Steve Burke: NBC ‘Significantly’ Lags in Profits, Needs More Ads, Higher Ratings

Says NBC is $500 million to $1 billion behind other broadcasters

NBCUniversal CEO Steve Burke said Wednesday that NBC “is significantly behind” its rivals in profitability and needs higher ratings and more ad sales.

Burke said ABC, CBS and Fox all are making about $500 million to $1 billion more than NBC does annually, in part because NBC charges 20 percent less than CBS and Fox do for advertising due to lower ratings. (This past season, NBC topped ABC in the key demo.)

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“We feel like we have some shows returning and very, very good development for this fall. But the fact of the matter remains that we are significantly behind CBS, Fox, and ABC in terms of the profitability of our broadcast business,” he said at the Bank of America Merrill Lynch 2013 Media, Communication & Entertainment Conference in Beverly Hills.

“Roughly speaking… we are $500 million to $1 billion behind the other three broadcasters and we have essentially the same physical plant.”

Burke (pictured above with NBCU executive vice president Lauren Zalaznick) also noted that NBC made $200 million in retransmission fees this year, up from “virtually nothing” two years ago. But he said retransmission is a “big opportunity,” but that so far NBC has “underperformed.”

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He also saw reason for optimism about NBC’s ratings: “Our ratings are lower than we would like them to be and so broadcast remains a very big opportunity,” he said.

Burke also said he met Tuesday with NBC entertainment chairman Bob Greenblatt.

“You are never totally confident or totally optimistic in a business that has so much variability,” he said, with so much depending on consumer taste, “and sort of getting lucky with a hit. But we feel like we are putting ourselves in the position to do better this fall and spring,” he said.

He spoke two days after an executive shakeup at NBCU that placed Jeff Shell in charge of Universal Studios. Asked about the company’s film unit, he said that this summer’s “Despicable Me 2” was “the most profitable film in the 100-year history of Universal.” He also noted that a spinoff, “Minions” is expected for next Christmas, to be followed by “Despicable Me 3.”