Peacock Under Pressure

Can the current cast of characters pull NBC out of the cellar?

Jeff Immelt isn't paid to be patient. Yet the man who presides over General Electric Co. (GE ), widely regarded as one of the world's best-managed companies, has endured months of disappointments at his $14.7 billion NBC Universal Inc. unit.

Immelt's tolerance of entertainment egos has finally worn thin as NBCU has begun to drag down the rest of the family. After more than a decade of dominating prime time, NBC TV sank to the ratings cellar last year and now ranks an embarrassing fourth behind Fox Broadcasting. Even with strides at NBCU's cable and digital operations, the network is so sickly it's hurting the entire unit's balance sheet. At a time when Immelt faces intense pressure to show sustained growth at GE, NBCU in the last two quarters was the only part of the $150 billion industrial giant's empire to see profits shrink.

No wonder the GE chief is now taking a larger role in the drama. He has rejiggered the cast of players, putting into the mix a rising GE star. And he is personally spending up to three days a month working with NBCU executives to help guide the turnaround, GE insiders say.

The sweatiest palms have to belong to Jeff Zucker, the brash 41-year-old former producer of NBC's Today Show who once was so cavalier that he showed up at a press conference wearing a bullet-proof vest to mock critics of his hit show Fear Factor. Life isn't quite as lighthearted these days for the head of NBCU's television group. In fact, Zucker's future may hang on how well a new prime-time roster is received on May 15. That's when NBC presents its fall schedule to advertisers at New York's Radio City Music Hall. The network has a few promising contenders, including the thriller Kidnapped, starring Timothy Hutton, but those shows may not be the breakaway hits the network needs.

What's more, the recent loss of Today's bubbly co-host Katie Couric to CBS News could blow NBC's morning lead to ABC's Good Morning America. Complicating matters is that French media giant Vivendi Universal (V ) has the right to exercise an option starting in 2007 to sell its 20% stake in NBCU back to the company. It was negotiated as part of the sale of its U.S. entertainment assets to NBC two years ago. If Vivendi pushes for a sale, it could force GE to lay out a lot of cash or even contemplate a spin-off -- although Immelt has said he wants to hold on to the business.

As the point man for the most troubled piece of the empire, Zucker has a year or so to start reversing NBC's fortunes, insiders say. Zucker assumed the role of heir apparent to NBCU Chairman Bob Wright last December, when an exasperated Immelt told Zucker to go off with fellow NBC exec Randy Falco to reorganize the place and make it work, say GE insiders. (Falco ended up as Zucker's No. 2.) Whether Zucker gets to replace the 63-year-old Wright, who is expected to retire in the next year or two, depends on how the network fares. "Zucker is clearly in the pole position," says Bill Conaty, GE's senior vice-president for corporate human resources. And what happens if he doesn't get it right? Responds Conaty: "We will have another decision to make."


One face to watch: Beth Comstock. GE's former chief marketing officer, 45, is now president of digital media and market development for NBCU -- a role that has her managing a critical business and reporting straight to Wright. Her lack of operational experience makes her an unlikely candidate for Wright's job in the near term, but she is a superstar within GE who clearly has Immelt's respect.

Comstock's mission is to turn NBCU's fledgling digital business into a major profit center. She oversaw the $600 million acquisition in March of iVillage Inc. (IVIL ), a Web site viewed by some media companies as an also-ran because it appeals to middle-aged women instead of the kids advertisers covet. But iVillage does offer Comstock a chance to run a business and to build a new franchise. Conaty says she "could end up taking a bigger role at NBCU, or she could end up in another part of GE."

For all the challenges at NBCU, it is not without its successes. The Universal theme parks are enjoying a resurgence. Cable channels, led by USA Network, Sci-Fi, and Bravo, generate $1 billion in revenues and are expecting up to 10% ad sales hikes this year. And Universal Studio has produced a steady stream of doubles and triples, including hits like The 40 Year-Old Virgin and Inside Man. Even last year's overhyped King Kong generated profits with its DVD sales. Looking forward, Zucker is spearheading a "TV360" initiative to create Internet and wireless content for all NBC shows, bringing in as much as $1 billion by 2010, projects Immelt.

But clearly, within the halls of NBC the hubris of yesteryear has waned. With network ratings off an additional 8% among younger viewers so far this year, Zucker seems almost low-key. He no longer eats marshmallows made up to look like sheep's eyeballs -- a stunt he once used to flaunt the success of Fear Factor. He was so hands-on at times, staffers recall, that at one point Wright ordered him to back off and give top network programmer Kevin Reilly more freedom to decide NBC's lineup.

Today, Zucker is staying out of the spotlight. When the press and advertisers gathered in March at the cavernous stage where Las Vegas is shot, the usually voluble Zucker sat quietly in the second row as others introduced Matthew Perry and various stars for upcoming shows. "I'd probably be laying low, too," says Laura Caraccioli-Davis, senior vice-president of media buyer Starcom Entertainment. "This is no longer the heyday."

This being the season to unveil new programs, NBC honchos can only hope that advertisers stay loyal to some hot shows from last year, like My Name is Earl and The Office. Some added allure for the marketers: NFL games on Sunday nights, which begin this September. The four-hour broadcasts are a key platform to promote its shows to hard-to-reach male viewers. And NBC is betting on new dramas like Kidnapped and The Black Donnellys to ratchet up audiences in the fall.

Spending lavishly has never been a hallmark of General Electric. But to lure highly rated Worldwide Wrestling Entertainment Inc. (WWE ) back to NBCU's USA Network from Spike TV last year, Zucker promised big bucks to promote WWE events on prime time. "He can be very persuasive," says Linda McMahon, WWE CEO. For now, Immelt is willing to give Zucker and Wright the resources they need to get the unit roaring again. In return, the GE chief wants what a GE chief has always wanted: results.

By Diane Brady and Ronald Grover

    Before it's here, it's on the Bloomberg Terminal.