NBC says local TV profoundly affected by downturn

LONDON (Reuters) - The U.S. economic downturn has had a severe effect on broadcaster NBC’s local television stations but the company has not yet seen an advertising slowdown at a national level, its chief executive said.

“It’s had a profound effect on our local TV stations, which were highly dependent on auto and retail advertising,” NBC Universal CEO Jeff Zucker told a conference of Britain’s Royal Television Society in London on Friday.

“We haven’t seen an advertising slowdown on a national level yet in the United States but obviously we’re concerned about it, and I think if you’re not concerned about it you’re in denial,” he added.

A report released this week by TNS said advertising spending in the second quarter showed its biggest drop since the last U.S. recession in 2001, with steep drops in spending from the automotive, telecoms and retail sectors largely to blame.

NBC Universal owns 10 local broadcasters including stations in Los Angeles, New York and Chicago as well as 15 Telemundo, Spanish-language stations. NBC says these generate approximately $2 billion annually in revenue from advertising sales.

It also has numerous affiliates across the country.

Zucker acknowledged that NBC, a unit of conglomerate General Electric, had work to do on its entertainment offering, where its ratings are behind the other U.S. networks.

“We are the leader in news and sports. We would like to be the leader in entertainment. We haven’t been and that’s disappointing. We’ve got to get better on the entertainment side,” he said.

Zucker said NBC would stop spending so much money on pilot shows that might never make it to a full series, and would bring programs straight to air instead.

“We cannot keep doing the huge overall deals that we were doing. We cannot keep the wanton spending on the pilots, the $10 million for one episode that’s never going to be replicated.”

But he later told Reuters on the fringes of the conference he was happy with Ben Silverman, whom he brought in to help strengthen the schedule as co-chair of NBC Entertainment.

“We’re very pleased with the performance and the job that Ben is doing,” he said.

OLYMPIC SUCCESS

Zucker added that the 10 million hours of online video that 12 million Americans had watched of the Beijing Olympics -- for which NBC was the U.S. rights holder -- had not cannibalized but complemented TV viewing, which rose.

He said lessons NBC had learned from the ways TV, online video and mobile content were used during the Olympics -- which are helping NBC create a single way of measuring consumption to help it sell advertising -- were as important as the financial results.

“The Olympics were profitable, not wildly profitable, but we made money on the Olympics. You measure success in other ways than just what it’s done for the bottom line,” he said.

“You can’t sell what you can’t measure. Eventually it will be very significant to our bottom line as well,” he said.

Zucker also told Reuters that NBC was not interested in buying Rainbow Media, which U.S. cable operator Cablevision has said it may consider selling. “We’re not looking at Rainbow Media,” he said.