NBCU Chief Steve Burke Says New Streaming Service Could Reclaim ‘The Office’ From Netflix In 2021; Exec Reorg No Threat To Andy Lack

Steve Burke, CEO of NBCUniversal, said the early 2020 launch of an ad-supported streaming service will, among other things, enable the company to take a closer look at bringing key titles like The Office back into its own control.

The sitcom, licensed to Netflix through 2021, has attained a popularity in the streaming space nearly comparable to that of Friends, whose fate sparked a flurry of dealmaking and talk in December as Netflix extended its license with WarnerMedia. The decision to re-up the Friends deal was lucrative for AT&T and WarnerMedia but raised some strategic questions given that the company has its own subscription streaming launch coming this year.

In an interview with Deadline after the company’s sweeping announcement of its streaming plans and a significant top-executive reorganization, Burke said it is a “safe assumption” that the company will try to reclaim titles like The Office. He said other top streaming draws like DreamWorks Animation films could also return from Netflix when those deals lapse.

As to the reorg, which will have NBC News head Andy Lack now reporting to Mark Lazarus, chairman of Broadcast, Cable, Sports and News, rather than Burke, the boss said it had no implications for Lack’s status. Anyone wondering about that shift in light of the costly settlement with Megyn Kelly and other recent bumps for Lack “shouldn’t wonder,” Burke said. “He’s doing a great job.”

The as-yet-unnamed NBCU streaming service will launch with about 15,000 hours of programming derived from the wide array of broadcast, cable, film, news and sports operations under the company’s tent.

“There will be a lot of competition in the streaming space and we want to have our own direct-to-consumer streaming service,” Burke said. “At the same time, we will still be producing content for everyone,” not just the DTC service.

Previous niche efforts by the company like the comedy-oriented SeeSo proved unsuccessful and the company’s lone subscription service currently is NBC Sports Gold. The “unique and different” aspect to the 2020 launch, Burke emphasized, is the foundation it will enjoy in the collective reach to 52 million homes for Comcast and Sky across the U.S. and Europe. Comcast acquired Sky, once a crucial building block for Rupert Murdoch, last year for $40 billion after a bidding war with Fox.

“We want to try to get a lot of scale quickly,” Burke said. The path to scale contrasts in many ways with that taken by WarnerMedia and Disney. which are ramping up subscription outlets from scratch zero. As Netflix continues to balloon in size, the scoreboard shows the size of the challenge. Beyond the big three SVODs — Netflix, Amazon and Hulu — no other major subscription service has replicated its TV-size reach despite years of trying and a few promising signs of progress.

Rival pay-TV providers like Charter or DirecTV will also eventually come offer the NBCU service, Burke said, as a value-add for consumers. “About 80% of the viewers are in the pay-TV ecosystem,” he noted. Those outside the bundle will also be able to sign up for a fee. Internal forecasts call for a benefit to NBCU of more than $5 per subscriber, enabling the company to counteract ongoing pressure on linear advertising. An ad-free version of the service will be made available for $12 to $14 a month, consistent with the going rate for top-end services.

At the same time it builds out a new streaming organization under the leadership of longtime cable guru Bonnie Hammer, NBCU will continue to play the long game with Hulu, Burke confirmed. As one of the original content partners behind the 12-year-old streaming service, NBC has a 30% stake in it. Once Disney closes its $71.3 billion deal to acquire most of 21st Century Fox, Disney will control 60% of Hulu. But Bob Iger and his team see Hulu as one of the three pillars of Disney’s streaming strategy, along with ESPN+ and Disney+. Even as a minority owner of Hulu, NBCU has seats on its board, data from its 25 million subscribers to be gleaned and a financial profit motive to stay invested. True, Hulu loses money (about $1.5 billion last year), but the asset is estimated to be worth $5 billion.

Saying it was early in the process, Burke declined to offer many specifics as to the mix of original programming on the streaming service or the budget levels for those shows. Still, he said, “originals are going to be important, as will our library and product that has been on linear TV.” In many respects, the company’s approach to production across its studio operations will apply to the streaming effort. “If someone creates a television series and we’re lucky enough to own it, we should put that show where it makes the most sense,” Burke said.

The upping of Lazarus and Jeff Shell, who is adding Entertainment, International and Telemundo to his portfolio, introduces new layers into the NBCU exec structure, but it also reduces the number of direct reports to Burke to 12 from 20. “We have been a very flat organization for the last eight years, though a successful one,” the CEO said, citing the date of Comcast’s acquisition of full control of NBCU. He said there was a “logic” to Lazarus taking on NBC News and Cable since so much of it has East Coast presence and that’s where the executive has been based. Shell, by contrast, is based in LA, making it more logical for him to steer Entertainment.

From a tech standpoint, the streaming service will lean heavily on NOW TV, an on-demand service launched in 2012 by Sky. Two top executives from NOW will be focusing on the customer experience aspect — the look, feel and function — of the new service. In terms of tech support and customer service, Burke said, the operation will be kept separate from the large divisions inside of Comcast and Sky charged with responding to customer complaints.

This article was printed from https://deadline.com/2019/01/nbcu-chief-steve-burke-says-new-streaming-service-could-reclaim-the-office-from-netflix-in-2021-exec-reorg-no-threat-to-andy-lack-1202535064/