Weaker Channels Increasingly Will Fall by Bundle Wayside, NBCU CEO Says
The push for skinnier bundles will see weaker channels increasingly dropped from multichannel video programming distributor lineups -- often with the assent of the programmers behind those channels, said NBCUniversal CEO Stephen Burke during a Guggenheim Securities symposium. Burke said he expects increased horse trading of channels with MVPDs -- agreeing to the dropping of one channel in exchange for a guarantee for continued carriage of another -- as a trend. The conference Tuesday was webcast from New York.
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Channels that don't belong to big programmers will be vulnerable, but being part of a big programmer's lineup isn't a guarantee of success, Burke said: "We have some channels that will be vulnerable. We own two or three channels that don't make a lot of money." Burke also said carriage talks between programmers and cable distributors are getting more difficult, with ever-bigger focus on keeping video costs down, especially as cable companies make their money off offerings like broadband and business services and the cash flow from video is decreasing.
Burke questioned the likelihood of skinny bundles. "I don't think anybody can assemble a super attractive, $25, $30 bundle," he said: Once the bundle price gets to $50 or more, there's not much of a difference between that and the current thick bundle.
While programmers' primary mission used to be making content with high enough ratings that broadcasters or cable channels continue to carry it, increasingly the foremost thought is about making programming attractive enough that subscription VOD services like Amazon Prime or Netflix want it, Burke said. The $1.5 million NBCU receives from Amazon for each episode of Mr. Robot automatically makes the series successful before the episodes air, he said, and the digital shorts put out by The Tonight Show with Jimmy Fallon, with embedded advertising, similarly make millions for NBCU.
The next five years will bring more cable programmer experimentation with shows of different lengths, serialized shows sold per episode and attempts at different types of mobile distribution, Burke said. The shifting viewing habits of millennials has come so quickly that monetization hasn't caught up, "but it will," he said. NBCU's biggest challenge in coming years is getting "more aligned with where eyeballs are going," he said, pointing to its investments in BuzzFeed (see 1508180051) and Vox as part of that effort, saying his company is close to finalizing a distribution deal with Snapchat. "The volumes you get when you tap into those dominant platforms -- Facebook number one, Snapchat, Twitter -- is a huge opportunity that we're only at the beginning of monetizing," he said.
Burke doesn't foresee major sports leagues going a la carte direct to consumers with their content. Given the money NBCU pays the NFL, he said it would be tough for the league to make more through some over-the-top route. Instead, all the major sports leagues likely will follow the NFL and Major League Baseball in complementing the reach -- and large payouts -- they get from broadcasters with other means of distributing, Burke said. He cited NFL plans for free streaming some games on Twitter (see 1605270031). "They make so much money and such great exposure, it's hard for me to see that going away any time soon," he said.
Comcast's announced plans to buy DreamWorks Animation (see 1604280010) advances its TV animation plans, as well as creating consumer product and theme park properties, Burke said. He said Comcast has interest in resurrecting existing franchises, like Shrek, alongside creating new ones.