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One Year Later, Wright Likes the View From His Studio

While other media companies cancel top execs almost as readily as they drop bad reality shows, NBC can boast one long-running executive hit: the Bob Wright show. Wright has run the place since 1986, when he came on board at NBC, a then-new division of General Electric.

Since landing the job, he has grown NBC with bold moves, like starting CNBC and then later acquiring Bravo and Telemundo. A year ago, Wright made the big move, doubling NBC's size by buying Vivendi Universal's entertainment properties, a $14 billion deal that gave Wright and GE their first play in the movie business and more heft in cable programming.

As NBC Universal's first anniversary approaches, Wright speaks to B&C's John M. Higgins about how the Universal merger changed his company and about some of the challenges still ahead.

A year after the deal, the biggest story about NBC Universal is the problems at NBC, which has fallen from first place to fourth. How do you approach the upfront market this year?

It's a difficult time to go into the upfront, not because of the decline but because of parity. Only 0.4 of a ratings point separates fourth place from first. That's the closest it's been in years. When it's that close, its only good for the buyers.

Why is parity such a bad situation for the seller?

It's hard for anybody to establish a price strength, that's all. When goods and services are very competitive, it's a good situation for purchasers.

Dropping to fourth place costs you a lot of leverage.

Being ahead is only important when you're way ahead. It also means being behind is only bad when you're way behind.

It would seem NBC's mission this fall is pretty clear.

The only real focus is to get prime time to get some more hits. I mean, that's pretty clear. So we're doing everything we can to do that. The Today show and late night are very strong and extremely powerful. And the stations are very well positioned, [but] they're impacted by performance in prime. When performance in prime is great, they really benefit. When it's not so great, they don't benefit as much. But they don't go to hell. Telemundo is doing very well. It's got a lot of opportunity in front of it.

For years, NBC passed on other studio deals—twice on Universal itself—saying it didn't want to be in that business. Why the change?

I don't think that's quite accurate. It was the film business we never felt we had to be in. When I first came here, we weren't really allowed to be in the scripted, prime time entertainment business. We were, however, in late-night and early-morning news programming forever. So as rules have eased, we have been producing a lot of our product, not all of it.

So what does owning the studio operation do for you right now? Is programming costing less?

Well, it's not so much the costs. It's our range. It makes us a bigger player in the business. We have more commitments, more full-time executives that actually are in the script-development business. They're in the talent, in the casting, more than in the past. Quite frankly, it adds a level of sophistication to what we were doing before.

You've done this deal just as media conglomerates are falling out of fashion. Viacom decided it's not working and is splitting into two.

Viacom is really a totally different issue. It's a Viacom-shareholder issue, and the shareholder in this particular case is the Redstone family. They have elected, for reasons of share price, to split some of the assets. And that's their business. It doesn't really impact any way that we look at the business.

It's easy to see how the NBC side is stronger from the diversification of revenue sources. How is the Universal side stronger?

For the same reason. They had very little advertising. It put a tremendous pressure on [the studio] when the parks business really suffered from 2001 to 2003. What various groups inside of NBC Universal do to contribute to the whole is very balanced. And that doesn't put unnecessary pressure on any one element of the company, which is very important. If one of them pops, then we're that much better off. We're not trying to create volatility. We're trying to create sustained performance, and this is a great combination of assets.

Looking at some other assets, I see Telemundo as being in a weak position.

Well, that's because it's smaller than Univision by a large number—but we knew that going in. The upside for us is pretty terrific when they started out with 20% of the audience and the other guy has 80%. And now, if we get to 30%, I don't really care what they have. I just care what I have. But I have plenty of room to grow, and so that's an exciting business challenge.

From the old NBC cable group, CNBC and MSNBC remain problem children.

Yeah, but Nielsen doesn't measure out-of-home viewing. So we are periodically stuck with lower ratings than we would like. But CNBC never has been designed primarily as an at-home business-news service. It is primarily an at-work and business-related service. We had a marvelous spike in the late '90s, when people at home decided to become traders and investors and watch a lot of business. They don't do it as much now. But the at-home audience is not our primary target. Actually, CNBC does quite well, but not as a measured Nielsen service.

But the revenues declined pretty substantially for a couple of years.

The profitability has not changed a great deal over the last four years. Well, MSNBC is a tough one because that market is a very narrow one, and Fox has got itself in a very large position in a small market. And that's a tricky one, and we have to keep figuring out how to make that much better for us.

What kind of moves will you make in the next year or two?

Well, we have some physical, sort of behind-the-scenes work, which is very important. It's in finance and information technologies, actually finishing the integration. We have a number of international opportunities that we're involved in. When we finish 2005, we'll be in pretty good shape to look at a lot of new things. We have a whole digital world to deal with, because every one of our businesses is impacted by the change from analog to digital. We're together now, and it gives us a chance to focus on that. That timing is pretty good.

In digital, what's the fear versus the opportunity?

There's plenty to worry about, and there's also plenty to be happy about. The Internet is a friend and a foe. We need to feel as comfortable dealing with the Internet as, for instance, we do dealing with broadcast operations or cable operations. We need to feel our content is protected, that it's valued properly, that it's paid for—and we need to deal with the piracy issues there. You have to kind of roll with the times and sort out the elements. But other people are in the same boat, and we'll figure that out.

If there's shifting of viewers and ad dollars, are you replacing high-margin dollars with low-margin dollars? As things shift to the Internet, that tends to be a low-margin game.

When you are moving from a more established media to one that's less established, you're going to initially have lower margins. Then when you feel comfortable with it and you get your hands on it, the margins can go up.

Back to the merger. It's a year old. Talk about the integration and what you found as you got into these Universal properties that you didn't expect to.

I don't think we found too much we didn't expect. One of the things we found is that the various business units were all eager to get going, to be as successful as they could be. There really wasn't a lot of indecision or confusion or lack of appetite for really doing things well. And that's not always the case in mergers.

So there are no surprises, upside or downside?

All the surprises have been very pleasant. They've been upside ones. There really haven't been any downside surprises.

There are always downside surprises.

This is a hard conversation, because you seem to be stuck on the fact that there's got to be something negative. Everything in life doesn't have a downside to it.

I'm a short-seller at heart.

Don't come here.