NBC Universal CEO: OTT Video Biz Still a Dream

14 Sep, 2016 By: Erik Gruenwedel

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In a premium television world going digital, NBC Universal is still looking for the right over-the-top video business model.

Speaking Sept. 14 at the Bank of America Merrill Lynch investor brokers conference in Los Angeles, Stephen Burke, CEO of NBC Universal and senior EVP of Comcast Corp., said the media company is trying to solve the industrywide challenge of creating business models and investment ideas that are commensurate with the time increasing numbers of consumers are spending on the Internet.

“I think everybody is doing what you expect them to do [on the issue],” Burke said.

He said last year’s $200 million investment in BuzzFeed paid off at the Rio Olympics when NBC Sports eschewed going in-house and instead contracted BuzzFeed to create a Snapchat channel throughout the 17-day Games.

“When NBC produces something, it comes with a certain polish and attitude. If BuzzFeed does something, it’s going to be a little lighter and irreverent. And it was a big success and we made some money.”

NBC Universal also invested $200 million in Vox Media, whose SB Nation is a Twitter-like platform for sports news. And movie-ticket-based Fandango subsidiary branched out to offer electronic sales/rentals of movies.

“Each one of our business heads is looking for synergistic bolt-on ideas,” Burke said. 

Meanwhile, the traditional pay-TV ecosystem remains corporate parent Comcast’s bread-and-butter business — and priority. While NBC Universal actively entertains going direct to consumers with comedy-based Seeso.com or professional cycling via NBC Sport Gold, actually undermining the bundled channel business model requires finesse. 

“You wake up in the morning saying you don’t want to wreck [the pay-TV ecosystem], but at the same time you need to … experiment, try new things that can be complementary to that ecosystem as viewers sort of demand they get everything they want anytime on any device.”

Online TV All Wet?

At a time when media companies rush OTT video platforms to market, Burke contends the concept of online TV sounds better than it is in reality.

The executive said the traditional cable bundle has always represented value when examining the content, and streamlining the bundle will reduce the cost only so much. Burke said cutting programming costs to around $40 to $60 would still result in a consumer proposition around $60 or more.

“If you’re a consumer that gets 200 channels, I’m not sure why huge numbers of people are going to run out and get excited about paying $45 for 25 channels. From a consumer point of view, it doesn’t make sense to me,” Burke said.

That being said, Burke said the job at NBC Universal is to maximize the structure and cash flow of each channel. And if third-party interests create products like Sling TV, PlayStation Vue or Charter Spectrum TV Plus, NBC is going to sell to those distributors.

“We want to make sure we make as much or more selling to an OTT [distributor] as we do selling to an MVPD. And if there’s incremental revenue, that will be good for NBC Universal.

“Having been around the cable business for a while, it feels like every so often there’s a new thing that will completely revolutionize and change cable, and right now [there’s] a lot of discussion about OTT. I think OTT is going to happen. But I think it’s a pretty challenged business model and I’d be surprised if it flies out of the gate with a big number.”

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