NBCUniversal CEO Talks 'Much Smaller' Upfront, Calls Peacock 'the Opposite of Quibi'

As Covid-19’s effects continue to put pressure on the television advertising business, NBCUniversal’s delayed upfront marketplace was “relatively normal, and much stronger than we expected," NBCUniversal CEO Jeff Shell told investors Thursday, but did not put a number to those claims. The annual negotiations, which heated up in July following NBCU's 30 Rock reunion that doubled as this year's upfront presentation, were "much smaller" than previous years, Shell acknowledged, but lower ratings points helped drive scarcity, benefiting prices. CPMs [cost per thousand impressions] were "slightly up" this season, even though "we expected to be way down on price," said Shell. Volume, however, was down compared to last year. The CPM increase was primarily due to the introduction of NBCUniversal’s consolidated One Platform offering unveiled early this year, which lets the company sell ad inventory across screens “and address that scarcity across multiple platforms,” Shell said. Overall, NBCUniversal had “a much smaller upfront than in the past, but much better than we expected,” said Shell. “The big impact of advertising is really the ratings—because we stopped production, we would normally have our fall schedule in high gear, and we’re just starting those shows. That’s what’s driving the advertising choppiness and declines,” Shell said on Comcast’s third-quarter earnings call with investors Thursday. “The flip side of that is it creates scarcity in the market, so the market is actually pretty strong, because if you have less ratings points, you have more demand.” But Shell and company representatives declined to put a dollar figure to upfront sales, which the company normally shares. Last year, for instance, NBCUniversal wrapped its upfront with a nearly $7 billion ad sales haul, a record for the company. Per Shell's "much smaller" comments, the company did not reach that same figure in 2020. The upfront update—and news about Peacock's growing user base—accompanied Comcast’s third-quarter earnings ending Sept. 30, right as NBC’s fall broadcast schedule punted most of its new shows to November or 2021. The company's NBCUniversal segment, which includes broadcast television, cable networks, filmed entertainment and theme parks, saw declines in advertising on both the broadcast and cable sides, which the company said was due mainly to ratings and some programming shifts; advertising revenue was down 11.5% on the broadcast television side, and fell 2.1% on the cable side. Advertising revenue across Comcast’s cable communications business, however, grew 11.8% in the quarter to $674 million, driven primarily by an increase in political advertising revenue, which was up 70% compared to 2016, Comcast chief financial officer Mike Cavanagh told investors. That helped offset a bleaker picture in the advertising revenue segment and reflected how political advertising was expected to help stabilize broad ad revenue declines—without political ad growth, advertising revenue would have decreased 6.8%. Total revenue in NBCUniversal’s broadcast television segment was up 8.3% to $2.4 billion in the third quarter, driven mostly by a 65.6% increase in content licensing revenue, while cable networks saw revenue decrease 1.3% to $2.7 billion. Revenue across NBCUniversal was down 18.9% to $6.7 billion as Covid-19 continued to batter the company’s theatrical and theme parks businesses. Across Comcast’s cable communications segment, revenue increased 2.9% in the quarter to $15 billion, bolstered by political advertising revenue gains along with growth in high-speed internet, business services and wireless, but were negatively affected by canceled sporting events and its effects on customer regional sports network fee adjustments. Peacock spreads its wings At-home entertainment and streaming remain bright spots for NBCUniversal and Comcast. Following NBCUniversal streamer Peacock’s July debut, nearly 22 million users had signed up for the service as of Thursday morning, Comcast CEO Brian Roberts said—more than double the 10 million sign-ups the company reported in the second quarter. The ad-supported streaming service, which starts at free but offers paid ad-supported and ad-free tiers, also grew substantially after the company’s September scramble to get the streaming service on Roku devices. Peacock had nearly 7 million more sign-ups than the 15 million sign-ups it had in September as the company reached a distribution with Roku after months of negotiations. “We’re just seeing the effects of the Roku deal just kicking in, so we have lots of growth coming among Roku customers going forward because we are just seeing the very beginnings,” Shell said. NBC’s Premiere League Soccer programming and live news offerings, as well as library titles such as Yellowstone and Mr. Mercedes, are performing particularly well, Shell said, but usage is broad-based. “In general, if you look at the usage, the fact that we have such a deep library of familiar stuff, it’s kind of the opposite of Quibi,” Shell said, taking a swipe at the short-form video service that announced last week it was shutting down after just six months. “We have stuff people want to watch.” The company declined to share monthly active account figures and engagement figures, but said those internal metrics were, according to Shell, “way ahead” of internal projections. And the company is banking on another bump from the January 2021 arrival of NBC’s The Office, which is presently on Netflix and is regularly among one of the streamer’s top 10 shows. While filmed entertainment was down 25% to $1.3 billion in the quarter as theatrical revenue continued to flatline—it was down 94.7% in the quarter due to theater closures—NBCUniversal’s home entertainment revenue is expectedly growing following the company’s move to release theatrical films on digital rental platforms, and was up 49.1% in the quarter. The segments’ theme parks revenue was down 80.9% to $311 million amid limited parks activity. Executives told investors that the company would in the coming quarters weather some additional costs related to a considerable restructuring and overhaul at the company, one of several back-to-back restructures that are reshaping Hollywood. The idea, Shell and Roberts said, is to save costs by consolidating resources and bolster all parts of the business more efficiently. "We've done away with the concept of creating a piece of work for a specific network," Roberts said. "Our priority is to invest in and create the absolute best content and ensure that we maximize monetization by choosing the most effective method of distribution, whether it's broadcast, cable networks, Peacock, sales to a third party or some combination of all four."