Rating the Comcast-NBCU Merger: The New Culture Settles In

Wall Street likes the progress the paired companies have made since the January union, but the jury’s still out in Hollywood

Eight months in, the jury’s still out on Comcast’s merger with NBCUniversal in Hollywood.  

Wall Street likes the shared progress by the paired companies, but NBCU’s recent track record is uneven: After a summer of hits and misfires, the film division recently torpedoed several pricey projects; and the network, now under the leadership of respected creative exec Robert Greenblatt, is still lodged in fourth place among four television networks with the new fall TV season about to begin.

Execs nonetheless maintain that the company is rushing toward a hopeful future as it approaches the merger’s one-year anniversary.

Also read: Comcast-NBCU Deal Done: $30B Later, Comcast Is Proud Owner of the Peacock

Emerging as plusses: the very aspects of the of the old-line Comcast culture that initially made Hollywood skeptical.

Comcast, a family business that Ralph Roberts began in the tinsel-free outpost of Tupelo, Miss., is a point of stability that investors large and small quite like. The cable giant, now run by son Brian (left), has the distribution apparatus to leverage content NBCU creates. 

“During the first quarter [of 2011], there were some speed bumps, some issues that raised questions whether the new property could fit well into the Comcast culture,” entertainment analyst Tuna Amobi of Standard and Poor’s told TheWrap.

But with each passing month, Amobi said, “the acquisition is looking very fortuitous for Comcast. They’ve already started to reap a very significant upside.”

Such a result was not necessarily a sure thing. When the complex deal for Comcast to acquire NBCUniversal from General Electric for $30 billion (news first broken in TheWrap) closed in January of this year, GE chairman and CEO Jeff Immelt voiced his gratitude for the 11 percent returns the entertainment side had generated over the previous 20 years.

Also read: Exclusive: Comcast in Talks to Buy NBC-Universal

GE wanted the cash to beef up its “high-technology infrastructure” ventures. It retained a 49 percent interest in NBCU but set horizon dates to pay off the debt in two stages — one at three years-and-a-half years out and one at seven years — to sell that portion off to Comcast (with GE and Comcast splitting the profits gleaned).  

In Hollywood, the bigger question was whether Comcast would be better suited to the vagaries of making hit film and TV shows (and the theme parks that feed off them) than the stodgy GE.

Whatever doubts the industry had about the status of Ron Meyer, who at 66 had been running the film studio and theme parks as Universal’s COO since 1995, began easing when the film arm enjoyed much-needed hits with “Fast Five” and “Bridesmaids.” The CEO’s contract was extended through 2015 in late June.

Meyer had already set the tone for his continuing tenure in 2009 by installing seasoned marketing head Adam Fogelson as chairman of the Worldwide Motion Picture Group to run the film slate, with Donna Langley and Rick Finkelstein joining him in a triumvirate.

Meyer and team began under Comcast inauspiciously, with the release of “The Dilemma” and  a holdover from the previous regime, “Your Highness.” It had much better luck in April with the $609.8 million global box office gross of “Fast Five,” surprise comedy hit “Bridesmaids (a $33 million movie that made $283.2 worldwide) and the Chris Meledandri-produced animated film “Hop" (grossed a profitable $183.9 million globally).

Also read: Comcast Digs In at 30 Rock: Communal Toilets, Buffet Dining and Where's G.E.?

Since June, however, there have been miscues.

Two July entrants disappointed: the Tom Hanks/Julia Roberts offbeat romantic comedy “Larry Crowne" was a pickup for distribution that took in just $52 million ; and the Steven Spielberg-produced/Jon Favreau-directed “Cowboys & Aliens” (left) which hasn't yet managed to match its $163 million production cost at the global box office (though Universal only held the bag for a quarter of the indifferent results). The latter film ended up being mocked by various rivals and commentators.

And though Universal has would-be tentpoles on the horizon, like November’s “Tower Heist” and May’s “Battleship” and “Dr. Seuss’ The Lorax,” some recent projects the studio declined to green light generated much media theorizing that Universal was scaling back at the behest of their corporate chieftains.

Chief among the projects that won’t see fruition — at Universal, at least — was the proposed trilogy from Imagine Entertainment’s Brian Grazer and Ron Howard, “Dark Tower,” based on the popular Stephen King series.

Word from inside the studio is that the enterprise was a “passion project” for the filmmakers — which in Hollywood can be synonymous for “expensive sinkhole.”

With an immovable start date looming, and the producers’ extensive revisions never quite reaching the threshold the studio wanted, Universal had to disappoint its valued partners.

A March thumbs-down pronounced to Universal regular Guillermo del Toro’s “Mountains of Madness” angered online fan boys; again, sources close to the studio say, a potentially costly and possibly abstruse effort from even a visionary director was felt to be too big a long shot.

They weren’t the only ones to be axed while still gestating; others included “Clue,” a board-game-based project with producing partner Hasbro, and a second, shelved Hasbro project, “Ouija.” (The latter resulted in a $5 million payout to Hasbro, which had borne the development costs.)

For its part, Universal execs insist that the Comcast chiefs are eager to kibitz but do not hold yea or nay power over proposed films — and that Comcast has actually opened up a bigger pool of funding than at any previous point in the studio’s history.

Indeed, studio executives point out that that with big bets like the Joe Roth’s action-style version of “Snow White” pegged at well north of $100 million and the pricey Asian reboot “47 Ronin,” Universal remains firmly in the “real movie” business — while eschewing what might be described as “mega-large” productions north of $300 million.

Meyer also oversees the conglomerate's theme park business, another positive for the merged company. Having bought back the Blackstone Group’s stake in its parks operation, the studio is enjoying unprecedented business at its Universal City Walk and Orlando parks. (The company also licenses parks in Japan and Singapore.)

Also read: Comcast to Buy Blackstone's Stake in Universal's Orlando Parks (Exclusive)

The final and most problematic piece of the puzzle has been the primetime NBC television slate, known for some critically adored items like “30 Rock” and the now-departed “Friday Night Lights” but steadily fourth among the networks in ratings and income. (Meanwhile, such cable channels as Bravo, E! and USA have been very profitable on the core busines side of the ledger.)

Perhaps the best argument for a certain sense of adventure on Comcast’s part was the hiring of Greenblatt, Showtime’s successful programming head from 2004-11. At the pay channel, he shepherded such hits as “Weeds,” “Dexter” and “The Tudors.”

Greenblatt (left) was quick to bring in a similarly well-regarded number two, Jennifer Salke, who previously had fostered “Glee,” “Terra Nova” and “Modern Family” for 20th Century Fox’s TV production wing.

Offered the same kind of elbow room they’d enjoyed at their prior homes, Salke and Greenblatt have had to hustle to get a new slate up to avert what analyst Amobi says might have ended up as a “desperate” situation.

Salke roamed the Television Critics’ Association event this year bonding with NBC Universal chief executive Steve Burke, who replaced the controversial Jeff Zucker last September.

Meanwhile, Greenblatt, stoked from an early success with “The Voice”, inveigled reporters with promised talent deals with names like Will Ferrell and “The Office” showrunner Greg Daniels.

He couldn’t top warm-up speaker Joel McHale’s description of Salke’s pet project, “Playboy Club,” as “ ‘Mad Men’ with boobs,” but he amended that to “an energized soap opera” and also pointed out "Leno" is steadily beating "Letterman" in its key demo.

No one from top to middle management at the merged companies expects an instant turnaround for NBC, but there is much to prove — especially given the $4.38 billion price tag Brian Roberts agreed to for rights to four Olympic games from 2014 through 2020. (The network lost $223 million on the Vancouver Games last winter, but says the side benefits from those and next summer’s London Games offset the numbers.)

While waiting for the promotional binge the games will bring, no one is expecting an instant turnaround at NBC. But although Comcast is sparing in how it uses the power of its vast cable audience to energize projects from the broadcast and film sides (as it did with “Hop”), Amobi predicts they’ll use their demographic clout smartly.  

“If they can leverage the core cable platforms to push some of the NBCU content franchises and generate a couple more hits as we look to the coming fall season,” he told TheWrap, “that could be a real upside here.”

The very bet that Comcast is making — to use its distribution arm in concert with its content business — is where the tale will be told.

“It will be closely watched," Amobi said. “There are a whole lot of industry players that are going the other way, separating the sides, so Comcast seems to be alone in believing in it. That’s that’s why I think this is going to be either a boom or bust scenario. Right now probably looking more like it booms.”