Steve Burke, CEO and president of NBC Universal, laid out a portrait of a movie business in “steady decline" at the CAA retreat at the La Costa Resort last weekend
Steve Burke has not been much of a public character since Comcast bought NBC Universal and he took over as CEO and President. So it’s always interesting to get a glimpse of what this very powerful mogul is thinking about his new empire.
It seems that he’s thinking hard about the declining economics of the movie business.
Speaking at the CAA retreat at the La Costa Resort last weekend, Burke laid out a portrait of a movie business in “steady decline,” as several people who heard him told TheWrap.
One observer recounted Burke as saying, “The movie studio and theme parks are new businesses to us. We’re still learning them. They’re challenged.”
Burke provided a litany of facts and figures supporting the case: double-digit declining DVD sales, insufficient replacement revenues from online streaming sources.
He said profit margins for the movie business have gone from double digits, to single digits to nonexistant.
What does this mean for Universal?
Since taking the helm of NBC Universal, Burke has done a good job of leaving Universal alone, so much so that it makes some of the senior executives there nervous. They wonder: Does he care about the movie business?
Now we have a clue: Burke has done the math and concluded it may not be worth his attention. Studio President Ron Meyer runs the place and produces a consistent profit, but perhaps it’s just not enough revenue to get Burke excited — despite the studio having one of the best slates in years.
Here’s the trend Burke’s talking about:
DVD revenues have been in steady decline since 2007, the year that spending in the category peaked at nearly $16 billion, according to Nash Information Services. In most years they’ve been down double digits every year. In 2010, the market was down to $13 billion, and it fell another 20 percent in 2011, according to online education site TheDegree360.
But at Universal, theme parks are booming. Burke told the 600 assembled agents that NBC Universal was looking for profit there and through content distribution, by which he can only mean the cash juggernaut which is cable.
One knowledgeable insider said that the theme parks now comprise a stunning 30 percent of NBC Universal’s revenue, about as much as the movie studio itself.
But it is no secret to anyone that Comcast bought NBC Universal to get NBC and its cable properties. The company tried to buy Disney in 2004 for similar reasons – ABC and Disney’s hugely profitable cable properties.
And that may be what weighs on the mind of Universal executives, even as they high-five their way back from CinemaCon, where their slate won high marks from exhibitors.