By Lillian Rizzo and Joe Flint
For years, NBCUniversal's cable networks, channels like USA,
Bravo and E!, were power centers in the media company, each with a
mandate to promote their own programming and brands.
Those days are over.
As new Chief Executive Jeff Shell reshapes the entertainment
giant to cope with cable TV cord-cutting and the rise of streaming
video, he is centralizing decision-making -- from which shows get
made to which networks those shows should run on -- and
dramatically slimming down the cable unit in the process.
Top executives are getting squeezed out. Most recently, Chris
McCumber, who led the USA and Syfy networks, said last week he was
leaving after a two-decade run at the company. Substantial job cuts
are expected throughout the cable entertainment group in the coming
months, and some open positions will go unfilled, people familiar
with the situation say.
The job of cable network president -- long a prestigious title
in the entertainment industry -- is being phased out, a symbol of
cable's shrinking importance. Mr. McCumber won't be replaced.
"The days of building that singular cable network with its own
team and needs are long gone," said Mark Stern, a former Syfy
executive and current president of Echoverse, a podcast studio.
NBCUniversal's top brass thinks certain entertainment channels
don't have a long-term future on the cable dial, the people said.
That includes E!, known for its red-carpet coverage and for giving
the Kardashian family a platform; Syfy, home to sci-fi thrillers;
and Oxygen, originally launched as a network for women that has
lately pivoted to true-crime, the people said.
"NBCUniversal's cable networks carry some of the most popular
programming in the industry and are enormously profitable," an NBC
spokeswoman said. "They will continue to be a valuable part of our
portfolio for fans, advertisers and our shareholders."
The cost-cutting could help persuade Wall Street that
NBCUniversal, a unit of Comcast Corp., isn't over-investing in a
declining medium. Comcast's businesses will likely be in sharp
focus among investors after activist Trian Fund Management LP took
a stake in the company, which The Wall Street Journal reported
Monday. Trian believes Comcast shares are undervalued and has held
talks with the cable company, but its views on specific areas of
the business weren't clear.
NBCUniversal believes its brand power lies not in networks, but
in individual franchises like "Keeping Up With the Kardashians,"
which airs on E! and is ending in 2021, and "Real Housewives" on
Bravo, one of the people familiar with the situation said.
Mr. Shell and his newly appointed TV czar, Mark Lazarus, are
putting a high priority on developing programs for the company's
new streaming-video service, Peacock, which had 15 million sign-ups
as of last week. Programming once intended only for broadcast or
cable may also appear on Peacock, and Peacock original content may
find a home on the networks.
"As long as it's being judged by the number of eyeballs, be
happy wherever they come from," Mr. Stern said.
The future is also dimming for sports networks like the Golf
Channel and NBC Sports Network. Hockey and soccer games are likely
to appear more frequently on USA Network and Peacock, the people
The move to downsize cable networks comes as the pandemic weighs
on NBCUniversal's business. Movie-theater closures hurt its film
operation, its theme parks were closed and TV ad spending fell off.
NBC's second-quarter revenue shrank 25% compared with the same
period last year.
When Comcast acquired control of NBCUniversal nearly a decade
ago, Chief Executive Brian Roberts cited the cable entertainment
networks as a key attraction in the deal.
Such networks have been a cash cow for decades, because
subscriber fees -- which cable providers pay to carry channels and
then pass on to consumers through monthly bills -- have risen
annually regardless of a channel's viewership. But cord-cutting has
gradually picked up pace since 2014, and the pandemic is
accelerating the trend for most operators, including Comcast.
The 2011 Comcast deal for NBCUniversal "was all about the cable
networks, and the theme parks and movie studio were almost an
afterthought," said analyst Craig Moffett, of MoffettNathanson.
"Now, the cable networks are an albatross."
Several of NBCUniversal's entertainment networks, including
Bravo, E!, Syfy and USA, have lost more than 10 million subscribers
each since 2014, according to Nielsen data.
And providers are starting to push back hard on paying for
unpopular channels. NBCUniversal could have difficult negotiations
in coming months, including with its own parent, Comcast, as well
as Charter Communications Inc. and Altice USA Inc., people familiar
with the company's carriage agreements say. NBCUniversal's
challenge is to keep enough fresh programming on each network to
justify the cost to providers.
The cable networks are still profitable and have managed solid
revenue and profit growth thanks to price increases. They accounted
for $11.5 billion of NBCUniversal's nearly $34 billion in revenue
last year, a decline from 2018 when the Winter Olympics took place.
Comcast's primary growth engine, however, is clearly the high-speed
There are no immediate plans to sunset any well-known
NBCUniversal channels, though some company insiders say they
believe that is coming eventually. NBCUniversal has shut down
other, albeit smaller, networks in the past, such as Esquire and
Chiller in 2017, and G4 in 2014.
"One of the things they have to figure out is they have this
collection of networks, and they have brands that exist in the
traditional TV ecosystem, but which ones do you want to lean into
in a digital world?" said Ben Swinburne, an analyst at Morgan
NBCUniversal took steps in recent years, under Mr. Shell's
predecessor, Steve Burke, to streamline some aspects of the cable
entertainment group, centralizing some functions like finance and
digital operations. Mr. Shell's proposed changes are even more
extensive, bringing all programming decisions together for the
first time -- not just for cable, but also Peacock and the flagship
NBC broadcast network.
Mr. Lazarus, a longtime NBCUniversal executive, oversees the
sprawling new TV and streaming segment. Frances Berwick, who
previously oversaw E!, Bravo and Oxygen, was appointed to run the
business operations across all of the entertainment properties.
Former Warner Bros. executive Susan Rovner is slated to join
NBCUniversal in coming weeks as the top creative executive.
Write to Lillian Rizzo at Lillian.Rizzo@wsj.com and Joe Flint at
(END) Dow Jones Newswires
September 22, 2020 13:28 ET (17:28 GMT)
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