NBC guts itself; Net-delivered creativity will prevail
I'm going to go out on a limb here and say that the announced cuts at NBC are not the end of television as we know it, but just more of the same. NBC Universal, part of General Electric, will cut $750 million in operating expenses by the end of 2007, according to a report in The Wall Street Journal today. The move was inevitable, not historic.
NBC will consolidate production of its NBC, CNBC, Telemundo and MSNBC news organizations, which is probably a good idea. That means fewer production staff Cuban understands that, even when you have talent on your side, success is still built in the channel.and a lot less overhead, not the end of news production. News has been undervalued by the networks for years, yet NBC does have the highest ratings among the network news operations, so don't believe for a minute that on-air talent will feel much of a pinch.
The more significant move, in my opinion, is the shift from pricey dramas to reality television in the 8 P.M. to 9 P.M. timeslot. Here's where the tone of television has been headed for years, ever since the media titans figured out that it is cheaper to pay people a "prize" to consume bugs and raw beef testicles or exercise their anxiety publicly over the choice to make a deal or not. This is a trend that started with Chuck Barris in the 1960s.
By cutting production costs in the first hour of prime time, NBC rids itself of multi-million-per-episode dramas and sitcoms. If it retains even half its audience in the timeslot, with production costs that are 80 percent lower, it wins. We—if you are one of those people watching NBC or, God forbid, competing on Fear Factor—lose, of course. But General Electric is happy at the end of the quarter.
No, not much has really changed today. NBC is fulfilling its destiny, to perpetually undervalue creative talent, which it treats as an unwanted cost. Creativity goes elsewhere these days—to cable, Internet and YouTube or Revver—to make their fortune. The channel monopoly enjoyed network television has been shattered for a long time, so we need to look where the talent will come from and who has decided to connect talent to markets.
The big news came a couple weeks ago, when George Lucas announced he was giving up making big budget movies. Instead, lots of small films, distributed through theaters, DVD, on-demand, commercial television and the Internet the father of Star Wars' future. Following the footsteps of Stephen Soderburgh, who has gone into business with Marc Cuban to produce films for simultaneous release in many media, Lucas may not achieve much himself, yet his stature and ability to marshal money for other, younger filmmakers could draw a lot of talent that currently believes its future in in Hollywood straight to the Net.
Cuban gets that he has to reward talent, but he also realized that reward can come on the backend rather than as a fixed upfront cost. That's why Marc Cuban is blogging today not about NBC and the demise of TV, but wondering what Apple will do in response to Google buying YouTube. After all, iTunes Music Store is where the money is currently flowing. The guy understands that, even when you have talent on your side, success is still built in the channel.