25 January 2010

NBC Said to Tell Comcast of Leno Troubles Before Deal


NBC told Comcast Corp. in November that Jay Leno’s ratings had hurt local stations, one of the factors that weighed on the value of the entertainment company, according to people with knowledge of the situation.

The discussion was part of a broad review of NBC Universal by executives of both companies as Comcast negotiated for General Electric Co.’s entertainment unit. NBC also projected a $200 million loss on the Olympics, according to the people, who asked not to be identified because the talks were private.

The review gave Comcast a heads-up that NBC was considering its options at 10 p.m., two months before the New York-based network announced the decision to move Leno out of prime time, the people said. David Bank, an analyst at RBC Capital Markets in New York, estimates NBC will spend $200 million rebuilding its schedule in that time slot.

Allison Gollust, a spokeswoman for NBC Universal, said the company doesn’t comment on closed-door meetings. John Demming, a spokesman for Philadelphia-based Comcast, the largest U.S. cable television service, also declined to comment.

Comcast agreed to acquire control of NBC Universal through a venture with current majority owner GE in a deal announced on Dec. 3. The cable operator will pay $6.5 billion and contribute cable assets worth $7.25 billion, including the Golf Channel.

Those at the briefings included Comcast Chief Executive Officer Brian Roberts and Chief Operating Officer Stephen Burke, as well as NBC Universal CEO Jeffrey Zucker, Jeff Gaspin, head of entertainment for the network, and sports chief Dick Ebersol.

Falling Ratings

Faced with falling prime-time and late-night ratings, along with viewer losses for local news on affiliate stations, NBC said this month it would move Leno back to late night at 11:35 p.m. Gaspin told TV critics this month he made the decision to end the 10 p.m. show in December amid growing protests from the stations, and that Comcast wasn’t involved.

“They have nothing to do with the business decisions we make, and they won’t until there’s regulatory approval,” Gaspin said at the time.

Conan O’Brien, 46, succeeded Leno on “The Tonight Show” in June and refused to host a later program at 12:05 a.m. NBC has negotiated a severance package for him, NBC’s Gollust said today. The exit deal will be announced today, she said.

The agreement may include a payout of about $32 million for O’Brien and about $12 million for his employees, the Wall Street Journal reported today. The newspaper said it didn’t have full details on the final arrangement.

Less Than 10%

The NBC network and its owned stations accounted for less than 10 percent of the $30 billion valuation for NBC Universal when the deal was announced, the people said. The company also owns a film studio, theme parks and cable channels.

GE, based in Fairfield, Connecticut, fell 48 cents to $16.02 at 4:15 p.m. in New York Stock Exchange composite trading. The shares declined 6.6 percent last year. Comcast, which was little changed in 2009, lost 52 cents to $16 on the Nasdaq Stock Market.

The day after the purchase by Comcast was announced, Zucker said in an interview with CNBC that Leno’s 10 p.m. show was performing as the network expected. Lower 10 p.m. ratings were hurting NBC’s local TV stations and the decision to air a talk show in prime time was being assessed, he said.

The sale of NBC Universal is awaiting regulatory approval that may take as many as nine months. Vivendi SA, which will sell its 20 percent stake in NBC Universal as part of the deal, fell 54 cents to 19.89 euros yesterday in Paris.

Ebersol, the chairman of NBC Universal Sports, said on Jan. 10 the network would lose money broadcasting the Winter Olympics in Vancouver because of rising costs for TV rights. He said it was the first such loss on the Olympics since he joined NBC.

NBC, last among the big four broadcast networks in prime- time audience ratings, will produce the most pilots since 2003 to win back viewers, Angela Bromstad, president of prime-time entertainment, said in a Dec. 21 interview.

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