D7 Interview: NBC Universal CEO Jeff Zucker May 28, 2009

An intro video features a song from NBC employee Jimmy Fallon praising (teasing) his boss. Zucker:

“Jimmy will be fired later today.”

NBC as a broadcaster.

Jeff Zucker wishes you wouldn’t think of the company that way.

The CEO of NBC Universal likes to point out, that his company boasts an array of cable channels, which make money from both advertising and subscriber fees.

That dual income stream looks like the way of the future for big media companies (at least in the near term), but that model also makes it hard for big media companies to adapt to the Web — if they give their programming away for free on the Internet, why will cable providers pay for the same stuff? Yet Zucker has just committed to work for another two years with Hulu, the joint venture with Fox and Disney that does just that.
Kara: What is state of TV business?

Zuker:  “Television in the aggregate is in very good shape.” Plus a plug for Conan O’Brien. “We’re in this transition period of trying to figure out the new technology that is out there…the issue with broadcast television is that it’s an inferior model to cable television with the dual revenue streams… having said that, the pipes still work” Events still work: Olympics, American Idol, etc.

“Jay (Leno) decided that he actually didn’t want to retire… we didn’t want to lose him… we had to figure out a way to keep a person of Jay’s stature and caliber.”  Jay’s comedy show – a way to keep Jay, we need to and want to address the changing landscape of TV, we wanted to provide a topical show for comedy that is “live” and “current” – there is a place for that during the week.

Lot’s of new digital channels in the works.

State of Hollywood and impact of “digital issues”…

The idea of HULU (not to suffer the same fate that Music had suffered – wanted to come together in a joint venture – that aggregated the content together – so people could see the content online in a way that did not corrupt the compensation for content.

HULU Labs is a “place for partners to experiment” with different ways to monitize content.

How much does HULU actually make?  The D Conference probably makes more money than HULU…

HULU has a plan and it is exceeding its plan and yet it is not a big money maker yet – just getting up and not being laughed at was the first goal.  The next 18 months the goal is to increase monitization.

When can you make truly significant money with things like HULU?

It will take increased advertising and subscription.

HULU may have subscriptions

There are a number of different ways that you could bring in money… One of the things that needs to evolve is better online advertising.

HULU itself can be an advertising agency for distributors…

Issue with iTunes and Steve Jobs…

We did not think that a library copy of the Rockford files should sell for the same price as Battlestar Galactica.
Apple is in the business of selling hardware.  Apple is the only company that gets to set both the wholesale and retail price.  Steve was committed to $1.99 for all video.  NBC decided not to participate any more.  Steve opened up to “tiered pricing” – especially for HD premium pricing.  Apple has gone to tiered pricing for music also.
It will be confusing with the consumer and they won’t spend an extra “buck”…
The $2.99 price point for HD-based content has proven that tiered pricing can work.

The problem with all the media companies is that we were replacing analog dollars with digital pennies…
Commercials on Analog TV were “dollar-based” and we were getting tiny revenue from the digital (Internet) channel.

We are now up to “digital dimes” (we have made progress but we have a 90 cent gap).

We need to get to “digital quarters…”