The job of a network executive has never been easy. Picking a hit is a tall order even for someone with what the industry likes to call a "golden gut"—a knack for sniffing out what's likely to sell. But these days, network bigwigs aren't even sure what kind of outfit they're likely to be running down the road. "No one really knows where it is going," Marc Graboff, co-chairman of NBC (GE) Entertainment and Universal Media Studios, told a gathering of media and technology executives in late April during a session at the OnHollywood conference in Los Angeles.
Graboff, speaking on a panel titled The Future of Television, ticked off a litany of ills confronting TV's broadcast giants, including video game playing and online streaming. The new ways of being entertained online are fragmenting the market and the situation has been exacerbated by declining ad sales. "It will eventually come back," Graboff says. "But it won't be as profitable as it was 10 or 15 years ago." Dealing with what Graboff calls "continual fragmentation" is a frequent talking point at meetings of network executives who are eager to keep network TV from suffering the same fate as the music industry.
So what's the outcome of all that hand-wringing? Like most network executives trying to make sense of their fast-changing predicament, Graboff was light on specifics. But he wondered whether there was still a place for "four networks that program 22 hours a week," suggesting some networks might slash the hours they program each night. He projected that in the future, networks might focus on programs that deliver large numbers of viewers, singling out the Super Bowl, Academy Awards, and Olympics. Lesser sports, he suggested, might leave network TV and find themselves on cable channels that get revenue from ads and fees from cable operators. As a result, those channels can afford events that might not get enough viewership to warrant ad sales alone.
Rethinking the Business Model
Graboff's remarks echoed those of his boss, NBC Universal CEO Jeff Zucker, who spoke during a McGraw-Hill (MHP) Media Summit in March. NBC is rethinking its business model and wondering, "It's been this way for 50 years," Zucker said at the time. "Does that mean that today that's still the right model?" To tweak that model, NBC this fall will air five nights a week a variety-style show featuring comedian Jay Leno at 10 p.m., virtually scrapping the traditional diet of one-hour cop and medical dramas in that time slot. "Does anyone think that Fox is any less a network because they only program two nights a week?" Zucker asked.
In the new NBC world, said Zucker, a show like The Office won't be measured so much by how it performs at 9 p.m. on the network, but by how often it's viewed on NBC.com or the online video site Hulu, or the number of times it's downloaded on Apple's (AAPL) iTunes Store. A different way of running a network, indeed. And if it works, there may still be networks around to run.
Grover is Los Angeles bureau chief for BusinessWeek.