NBC Universal Questions Linger


NBC has completed its purchase of Vivendi Universal Entertainment, giving its affiliate-sales force an arsenal of networks reaching into the realms of general entertainment, culture and genre-specific niches and news.

How well NBC Universal leverages that expanded clout should play out in the months ahead, as the giant media company, which will generate annual revenues of $15 billion, tries to secure increased rates for USA Network and makes a decision on the fate of the buzzworthy but minimally distributed Trio.

Moreover, it was unclear how affiliate sales would be structured under the direction of NBC Universal Cable president David Zaslav.

Those were among the questions that remained following last Wednesday’s official merger announcement in the Peacock’s Saturday Night Live studio here.

The gathering did provide some answers key answers for the cable community. The new NBC Universal organizational chart gives dual-network oversight to a pair of veteran female cable-network chiefs.

Sci Fi Channel president Bonnie Hammer adds responsibility for USA Network, while Trio president Lauren Zalaznick adds day-to-day operations of Bravo.

Both report to Jeff Gaspin, now NBC Universal cable-entertainment and cross-platform strategy president. Gaspin has managed Bravo since NBC bought it from Cablevision Systems Corp. in December 2002.

Gaspin, in turn, reports to NBC Universal TV Group president Jeff Zucker, who has oversight of MSNBC and CNBC.

Some touchstones to follow in months to come:

• USA impact: Big benefits could accrue to USA Network. Most of its affiliate deals expire in 2005, according to Universal sources.

The network has enjoyed a ratings renaissance over the past year, due mostly to the success of its original programming shows such as Monk and Dead Zone. USA’s 2.1 household primetime rating was good for a share of the top spot in the first quarter, and the network followed with a 36% primetime ratings increase in April to a 1.9.

Still, operators have intimated that they would look to maintain or even reduce USA’s rate card, ranging from 32 to 42 cents, when their current contracts expire.

Zaslav would not comment on renegotiation strategies, but hinted USA would come to the table with an enhanced package, potentially including video-on-demand and HDTV programming not currently offered by the service.

“We’re going to focus on making each of our services stronger and more compelling, while at the same time we’ll listen to what our distributors want,” Zaslav said. “We’ll be flexible and nimble to what the distributors are interested in.”

USA is steaming ahead with an aggressive slate of original series, miniseries and movies that run the gamut from crime dramas to ripped-out-of-the headlines movies. The slate will be part of the combined upfront presentation to advertisers NBC Universal makes here on May 17.

NBC Universal will also look to boost value via Olympics coverage. Dick Ebersol, chairman of NBC Universal Sports & Olympics, which now includes USA sports properties, said that it was “absolutely” the intention to make “USA the cable home of the Olympics.”

Ebersol said USA — slated to begin Olympic Games trials coverage this month — would present “high-level” events from Athens this August, “the majority of them live in the morning and afternoon New York time.” A detailed scheduled is expected to be announced within a couple of weeks.

Although NBC holds Winter and Summer Olympics rights through 2012, its cable deals through CNBC and MSNBC are up in 2008. NBC could conceivably tie the remaining Olympics cable deals to a USA renewal agreement, according to NBC executives.

USA could also benefit from NBC retransmission consent deals.

• Trio future: The game plan for Trio is far less settled than for USA, as speculation persists the 20 million home network will ultimately be folded into Bravo.

Gaspin said Trio would remain a linear channel for now, but must show distribution improvement in the next three to six months.

“Now that we’re together, we’ll take a long hard look at it,” he added. “The story about Trio is distribution. It’s in 20 million homes now, and to be a viable channel, it needs to get to 40 million. We have to look at what the prospects of that distribution increase [are] and make a decision based on that.”

• Job cuts: NBC Universal chairman and CEO Bob Wright said the combined entity employs 15,000 and whatever cuts come won’t exceed 3% of the work force, or about 500 people, over a couple of years. Workforce redundancies are most likely to claim jobs in such areas as network affiliate sales and marketing.

Zaslav would not comment on potential employee cuts except to say that the company will look at the NBC and Universal teams “to find the best people and create the strongest group going forward.”

But one NBCU executive said many of the cuts will come from the television and cable group, where there is significant overlap in several areas — particularly in ad sales, where NBC Cable will now represent the Universal cable networks.

“There’s obviously more synergy [in the television group],” said the source. “The cable and television group is more likely to have overlap, so there will be people doing the same thing, so we’ll have to figure out who the best people are and how many people we need.”

<p>The Peacock’s Universe</p><p>Cable holdings under NBC Universal (sub counts):</p>

USA Network

88 million


86 million

Sci Fi Channel

83 million


81 million


76 million


32 million*


20 million


6 million