A TV network in last place looks to Jay Leno and slashes costs with wolves at the door
By Robin Rowe

NBC feels the Jay Leno Effect

HOLLYWOOD, CA (Hollywood Today) 10/2/2009 – Why is GE ready to talk to Comcast now about selling 51% of NBC Universal? Could it have anything to do with Jay Leno? Will Leno save NBC?

At the Beverly Hills Hotel, during a TV Caucus industry breakfast on September 22nd, 2009, executives discussed the fall season and Leno in particular. “The Leno effect is about cutting costs and delivering for a third or 25% of the cost,” said Lionsgate TV Programming and Production President Kevin Beggs. “If it does a 1.5 they’ll make $300M over a year,” said WME Entertainment Worldwide Head of Non-Scripted TV John Ferriter. “It’s not the best decision for delivering the highest quality content; it helps cable,” said HBO Programming Group President Michael Lombardo. “It’s a smart tactical move,” said USA Network Original Programming President Jeff Wachtel. “It saves money, and perhaps more importantly, it keeps Leno.”

The disarray at NBC scripted television became obvious on August 5th, 2009, when an otherwise mild-mannered Hollywood press corps became irate and hostile as NBC executives laid out plans to turn around NBC’s lackluster third-place network performance. Ben “Ben-B-C” Silverman had recently been fired for NBC’s failures, yet NBC executive Angela Bromstad, in charge of scripted programming, told the press not to expect much change.

When asked about Silverman’s exit, Bromstad drew unintended laughter from the press when she said, “I think that this has always been Ben’s plan.” Apparently, failure is so entrenched at NBC that executives take the job expecting to be fired. Bromstad dodged so many questions that an exasperated reporter responded, “We’re sorry we keep asking questions that apparently we’re asking to the wrong people.”

Paul Telegdy, in charge of NBC reality, offered one answer to NBC’s woes: The Jay Leno Show.

The Jay Leno Show may make NBC $300M a year, but at the cost of firing the creative staff from the scripted shows it replaces and forgoing the future value of those shows. How much is that worth? Maybe a lot. Lionsgate, which had been on the ropes financially, came back with a strong first quarter based on DVD sales of their TV series Weeds, expected to exceed $100 million. NBC is putting the financial squeeze on it’s surviving scripted producers, demanding that NBC Heroes cut $300,000 an episode from the budget.

The news isn’t great from Universal Studios either. They had a dreary summer with Funny People ($60M U.S. box office), Public Enemies ($97M) and Land of the Lost ($49M).

Each year in November, Vivendi has the option in its contract with GE to demand payment of the cash value of Vivendi’s 20% share of the company. J.P. Morgan analyst Stephen Tusa recently valued NBC Universal at $30 billion, down from $43 billion in 2003. That means that GE would need to come up with $6 billion in cash at a most inconvenient time.

GE CEO Jeffrey Immelt said today that the discussions about NBC Universal’s future center on partnerships or an IPO. In other words, GE doesn’t have the money. They need Comcast. Wells Fargo analysts upgraded Comcast to buy on Friday after the company proposed the formation of a spinoff that would include the cable giant’s media properties and NBC Universal. That deal would not require Comcast to issue new shares or take on more debt.

Jay Leno has joked that he’s much calmer since he became rich. NBC Universal is becoming a lot less calm, now that they’re not. Can Leno save NBC? Not by November.