NBC in Trouble

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Case Details:

Case Code : BSTR233
Case Length : 24 Pages
Period : 1990-2006
Organization : NBC
Pub Date : 2006
Teaching Note : Available
Countries : US
Themes : Failure of Strategy | Revival | Competition | Trends
Industry : Media and Television Broadcasting

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"I can tell you, it's like a weird monkey off the back in a way. Business is cyclical... nobody stays on top all the time."¹

-Kevin Reilly, President, NBC Entertainment, on the declining NBC Viewership, in 2005.

"we're not as strong as we've been, maybe, but we're only one breakout hit away from being there again. Of course, breakout hits are harder to come by these days."²

- Jeff Zucker, then President of NBC Universal Television Group, on NBC's poor performance in 2004-05.

Introduction

In the television rankings for the 2005-06 season,³ NBC Television Network (NBC) was ranked fourth for the second consecutive year in the most popular broadcast network category.

The rankings were released by Nielsen Media Research⁴ in May 2006. NBC trailed behind rival networks CBS Television (CBS), FOX Broadcasting Company (FOX) and American Broadcasting Company (ABC).

CBS had been the top network since 2002-03 season during which it dethroned NBC from the top spot. In the 2005-06 season, NBC had lost 1% of its viewers as compared to 2004-05 season (Refer Table I for viewership details in 2005-06).

FOX emerged as the most popular network among the 18 - 49 year-old segment (where advertisers paid premiums) for the second consecutive time, while NBC stood fourth here too.

Moreover, the Thursday night primetime slot,⁵ which had earlier been dominated by NBC, was now taken over almost completely by CBS. NBC, the television network division of NBC Universal, suffered as its own hit series like Friends, ER, etc. completed their run, while at the same time, rivals moved in. FOX's American Idol was the 'most popular television show' (second consecutive time) during the 2005-06 season. CBS had a great hit in CSI: Crime Scene Investigation and ABC had Desperate Housewives.

But NBC had no new shows to boast of. Its biggest hit was the game show Deal or No Deal, but this came in 13th in terms of viewership in the year 2005-06 .

Even the telecast of Winter Olympics (held in Turin) in February 2006, which usually drew a big audience, could not help NBC.

Bill Caroll, Vice president and Director of Programming at Katz Television Group, remarked, "If you were optimistic about the Olympics, you'd have to be somewhat disappointed with the numbers NBC delivered."⁶ To revive its sagging ratings, NBC acquired the rights to televise the prestigious National Football League⁷ (NFL) games which were to start in September 2006.

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1] Bianculli, David. "We Got Clobbered, but We'll be Back," www.nydailynews.com, July 25, 2005.

2] "NBC: Now It's Wait-And-See TV," www.businessweek.com, May 09, 2005.

3] A television season in the US usually starts in mid-September and ends in May of the next year. Networks vie with each other to attract advertisers by showcasing their lineups for the Fall (September - December).

4] Headquartered in New York, Nielsen Media Research provides television audience measurement and advertising information services worldwide. It has offices around the world in more than 40 countries.

5] Thursday night primetime, between 8:00 pm and 10:00 pm, was made a most popular slot for TV viewers by NBC during the 1980s and 1990s when it began showing blockbuster serials at this time. Since then, the television networks have been vying with each other to dominate this slot by airing their best shows and advertisers have been paying premiums to advertise during that time.

6] La Monica, Paul R. "Olympics Didn't Sweep Away ABC and FOX," www.money.cnn.com, March 02, 2006.

7] Started in 1920 as American Professional Football Association, National Football League is the largest professional American football league with thirty two teams from all of America. The teams are divided into two groups - American Football Conference (AFC) and National Football Conference (NFC). Each Conference is further divided into East, West, North and South, each consisting of four teams. The NFL pre-season starts somewhere in August while the regular season starts on the first Sunday after the Labor Day (first Monday of September every year). Majority of the matches are played on Sundays and Mondays and a few on Thursdays. The winner is selected in the final Super Bowl, usually held in February. The season ends with a match between the stars of AFC and NFC groups called Pro Bowl.