New York -- NBC Universal CEO Jeff Zucker said that his company’s joint online video venture with News Corp. – dubbed Hulu – is expected to go live next year, adding that the decision to create its own online video outlet – and to cancel a deal for NBCU videos on Apple’s iTunes service – was driven by simple economics.
NBCU pulled its videos from iTunes in August. In October it announced the Hulu joint venture.
Zucker said that while he believes iTunes is a “fantastic” service, he added that NBCU content represented about 40% of the videos downloaded from the site. At the same time, NBCU’s take from iTunes was about $15 million in profit last year.
“One of the biggest things I struggle with is to make sure we’re not replacing dollars with pennies,” Zucker said at the UBS Securities Media & Entertainment conference Monday.
Zucker said that while $15 million in profits was “nothing to sneeze at,” it also was not a game changer for NBCU.
“There is no place that I can think of where the retailer also gets to set the wholesale price,” Zucker said. All we asked for is the opportunity to set a variable price structure, even with just one program. Apple was not willing to do that.”
Hulu is currently in beta test with about 60,000 users and seven charter advertisers. While he would not set a firm date for the official launch of the service, he said “after the first of the year we would look to go live with it.”
Zucker also expressed concern about the ongoing writers strike, adding that while it is not seriously affecting NBCU at the moment, he hoped for a quick resolution.
Members of the Writer’s Guild of America were given a new contract proposal by the Alliance of Motion Picture and Television Producers (AMPTP) last Thursday and are scheduled to re-enter discussions with the studios on Tuesday. But he also managed to throw a dig concerning the writer’s demands for a piece of digital revenue.
“Hopefully we can begin a real dialog tomorrow,” Zucker said. “The issues on the table, the writers have decided that these are the issues they were willing to go on strike for. It’s difficult to understand how they can have a sense where we are given the reality of the digital economy. Hopefully we can come to an agreement in the next few days.”
Zucker would not speculate on how a prolonged writer’s strike would impact NIBCU’s upfront if it lasted until May. But he did say the networks would survive, albeit in a slightly different form.
Zucker said that he was not considering the strike would last that long, adding that the upfront has two different components – the much hyped presentations of the seasons new shows and the months-long selling period that follows it.
“It [the upfront] is the most efficient was to auction off the time to advertisers, I don’t think that will change,” Zucker said. “Whether we still make a grand presentation of the [fall] schedule; there is no rule that you have to do that way.”
Zucker said no such changes are currently being contemplated.
Zucker also tried to squelch talk that NBCU is up for sale. He stated that General Electric Chairman Jeff Immelt (GE owns NBCU) has been a big supporter of the networks.
“Jeff [Immelt] has been incredibly clear that NBCU is not for sale,” Zucker said.
