NBC Universal in restructuring mode for the digital era

MUMBAI: US media conglomerate NBC Universal has announced NBCU 2.0. This is a wide-ranging strategic initiative to assure future growth, streamline and strengthen operations, and exploit opportunities created by the rapidly evolving digital and global marketplace.


NBCU 2.0 will seek to maximise the potential of the entire NBC Universal portfolio, including broadcast, cable, film, and theme parks, by creating operating efficiencies and reallocating resources to invest in new growth areas. The initiative the firm says continues the evolution of NBC Universal, marked in recent years by significant investments such as Vivendi Universal Entertainment, Telemundo and iVillage. NBCU 2.0 will enhance ongoing efforts to redirect traditional analogue resources toward high-growth digital areas and international expansion.

NBC Universal has struggled with weak ad sales and profits. The structuring plan will reduce annual expenses by $750 million. This will be partly done by cutting 700 jobs. The moves, which have been in the works for more than a year, were announced by General Electric vice chairman and NBCU chairman/CEO Bob Wright. NBC U profit dropped 10 per cent during ththird quarter, pulled down by lower ratings at NBC which has struggled after the departure of high profile shows like Friends.

NBC is said to be looking to ease off of scripted dramas, that can cost several millions of dollars per episode, in the 8 pm time slot in favour of less expensive game shows and other fare. The advertiser interest is not enough to justify the expense of scripted shows indicate reports. To give a cost comparison to readers the game show Deal or No Deal costs $1.1 million an episode, while the drama Friday Night Lights costs more than double at $2.6 million an episode. So in the first hour of primetime there will be more of game shows rather than dramas.

Wright says, "Success in this business means quickly adjusting to and anticipating change. This initiative is designed to help us exploit technology and focus our resources, as we continue our transformation into a digital media company for the 21st century".

In many cases, the company says that savings will be reinvested in higher-growth areas. The focus is going to be on tapping into the digital arena. Digital revenues are expected to exceed $1 billion by 2009. Recent growth has been driven by initiatives such as the partnership between Yahoo and Telemundo to develop the leading Hispanic Internet destination; the launch of NBC WeatherPlus, nbbc,,, and; the creation of several other original broadband channels; the development of interactive television and digital cinema applications; and the delivery of a 360-degree content experience via online and wireless platforms.


NBCU Television Group: As part of NBCU 2.0, the business models in News and Entertainment will be further adapted to exploit the opportunities of the changing media landscape.

NBC Universal Television Group CEO Jeff Zucker says, "NBC Universal 2.0 will prepare us for future growth from a position of strength. With new momentum in prime time at NBC, continued leadership from NBC News, real growth at Telemundo, and solid performances in virtually every other division of our Television Group, there is no better time to re-engineer the company for the revolutionary changes to come. We have to recognize that the changes of the next five years will dwarf the changes of the last fifty."

News: Newsgathering operations will be further modernised to improve efficiencies. As part of the redesign, NBC Universal's 24-hour cable news channel, MSNBC, will move its operations to the company's production facilities at 30 Rockefeller Plaza, New York, and Englewood Cliffs, New Jersey. The move will streamline newsgathering operations and result in better utilisation of both state-of-the-art facilities.

In addition, in an extension of the successful centralisation strategy developed by the NBC Universal TV Stations Group in recent years, the company is creating consolidated news facilities in Burbank. The facility will support a number of news and information operations, including the NBC and Telemundo networks, KNBC, KVEA, KWHY. The new configuration the company says will increase productivity and improve communication, coordination and resource-sharing among newsgathering units. Reviews are also under way at NBC News bureaus and facilities around the world.

New digital distribution opportunities and synergies will be created by improvements in how information is gathered, shared and distributed across multiple news and information platforms. These changes will be implemented at the NBC network and stations levels, as well as at the Telemundo stations, where new emphasis will be placed on regionalised news programming with local content in some smaller markets.

Entertainment: On the entertainment side, the TV Group will maximise its ability to generate revenues across all platforms - including new digital distribution outlets - through a business strategy that reduces NBCU's dependence on traditional content distribution methods and advertising models. This includes bringing content to consumers sooner on a variety of platforms, creating new windows or opportunities in the traditional syndication market, and developing alternative advertising metrics.

NBCU 2.0 will also continue to make the growing Hispanic market a priority, as highlighted by the significant recent investments in Telemundo's prime-time production, a new studio and news bureau in Mexico, and the acquisition of three TV stations in the last 18 months.

Universal Studios : The initiative will focus on the recent developments in technology and media that are transforming the film industry, with the goal of competitively positioning the Studio for continued growth and success.

Universal Studios president and COO Ron Meyer says, "As a business we are continually looking to be smarter about how we develop, distribute, and market our films around the world . "We plan to realign our operations to maximize growth opportunities in an increasingly competitive and evolving industry. Making these changes now will reinforce our position as an industry leader."

The strategic realignment of domestic theatrical, home entertainment and television marketing and distribution divisions will realize cost savings through consolidating positions and maximizing efficiencies across all aspects of the business units. Savings will also be realised though consolidating locations, support functions and marketing activities at Universal Pictures International, Universal Pictures International Entertainment and NBC Universal International Television Distribution.

Universal Parks and Resorts Group will continue to look for strategic growth opportunities and cost reductions at their properties in Los Angeles and Orlando.

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