It’s Not A Revolution. It’s Probably A Shell Game

When the Wall Street Journal broke the news yesterday of the reported discussion of NBC abandoning programming the 10 PM Eastern hour by next fall, my phone and LinkedIn were ablaze with alerts and shock.  How could a network that is frequently quite successful in winning the hour–the most strategically beneficial to companies as it leads into the top corporate media profit center in late local news–just walk away?

I was anything but shocked, given what I’ve seen with my own eyes and knowing who runs the place these days.  Of all the executives (apart from owners) that I’ve ever worked with, by far none have had the combination of insight, savvy and vision as Jeff Shell, now the CEO of NBCUniversal, and previously was also a top executive for FOX Cable, where he frequently trusted me with projects going far and beyond my job description, and Disney, where he developed his talents at taking a 360 degree overview of the media landscape and offering unique solutions that might at the time seem to be insane, but upon further review proved to be prescient.

When Jeff joined FOX in the 1990s, he was aware that Rupert Murdoch was eager to develop a competitor to ESPN, being a passionate lover of sport (that’s how they say it in Australia, mate).  While at Disney, he was part of an initiative to expand the ESPN brand to a group of regional sports networks, the first of which was slated to be ESPN West, which was targeting the rights to the California Angels.  At the time, existing RSNs were owned by a hodgepodge of companies with ties to broadcasting, cable and/or legacy media, few beyond their local markets.  He also knew that in most of those markets, whenever local games would go head-to-head with a national ESPN telecast, the local team would often get higher ratings, even in a down year.

He helped convince Murdoch the best way to compete with a national monolith was death by a thousand cuts–by aggregating the power of the RSNs to create a national consortium that would reverse-engineer the traditonal structure of national networks by programming prime time hours locally and fringe time nationally.  Murdoch purchased Prime Ticket outright, renewed the Angels’ broadcast rights for a substantial increase, and eventually forced ESPN to abandon its ESPN regional network plans.  At Fox, the RSN business delivered the largest per-subscriber rates for any FOX cable entity, drove the expansion of the FOX Sports brand into several additional networks focusing on specific sports, and eventually became the backbones for what are now FS1 and FS2.  By the time that happened, Shell was long gone, having moved on to NBC.

But while at FOX he saw first-hand, as did I, the benefits of allowing local broadcast entities to program prime time hours with non-national content.  Since its inception FOX has always ended prime time at 10 PM (save for sporting events), having inherited a footprint of larger-market television stations who had lucrative prime time newscasts.  In the 10 PM hour, many delivered higher ratings than all but the top-tier traditional late news players in the 11 PM slot, and with twice the higher-CPM inventory,  The fact that the FCC rules didn’t allow a company like FOX to offer a service that programmed more than 15 hours a week while still owning a production company may have been the law, but out of that FOX found opportunity.  They focused their development and promotion on the first two hours of prime time, found some early success, made the prime time real estate higher-rated and younger and revitalized the newscasts that drove profits to cover the losses of the network.

That was then, this is now.  NBC has previously tried to do away with programming the 10 PM time slot with entertainment programming.  In 2009, faced with the contractual pigfu-k of buyers’ remorse with a commitment to give THE TONIGHT SHOW to Conan O’Brien while Jay Leno was still doing quite well, Jeff Zucker created a five-night-a-week slot for Leno in the 10 PM hour.  At the time, virtually every scripted TV supplier–and many of the NBC entertainment executives who worked with showrunners–was apoplectic.  One (you could probably guess who) privately called Zucker “The Human Penis”, and not just for the shape of his head.  When both Leno and O’Brien’s ratings went south quickly, NBC quickly reversed course, returned Leno to late night for five more years and gave 10 PM back to entertainment checkerboarding.

But a funny thing was happening in how people were watching TV while all of this was going on.  DVRs were becoming prolific, Nielsen had finally developed a way to measure “streams” of delayed viewership from those homes, and some intriguing head-to-head battles were developing in earlier time slots, most notably on Thursday nights where NBC’s upscale comedies (THE OFFICE and 30 ROCK, to name two) were facing off against GREY’S ANATOMY at the peak of its rise to prominence.  Many viewers loved both.  With DVRs, they no longer had to choose which to watch,  Many watched one network at 9 PM, and then watched the others’ show(s) at 10 PM.  With the advent of time-shift viewing, both networks’ ratings and profits were strong, and the number one viewing SOURCE in the 10 PM hour ultimately was no longer NBC, ABC or CBS–or even FOX affiliates’ local news.  It was, in Nielsen parlance, “TIME SHIFT”.  And its’ truer today than ever.

So, armed with this knowledge and playbook, an NBCUniversal now run by Shell has undoubtedly looked at the big picture and realized that by taking the 2009 plan a few steps further, reducing network prime time to a FOX-like model creates a domino effect of potentially favorable results, and with the advent of streaming and NBCU’s determination to make Peacock work there’s far less downside that there was 13 years ago:

— Shows that currently program 10 PM that are produced by Universal TV, including the Dick Wolf franchises, can easily migrate to Peacock.  As the rights to those franchises’ earlier episodes move there as well, new episodes of those relocated series can help drive adoption and time spent for the streaming service, as well as immediately salable inventory for its AVOD tier.

— Late local news can move down to a higher HUT level hour, potentially with an expansion beyond the current 35-minute length, creating more higher-valued inventory for the stations they own and the affiliates they still wish to keep.

— THE TONIGHT SHOW, once again low-rated, can move down to an earlier time slot and get a jump on its competitors, potentially doing the same for Seth Meyers’ later show at a time when its CBS competition is in transition.

–It would then potentially open up a slot beyond Meyers more opportunistic than 1:30-2 AM was, one that could be filled by a younger, female, diverse voice arguably needed in the landscape after the recent cancellations of Samantha Bee and Desus and Mero’s shows. (Amber Ruffin, anyone?)

–With the potential of higher ratings for late night, which ultimately costs less to produce than scripted entertainment, NBC could offer its stations a reduced commercial load in exchange for finally extracting the right to allow these shows the chance to be seen earlier in the evening on Peacock Premium, a plan that was supposed to take place in fall 2020 but was scuttled at the time by both the uncertain production nature of these shows during the more disruptive early days of the ENdemic and the hue and cry of the affiliates seeking to protect their turf.  Considering late night TV shows these days are viewed to far greater extents beyond prime time, and even beyond a connected screen, this option for uberfans to see these shows earlier–when their topicality is even more viable–makes even greater sense than it did when it was first being explored.

I am pretty confident that if Jeff Shell himself has not personally overseen this playbook, someone who has learned a lot from him has.  And for the Journal to even print the rumor of this potentially coming to pass, it’s likely a lot more advanced and thought out than those who are shocked realize.

When one plays a shell game, they have to be attentive and quicker than the sleight-of-hand manipulator who hides the ball.  In the Shell game of media, Jeff is way better at following those movements than almost anyone else.  I, for one, don’t see a single flaw in this plan, and I am rooting like hell for it to become official.

And if anyone reading this wants to share this with him or anyone in his orbit, I’d greatly appreciate it.  I’ve got a few balls in the air myself these days, and I’d like them to know a few of the above suggested tweaks while they’re still fresh.

I recently learned that the Peacock logo that NBC has had for several decades is getting a refresh this fall.  Crossing a Peacock with a Fox could produce a very intriguing possibility.

I kinda like it.  And I suspect Jeff might as well.

Until next time…