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Fixing NBC will be priority for new chief of NBC Universal

Steve Burke will become CEO when Comcast takes over the media company. He is expected to install two experienced TV executives at the broadcast network when he unveils his management lineup.

November 16, 2010|By Meg James, Los Angeles Times

When Comcast Corp.'s Steve Burke assembled his new executive team for NBC Universal, he followed an old management maxim: If it ain't broke, don't fix it.

Burke — who will become chief executive of NBC Universal when the Philadelphia-based cable giant assumes control of the company, most likely early next year — nonetheless will be spending a lot of time trying to fix one part of the sprawling media enterprise that is broken: the NBC broadcast network.

"Turning around the broadcast network will be one of the top priorities," said Matthew Harrigan, media analyst with Wunderlich Securities. "Comcast does extremely well with the block-and-tackle businesses, but the network and film studio will be new for them. These are high-cash-burn businesses that need a lot of investment. And spending money like that hasn't been Comcast's style or nature before."

Once boasting such hits as "Friends," "Frasier," "ER" and "The West Wing," NBC regularly threw off more than $600 million a year in profit. But the network has struggled in the ratings in recent seasons and last year ran an operating loss of about $400 million, Harrigan said.

The swing illustrates the profit and peril of a hit-driven business such as network television. Get the right shows and networks can charge higher rates for advertising, which flows directly to the bottom line. Pick shows that don't work, or load up on expensive sports contracts, and the costs quickly outstrip revenue.

Burke is expected this week to unveil his management lineup for NBC Universal, which will install two experienced TV executives at the broadcast network. Robert Greenblatt, former Showtime entertainment president, will be in charge of programming. Ted Harbert, who runs Comcast's Los Angeles-based cable channels, including E!, will be responsible for the business functions, including advertising sales and television stations.

The selection of Greenblatt, who transformed Showtime with such unconventional shows as "Weeds," "Dexter" and "The Tudors," sends a message that Comcast intends to invest considerable resources to restore the plume to the peacock. Before he joined Showtime, Greenblatt was a top executive at Fox, helping develop "The X-Files," "Ally McBeal," "Melrose Place" and "The Sopranos" (the last of which ended up on HBO).

Comcast executives have assured Greenblatt that he will be given the time and money to rebuild NBC, according to people familiar with the discussions.

He might need it. NBC has been laboring this season to recover from Jay Leno prime-time debacle by restocking the 10 p.m. hour with dramas. But several new shows, including "Outlaw," "Chase" and "Undercovers," have stumbled. NBC's "Sunday Night Football" and its huge audiences have kept the network in the ratings game.

For the most part, however, Burke will be relying on a mix of senior NBC Universal and Comcast executives.

Universal Studios President Ron Meyer, NBC Sports Chairman Dick Ebersol, NBC News President Steve Capus and CNBC President Mark Hoffman will all retain their portfolios. Burke also sought to keep in the fold the two executives who run NBC's highly profitable cable television group, Bonnie Hammer and Lauren Zalaznick, giving them additional duties.

Hammer, who oversees USA Network and Syfy, will gain responsibility for Comcast's cable channels E! and G-4. Zalaznick, who heads Bravo and Oxygen, will add Comcast's Style cable channel and take over NBC Universal's Miami-based Spanish-language network Telemundo and bilingual cable channel mun2.

In recent years, NBC's cable channels — USA Network, Syfy, Bravo, MSNBC and CNBC — have generated more than $1 billion a year in profit, propping up the company financially even as the network and movie studio faltered. In his analysis, Harrigan estimated the asset value of USA at $11.7 billion, the Syfy channel at $6.3 billion and CNBC at $3.9 billion.

By contrast, Harrigan valued the NBC network at a "negative $600 million," although he calculated that the NBC stations were worth $1.8 billion.

Burke did not craft a streamlined structure, signaling that he instead intends to be a hands-on manager. He will have at least 10 people reporting directly to him, which ensures that he will be deeply involved in key decisions, including negotiations with cable operators, sports leagues and powerful technology companies such as Apple Inc. and Google Inc.

Comcast, already the nation's largest cable operator and Internet service provider, is awaiting approval from the U.S. Justice Department and the Federal Communications Commission for the merger. When the transaction closes, Comcast will own 51% of NBC Universal, and current owner General Electric Co. will retain 49%.

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