NBC Is Chasing After Crumbs While Its Rivals Dine Like Kings, and Steve Burke Has Had Enough | Adweek NBC Is Chasing After Crumbs While Its Rivals Dine Like Kings, and Steve Burke Has Had Enough | Adweek
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Burke: NBC Is Leaving $1 Billion on the Table

Network exec vows to gain equal footing with rivals
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NBCU’s advertising and distribution partners should get ready to dig a little deeper in the coming years, as Burke’s team will be wrangling for higher CPMs and carriage fees at the cable networks and more taxing retransmission consent fees.

“NBC currently makes essentially no money on retrans, and there’s no structural reason why we shouldn’t make the same amount of money as CBS,” Burke said. CBS currently hauls in more than $250 million per year on retrans and expects to hit the $1 billion mark by 2016.

Turning to the cable unit, Burke noted that the 15 networks generate about 80 percent of NBCU’s operating cash flow, but even there he finds plenty of room for improvement. “USA Network is the No. 1 cable channel, and yet its affiliate fee is substantially lower than TBS or TNT,” he said. A disparity exists on the advertising side of the ledger as well, as CPMs for some of the larger NBCU nets are, in many cases, 30 percent below rates secured by rival channels. 

In a bid for pricing parity, USA and Bravo pushed hard in this year’s upfront, securing what Burke characterized as “cable industry-leading CPM increases.”

It has taken the better part of a decade for USA to drag itself out of the hole it dug back in 2002 when the network tried to turbocharge volume by slashing its upfront CPMs by 13 percent.

“Even if you believe you have an entitlement gap of 25 percent, you can’t [get it back all at once],” Burke said. “You chip away 2, 3 percent per year, but it’s real money. It can be frustratingly slow…but over time there is significant ground to be made.”