and other hit shows at the start of the decade. The network will be “fiscally prudent” when weighing a bid for broadcast rights to the 2014 Winter Olympics in Sochi, Russia, and the 2016 Summer Games in Rio de Janeiro, Zucker said today on CNBC. The Olympics are something the company would “like to stay in,” he said.

Zucker has “at least a couple of years” to right the broadcast network and bring it up to second or third place in the ratings, according to Don Seaman, head of TV research at MPG North America, a New York-based media buyer.

“NBC, their biggest issue right now is they have no identity,” Seaman said. “They just seem so adrift.”


When Zucker became NBC’s entertainment chief in 2000, the network was in second place in prime-time. In 2004, he was promoted to lead NBC Universal’s TV group, which also included cable properties.

“Part of me is surprised he keeps going and going and going,” said Seaman, whose company’s clients include McDonald’s Corp., Sears Holding Corp. and Carnival Corp. cruise lines. “NBC unfortunately has become that also-ran.”

The network hasn’t “done a very good job” of programming prime-time in the last several years and needs to do better, Zucker said last month at a conference at the Paley Center for Media in New York.

At the Universal Pictures film unit, U.S. and Canadian box- office sales have declined 16 percent year-to-date, according to researcher Box Office Mojo. At the same time, the industry is poised to set a record, surpassing $10 billion in sales, according to estimates from Hollywood.com Box-Office. The industry is grappling with a decline in DVD sales.

NBC Rise

In October, Zucker shuffled management at the film studio, naming Adam Fogelson chairman and Donna Langley co-chairman, replacing Marc Shmuger and David Linde.

Zucker, a Harvard graduate, started as a researcher for NBC Sports coverage of the 1988 Seoul Olympics. Later he landed at the “Today” show, which he would eventually run by the age of 26, and ascended to run NBC’s Los Angeles entertainment division in 2000. He became the network’s president two years later.

Bob Wright, Zucker’s predecessor who helped merge NBC and Vivendi SA’s Universal Studios, is credited with creating cable channels such as MSNBC and CNBC, and acquiring Telemundo and Bravo. NBC Universal’s third-quarter cable operating profit climbed 11 percent to $552 million as sales gained 8 percent to $1.2 billion, GE said Oct. 16.

It’s advantageous for Comcast to keep NBC Universal stable during the acquisition process, Wright said. He declined to comment on Zucker’s performance.

‘Getting the Deal Done’

“Right now the focus is on getting the deal done, and keeping management intact,” Wright said in an interview.

Firing Zucker could be costly. His employment contract runs through 2013, according to two people with knowledge of the agreement. They asked not to be named because terms aren’t public.

“Replacing Jeff Zucker would underscore to Wall Street that value creation is Comcast’s top priority,” Martin said. “NBC has gone to fourth from first and he should take the blame. He should get out of the way.”

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