Why You’re Getting Jay Leno in Prime Time: NBC Profits Shrank by $1 Billion in Three Years
by Peter Kafka
Posted on December 17, 2008 at 3:00 AM PT
Want to know why NBC is giving up on five hours a week of prime-time programming and replacing it with Jay Leno? Take a look at this chart, pulled out of parent company GE’s investor presentation Tuesday.
To spell it out: Profits at NBC’s broadcast business–the NBC network along with revenue from local stations the network owns, and revenue from other stations that carry its programming–shrank from $1.4 billion in 2005 to $400 million this year.
That’s a billion dollars of profit that disappeared in three years (or a compound annual growth rate of negative 33 percent, if you like your stats served that way).
Bear in mind that GE (GE) is actually boasting here: It’s using the chart to pat itself on the back for making itself less dependent on broadcast advertising and revenue. Still, it’s always disconcerting to see a billion dollars disappear from the books, no matter how big and how well-positioned you are.
You can blame some of that loss on the fact that NBC has tumbled in the ratings and has never replaced the hits it had in the days of “Seinfeld,” and later, “Friends.”
But hits are cyclical: Wait around long enough, and you end up airing something that works. If NBC thought that hits would be enough to claw back some of that billion, CEO Jeff Zucker wouldn’t be conceding five valuable hours to Jay Leno, who costs less to air than the shows he’s replacing, but has less upside potential.
Instead, Zucker seems to be saying that broadcast TV is a big but shrinking business, and that he’s not going to fight that trend. Hard to argue with the numbers.
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Comments
Zucker is in denial. Hollywood just isn’t talented anymore. He is hiding behind the excuse of the internet and cable, but in reality, he just isn’t very good at his job. His only hit this year has been the trashing of Palin on SNL. But he isn’t alone.
Posted by Jeff Stevens at December 17th, 2008 at 3:47 amHBO has been in decline since the Sapranos left the air.
Now if the hosts of CNBC would only have the guts to ask Jack Welch why industrial giant GE bought must-see TV in the first place and why his six-sigma principles failed to keep it at the top.
I agree with Jeff Stevens comments.
Posted by Ruth Martin at December 17th, 2008 at 10:38 amHowever, I must add that NBC has proved itself to be an unreliable news source. This network, along with the other majors, is no longer a valid source of journalism. They switched to the “entertainment” mode, which should be called “editorial” mode, yet they call it reporting.
NBC may wake up and discover that Jay Leno isn’t that popular at 10am
I’m mega-bored of Jay. Just not funny.
Posted by Sam Harrison at December 17th, 2008 at 12:21 pmcorrection: 10pm that is
Posted by Sam Harrison at December 17th, 2008 at 12:21 pm