When David Zaslav, CEO of Warner Bros Discovery, wanted to make a powerful first impression at the company’s premiere last spring, he used words meant to wow ad buyer audiences.
The newly merged company, he stated, would now stand “shoulder to shoulder” with the broadcast networks in terms of scale and reach. Three decades after Fox became the fourth major network, Zaslav said, “WBD makes the number five”.
Today’s news from NBCUniversal suggests that not everyone is as excited as Zaslav to be a part of the broadcast club. A person familiar with NBCU talks confirmed to Deadline that executives are considering a plan to cut an hour of primetime programming every night and return the 10 p.m. block to partners. The Wall Street Journal had the first record of those deliberations.
No final decision has been made yet and the earliest move would be 2023.
The news followed the equally grim outlook for the CW now that it is largely in the hands of Nexstar Media Group. Executives at Nexstar told investors last week that the company would aim to turn a profit on the CW by 2025. “It’s no secret that the CW isn’t profitable,” said CFO Lee Ann Gliha, “but this isn’t typical of fully distributed broadcast or cable networks. According to SNL Kagan’s data, no other broadcast network operates at constant loss.”
Tom Carter, president and COO of Nexstar, said the company would be “unlike other broadcast network owners” in its financial rigour, promising “lower unscripted costs” and a shift in Riverdale network signature scripted lineup.
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Cost is an insidious concern for all broadcast network owners, especially as they want to fuel their streaming ambitions. Launched two years ago, NBCU’s Peacock is doubling its content spending this year to $3 billion and rising to $5 billion in the coming years. If NBCU were to scale back into primetime, it could save money it previously spent on original shows intended for broadcast, in line with secular pay-TV bundle declines and linear ratings.
The acceleration of cable cutting and the explosion of streaming options over the past decade have robbed broadcast networks of much of their mojo outside of sports and unscripted programming. Now that media companies have been restructured to reflect the mixed focus on streaming, cable and broadcast, there is no longer a sense of a lead dog pulling the sled.
“Networks are at a watershed in terms of costs,” said one broadcast veteran. “Live sports have emerged as the main driver for the future, and their high prices are putting cost pressure on the rest of the lineup. The question is whether affiliates want fewer hours of prime-time network programming.”
“Since we launched Peacock, we’ve said from the beginning that we take a different approach to most other people in the streaming business,” said Jeff Shell, CEO of NBCU, during Comcast’s first quarter earnings call last April. “We don’t really see Peacock as a separate, separate company. We think it’s an extension of our existing TV business and we manage it that way. This is how we set up our company. That’s how we program it. For example, we sell ads both linearly and Peacock.”
The affiliates of NBC, a group chaired by Eric Meyerowitz, EVP and group head of Hearst Television, have been unsettled in recent years. As the company has funneled money to Peacock, it has also renewed its long-term relationship with the NFL, with a $2 billion-per-year contract for a decade. NBCUniversal also agreed to be one of three companies to hand out a record $7.5 billion to sell Big Ten games, including some exclusives to Peacock. Both huge football deals will come into effect next year, meaning that transfer consent fees are likely to rise. At times, even in a degraded environment, NBCU moves met with resistance. In January 2020, when the company announced it would be giving Peacock Premium subscribers access to The Tonight Show with Jimmy Fallon and Late at night with Seth Meyers starting at 8pm, affiliates grumbled. The plan has yet to come into effect officially, partly due to the Covid hangover.
Meyerowitz declined to comment through a spokesperson about the potential impact on NBC stations when Deadline contacted him.
As for the other networks’ plans, Disney’s recent strategy suggests ABC could be “a logical player” for a reduced prime-time load, a senior media exec said. “They look like Disney+, ESPN+ and FX/Hulu all in.” A turning point along those lines was the diversion of the mainstay Dancing with the stars to Disney+ after 30 seasons on ABC.
Talks have not yet heated up within Paramount Global about any changes to the CBS lineup, insiders indicated.
An ABC representative did not respond to Deadline’s request for comment on the company’s primetime prospects.
As for how advertisers will handle the changes in the old broadcast landscape, Brian Wieser, global president of business intelligence for major media agency GroupM, sees no cause for alarm. A significant portion of the TV advertising business, which shrunk north of $70 billion a few years ago, has simply switched to streaming and will likely continue to do so. Peacock is now a multi-billion dollar ad company, a plateau crossed by Paramount’s Pluto TV and Hulu some time ago. Disney+ and Netflix plan to introduce ads in the coming months, and HBO Max added a cheaper ad tier last year.
“It sounds like it’s a big deal, and some people will have that reaction to it,” Wieser said of NBC’s internal discussions. In reality, however, such a move would mean a redistribution in the margins. “The thing that really matters to a marketer is, is there an ongoing investment in ad-supported programming? The answer is clearly yes.”
Citing numerous examples of NBCU-style moves in the media business lately, including at Warner Bros Discovery, Wieser added, “The funding of traditional networks to fund streaming has been going on for a number of years.”