Jeff Shell to Become NBC Universal CEO on Jan. 1, 2020

As expected, NBC Universal has tapped Jeff Shell to become chairman and CEO of the media company effective Jan. 1, 2020, replacing Steve Burke, who announced he is stepping down after eight years. NBC Universal properties include Universal Pictures and Universal Pictures Home Entertainment.

Shell is a longtime NBC executive having overseen NBC Entertainment, Universal Filmed Entertainment Group, Telemundo and NBC Universal International, among other positions.

Burke will retire on Aug. 14, 2020, following the Summer Olympics in Tokyo. Shell will report to Burke, who will move to the role of chairman, NBC Universal. Upon Burke’s retirement, Shell will report directly to Brian Roberts, Chairman and CEO of Comcast Corp., which completed its takeover of the company in January 2011.

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“Jeff Shell is the ideal executive to take the helm at NBC Universal,” Roberts said in a statement. “He has a stellar track record across both the film and TV side of the business, as well as a wealth of international experience. I could not be more confident in his ability to lead NBC Universal into the future.”

Under Burke’s leadership, NBC Universal increased its adjusted pre-tax earnings from $3.4 billion to $8.6 billion since the Comcast acquisition through 2018 — achieving the fastest annual growth rate of any major media company.

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Yet Burke has also been hesitant to embrace over-the-top video, including online TV. The executive famously told an investor call in 2017 that online TV was a money-losing proposition, adding the format was not “material” to the pay-TV business.

“We have deals in place with all of them,” Burke said on the call. “But it’s a very tough business and we’re skeptical it’s going to be a very large business or profitable business for the people that are in it. And they’re off to a relatively slow start.”

NBC Universal CEO Steve Burke Stepping Down in 2020

NBC Universal CEO Steve Burke is reportedly leaving his position in 2020, nine years after assuming the title following Comcast’s acquisition of NBC Universal from General Electric.

Burke would likely be replaced by Jeff Shell, current chairman of Universal Film and Entertainment, although no official announcements about the executive changes have been made by Comcast.

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The 61-year-old Burke’s departure comes as NBC Universal readies Peacock, a branded subscription video-on-demand platform with an ad-supported component. It marks Comcast’s first standalone foray into over-the-top video distribution after decades of sticking behind cable-based pay-tv.

Indeed, as Netflix, Amazon Prime Video and Hulu, which Comcast co-owned, flourished, Burke insisted digital distribution — notably online TV — was “not all that material to our business.”

“We have deals in place with all of them,” Burke said on a 2017 fiscal call. “But it’s a very tough business and we’re skeptical it’s going to be a very large business or profitable business for the people that are in it. And they’re off to a relatively slow start.”

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On that call, Burke agreed linear pay-TV would continue to be challenged by online, but suggested cable distribution, which features prominently in the company’s quadrennial Olympics, Super Bowl and NBC Network broadcasts, remained lucrative.

“[Broadcast] demand for the last two or three years has been remarkably consistent,” he said at the time. The business is “certainly more challenging, but I like our hand.”

Comcast in Talks with Disney to Sell Hulu Stake

Comcast reportedly is in talks with Disney to sell its 30% stake in Hulu, which includes online television platform Hulu with Live TV, according to CNBC, which cited internal sources.

CNBC is owned by Comcast business unit NBC Universal.

Disney currently owns 60% of the 12-year-old streaming service with 25 million subscribers after it acquired 20th Century Fox. AT&T’s WarnerMedia unit just sold its 10% stake back to Hulu for $1.43 billion.

The discussions, which CNBC said are in the preliminary stage, were revealed hours after Comcast chairman/CEO Brian Roberts told investors the cable giant enjoyed owning a large stake of a Disney asset.

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“On Hulu, the relationship with NBC, it’s very much in everybody’s interest to maintain,” Roberts said on the all. “And we have no new news today on it, other than it’s really valuable. And we’re really glad we own a large piece of it.”

At the same time, with Disney firmly in control of Hulu and Comcast heretofore reluctant to move too far away from the pay-TV business model, selling its stake in an over-the-top business could help Comcast alleviate more than $100 billion in corporate debt following the $39 billion Sky acquisition.

Comcast reportedly could get $4.5 billion for its stake in Hulu, which lost $1.5 billion in 2018. Disney doesn’t expect Hulu to become profitable until 2024 — and only after possible international expansion.

At the same time, NBC Universal CEO Steve Burke remains skeptical of OTT business model, including Netflix.

“To be worth $150 billion, someday you’ve got to make at least $10 billion in EBITDA,” Burke told CNBC last year. “There’s at least a chance Netflix never makes that.”

Comcast, which only recently incorporated direct access to Netflix for its Xfinity pay-TV subscribers, plans to launch an OTT service for Xfinity in 2020.

Comcast Eyeing AVOD Service in Europe

Comcast continues forge a business strategy in the United States melding ad-supported digital distribution with legacy pay-TV. Across the Atlantic, the media company has become a major over-the-top video player in the United Kingdom, Germany and Italy.

The cabler’s $39 billion acquisition of satellite TV operator Sky included Now TV, the 7-year-old telecom with operations in the U.K., Ireland and Italy. Now TV provides standalone online TV, high-speed Internet and landline telephone services.

Now TV, which was one of Roku’s first OEM clients for streaming media devices, including USB stick technology, is the third-largest OTT video service in the U.K. behind market leader Netflix and Amazon Prime Video, according to Broadcasters’ Audience Research Board (BARB).

Through the third quarter (ended Sept. 30, 2018), more than 11.6 million homes in the U.K. had subscriptions to Netflix, Prime Video or Now TV – an increase of 22% from the previous-year period, according to BARB.

The research firm said Now TV ended the period with 5.7% household penetration and 7% million usage among consumers. That compared to 17.2% households (21% consumers) for Prime Video and 34.1% households (49.3%) for Netflix.

Now TV use grew 12.1% among households (11.6% among consumers), compared to 27.7% household (25%) growth for Prime Video; and 29.6% household (27.7% consumer) for Netflix.

Netflix continues to spearhead OTT video use, adding 2.2 million homes in Q3, while Prime Video and Now TV added more than 1 million homes and just under 200,000 households, respectively. BARB said the number of homes with two or more OTT services increased 40% from 2.8 million to just under 4 million in the past year.

Comcast says the addition of Sky (and Now TV) expanded the media company’s direct-consumer relationships to more than 54 million across the U.S. and Europe.

Steve Burke, CEO of NBC Universal, says Comcast’s pending AVOD service would incorporate Now TV technology and represents a good alternative for consumers not tethered to pay-TV/SVOD, while posing less of a risk in start-up costs.

“We think this approach has a much better chance to get scale quickly,” Burke said on the fiscal call.

 

Comcast Has High Hopes for Pending Streaming Video Service

Comcast has long eschewed over-the-top video, arguing its legacy cable pay-TV service and Xfinity X1 set-top box offer superior content and access options.

With much of the entertainment industry coveting OTT distribution, including pending platform launches from Disney and WarnerMedia, Comcast recently changed its tune announcing it would launch a free streaming service for its pay-TV subs in 2020.

Speaking on the Jan. 23 fiscal call, corporate CEO Brian Roberts said the service would be “distinct and compelling” offering current and prior seasons of NBC Universal programming, some original content and a “light” advertising load.

“It’s a great value proposition for consumers and provides marketers with a unique, targetable digital advertising and high quality premium programming,” said Roberts. “It will harness all the things that make our company so unique.”

He said that when presented to the company’s combined 54 million subscribers (with British satellite operator Sky and its Now TV OTT video platform), Comcast would be able to generate “significant value” over time by enhancing the company’s content monetization and strengthening the value of pay-TV.

“We will continue to sponsor a broad, varied distribution environment and see this platform as being a valuable addition to this highly effective strategy,” said Roberts.

NBC Universal CEO Steve Burke, a long-time foe to OTT video, embraced the strategic change, saying he believes the company now “under-monetizes” its content on the Internet.

In a fiscal call last year, Burke said that while the media company had deals with online TV services such as Sling TV, DirecTV Now, Hulu Live and YouTube TV, he doubted the platforms would make much of an impact.

“They’re off to a relatively slow start,” he said.

Indeed, NBC’s attempt at a standalone OTT comedy platform (SeeSo) shuttered after 18 months.

Neil Smit, former CEO of Comcast Cable, in 2016 infamously declared that he hadn’t seen an “OTT model that really hunts.” Less than a year later Smit stepped down as CEO, replaced by company veteran Dave Watson, whose stance on OTT is only slightly changed from his predecessor’s.

But management opinions have apparently changed in the face of market reality.

“In terms of content and taking things that are currently licensed elsewhere and moving them to the platform, I think it is going to be very positive for us financially, because in effect, we’re going to be a brand new buyer,” Burke said.