But NBCU’s Jeff Zucker holds out hope for eventual role for local broadcasters, saying the partners will be “exploring ways” the O&Os and affiliates can distribute their content on the video megasite.
Plans of News Corp. and NBC Universal for a vast online video distribution platform include no immediate role for the Fox and NBC O&Os or their affiliates and no immediate benefit other than to promote primetime shows, NBCU CEO Jeff Zucker and News Corp. COO Peter Chernin acknowledged yesterday following the announcement of the venture.
But, during a telephone press conference, Zucker held out hope that TV stations may eventually participate and profit. “We’ll be exploring ways they can be our distribution partners and benefit from that. And they can distribute their own content on the new service.
“This is a secondary platform,” said News Corp. COO Peter Chernin in response to a question from TVNewsCheck. “Both companies’ affiliates will benefit from the [new service as] a promotional platform.”
Zucker agreed: “We do not believe this cannibalizes revenues from traditional outlets.” In fact, he said, NBC Universal research shows “evidence that online availability attracts new attention and higher ratings to the initial run.”
“That was certainly your experience with The Office,” said Chernin, referring to the widely held view that the sitcom’s unexpected popularity on Apple’s iTunes site prevented its cancellation and allowed it to become a hit.
Seen by most observers as a response to the success of the Google’s YouTube, the yet-to-be-named venture intends to be the richest video site on the Web, filled with TV shows and movies for the vast libraries of NBC U and News Corp. The launch is scheduled for “this summer.”
The majority of the new venture’s TV programming will be ad-supported and available to consumers for free, but Zucker said there would be a secondary “sell-through” model. “Basically, anything available for purchase on iTunes can also be purchased here,” he said.
The venture will also make available free, ad-supported short form TV content ranging from clips of premium programs to user-generated videos and “mash-ups” — user-edited videos assembled from copyrighted clips, often with a satiric bent.
Chernin and Zucker emphasized their wealth of premium content as a unique strength of the partnership, which already includes News Corp’s MySpace.com, AOL, Yahoo and MSN as distribution partners.
Together, the online services reach 96 percent of the monthly U.S. unique users on the Internet. And, according to Chernin, “We are already in negotiations with other distributors and content providers….We expect it will be the biggest video destination on the Web.”
Even so, the partners are taking no chances, according to Zucker. He cited NBC’s “ongoing discussions with YouTube to make sure pirated content does not show up there. We look forward to coming to resolution before this launches.”
Chernin believes the new venture’s emphasis on consumer convenience will further protect copyrighted content. “One of the great lessons about piracy is that you have to give consumers access, you can’t just restrict it. This venture provides easy access for consumers with legitimate protection for copyright holders.”
This openness differentiates the new service from failed predecessors such as Disney’s “Go” network and the ill-fated AOL-Time Warner partnership.
“These were both walled gardens,” Chernin said. “This venture is about being as open as we possibly can.
“On launch this will probably be the largest advertising platform on earth,” he added.
Charter advertisers include Cadbury Schweppes, Cisco, Esurance, Intel Corp., General Motors and Royal Carribean.
While extolling the new venture’s advertiser appeal, Zucker emphasized that the companies do not expect to eat into broadcast revenues. “If you put on great programming like American Idol, the advertising will be there.”
The two top executives seemed to go out of their way to salute each other’s prime time hits, setting a convivial tone for the press conference.
At one point Chernin joked that the two networks planned to merge their primetime schedules. “NBC Universal will take that deal,” shouted Zucker.
At launch, full episodes and clips will be available from such shows as Heroes, 24, House, My Name Is Earl, Saturday Night Live, Friday Night Lights, The Riches, 30 Rock, The Simpsons, The Tonight Show, Prison Break, Are You Smarter than a 5th Grader and Top Chef.
“This is sure to be a long and extensive period of experimentation,” said Chernin. “What’s great about this new venture is that we will be able to chart our own futures together.”
Added Zucker: “Our own sites have taught us a lot about consumer behavior. We’ve actually been shocked by the willingness of consumers to sit through a whole show with ads on nbc.com. Our research shows great retention of those ads, which is terrific for advertisers.”
The new company will be located in New York and Los Angeles. A transitional management team led by NBC Universal’s Chief Digital Officer George Kliavkoff, along with an experienced group of executives from NBC Universal and News Corp., will work together to launch the site.
The company’s permanent management will be announced shortly, along with branding details and additional advertising partners. Each company will devote a significant marketing and promotional budget to the new site’s launch.