CEO Gives Failing Grade to NBC Universal's Online Efforts9 Sep, 2015 By: Erik Gruenwedel
Media giant inks streaming agreement with China’s Alibaba Group
Despite NBC Universal operating about 50 branded websites targeting viewers and consumers, CEO Steve Burke believes the media company’s online efforts are lacking.
Speaking Sept. 9 at Bank of America Merrill Lynch 2015 Media, Communications & Entertainment Conference in Beverly Hills, Calif., Burke said that while people are watching more video than ever before, they’re watching it in places that aren’t tracked or monetized.
“We are not as strong as we need to be. We’re not as smart as we need to be. We’re not as cutting edge as we need to be in terms of taking our existing content and bringing it to consumers directly via the Internet,” said Burke.
NBC Universal is owned by Comcast, whose cable property spearheads a pay-TV industry under siege by changing consumer habits, including proliferation of over-the-top video services such as Netflix, Amazon Prime Instant Video and Hulu Plus (which is co-owned by Comcast).
Burke conceded that the cable distribution business is a tougher business than it was 10 years ago. At the same time, he believes it remains a solid business — provided changes are made in distribution and marketing to the end user.
The pay-TV industry took a hit last month after Disney-owned ESPN disclosed subscriber losses, which, combined with Chinese economic worries, triggered a stock sell-off on Wall Street.
“When 21 million people every month pay you a check of $100 … these marginal [subscriber] changes get amplified,” Burke said.
The CEO said that despite watching “$50 billion worth of market cap” fly out the window in a week, he called Wall Street’s reaction an overreaction.
“I think these businesses are very robust,” he said.
To help buttress NBC Universal’s channels online, which Burke said attract one-in-five pay-TV subscribers on a daily basis, the company has zeroed in on four online properties — The Huffington Post, BuzzFeed, Vice Magazine and blog site Vox.com — as benchmarks for digital growth. Comcast has made $200 million minority investments in BuzzFeed and Vox.
Comcast plans to work with the companies for the next year’s Olympics, in addition to melding NBC News with another company and launching joint advertising packages with both companies. Burke believes Comcast’s analog and digital business will benefit from interacting with online executives who have proved they are “so good at what they do.”
“[These] companies have very clearly defined businesses … brands and relationships with consumers. But the real reason we did it is to get smarter,” he said.
Meanwhile, Burke attributed Universal Pictures’ record-setting box office to luck as much as internal changes implemented at the studio. The studio is on track to see annual operating income increase more than 50% on global revenue of more than $6 billion.
Like other studios, Universal is targeting foreign movie audiences (i.e. China) more aggressively. Indeed, box office hit Furious 7 did $400 million in China, more than in the U.S. Separately, NBC Universal inked SVOD license agreements with Alibaba Group, the Chinese ecommerce/media giant linked to other U.S. studios.
“Sometimes you do things and you get lucky,” Burke said.
At the same time, the executive said better cooperation between NBC Universal and other Comcast properties would help the bottom line.
“If we can take that [No. 1 pay-TV] presence in people’s lives two or three weeks before a movie or Harry Potter [ride] comes out in Orlando (Fla.), [with] wall-to-wall [advertising], creative promotions, dinosaurs running across the ticker, etc. … then all of sudden across the psyche of America, Jurassic World is on their mind,” Burke said.