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Zucker on Layoffs: “I Think We’ve Taken the Necessary Steps”

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CNBC’s David Faber sat down with NBU president Jeff Zucker this morning at the UBS Media & Communications conference at the Grand Hyatt in New York City. Much of the conversation focused on the advertising downturn and how it’s affecting NBC Universal and other media companies. But Faber did ask about last week’s layoffs at NBCU, first reported on TVNewser.

Faber: Not to end on a down note, but last week was not a great week at NBC Universal. We had layoffs. Is that it or do you have to revisit that as 2009 moves ahead?

Zucker: Obviously we hope that that is all that we’ll need to do. We think we have gotten out in front. That’s what we always try to do. We try to be prudent about the market and what we see coming. We took the steps that we thought we needed to take. I think that is all we see unless there’s a tremendous change in the world that we don’t envision. I think we’ve taken the necessary steps.

The entire transcript is after the jump…


David Faber: WE’RE HERE IN MID TOWN MANHATTAN WITH JEFF ZUCKER WHO RUNS NBC UNIVERSAL. I KNOW YOU HAVE A LUNCH TALK. I WOULD ASSUME A LOT OF THE ATTENDEES ARE FOCUSED ON THE NEAR TERM IN TERMS OF WHERE ARE WE IN ADVERTISING.LET’S START THERE. WHAT ARE YOU SEEING? WHAT ARE YOUR EXPECTATIONS AT THIS POINT AS WE END THIS YEAR FOR 2009?

Jeff Zucker: OBVIOUSLY AT THIS POINT WE’RE FOCUSED ON 2009. THERE’S BEEN A COUPLE REPORTS OUT THIS MORNING ON THE WAY PEOPLE SEE ADVERTISING. IT’S STILL EARLY TO KNOW WHAT 2009 WILL LOOK LIKE BUT CLEARLY WE KNOW THE MACRO ECONOMIC CONDITIONS AND I THINK THAT ADVERTISING AS A WHOLE WILL PROBABLY BE DOWN. THERE ARE CERTAIN PARTS OF IT THAT ARE OBVIOUSLY HURT HARDER THAN OTHERS. LOCAL TELEVISION WE’VE TALKED ABOUT THIS BEFORE CLEARLY HAS TAKEN A HUGE HIT.I THINK THAT WILL CONTINUE INTO 2009. ON THE BROADCAST NETWORKS, I THINK WE’VE SEEN SOME SLOWDOWN BUT IT’S NOT AS DIRE AS SOME PREDICTED. I WOULD SAY THERE’S CONTINUING STRENGTH ON THE CABLE NETWORKS ESPECIALLY THOSE CABLE NETWORKS THAT ARE STRONG INCLUDING CNBC. SO I THINK IT’S A MIXED BAG. IT GOES TO THE BIGGER POINT WHEN YOU RUN A MEDIA COMPANY A DIVERSIFIED PORTFOLIO WILL HELP YOU GET THROUGH TIMES LIKE THIS WHICH ARE CLEARLY TOUGH.

Faber: IN TERMS OF SPECIFICS ON BROADCAST RIGHT NOW, THE SCATTER MARKET PRICING RIGHT NOW CAN GIVE YOU A SENSE OF WHAT TO EXPECT THE UPFRONTS FIVE MONTHS FROM NOW.

Zucker: I WOULD SAY IT’S EARLY TO EXTRAPOLATE SCATTER FROM UPFRONT. WE HAVE A BETTER SENSE OF THAT IN THE SECOND QUARTER. I THINK ESPECIALLY GIVEN THE TIMES WE’RE IN, I THINK IT’S TOO EARLY AND PREMATURE TO SAY WHAT IT WILL LOOK LIKE THEN. OBVIOUSLY THE SCATTER MARKET IS SLOW. I THINK THE KEY IS THAT IT’S JUST SLOW. PEOPLE ARE SCARED. PEOPLE DON’T WANT TO MAKE BETS. MONEY IS STILL COMING IN. BUT IT’S COMING IN AT THE LAST SECOND. PEOPLE DON’T WANT TO GET OUT IN FRONT OF THINGS. SCATTER IS SLOW. SLOWER THAN WE WOULD LIKE. AND VOLUME IS NOT WHAT WE HAD ANTICIPATED. BUT IT’S NOT DIRE EITHER. AND SO I THINK IT DEPENDS ON THE PROPERTIES. CABLE IS STRONGER.

Faber: IS CABLE HOLDING UP AS WELL AS — UP YEAR OVER YEAR? DO YOU EXPECT IT WILL BE?

Zucker: CABLE IS STILL STRONG. I THINK IF YOU HAVE PREMIERE PROPERTIES LIKE NBC UNIVERSAL DOES WITH REGARD TO CABLE, YOU’RE SURVIVING THIS BETTER. SCATTER IS OKAY ON THE CABLE SIDE IF YOU HAVE THE RIGHT CABLE PROPERTIES. AND THAT’S SOMETHING THAT WE’RE TAKING GREAT COMFORT IN.

Faber: YOU SAID A NUMBER OF YEARS AGO IN TERMS OF DIGITAL STRATEGIES THAT IT’S DIFFICULT IN PART BECAUSE YOU’RE EXCHANGING ANALOG DOLLARS FOR DIGITAL PENNIES. YOU SHOULD HAVE PATENTED THAT. BUT LET’S TALK ABOUT DIGITAL. OBVIOUSLY MANY PEOPLE STILL LOOK AT IT AS A SIGNIFICANT IMPORTANT GROWTH AREA FOR MEDIA COMPANIES. IS IT GOING TO GROW IN 2009?

Zucker: I THINK IT’S A GROWTH AREA. I THINK IT WILL GROW. I JUST DON’T THINK IT WILL BE THE GROWTH AREA AT THE SAME LEVELS OF GROWTH THAT PEOPLE HAD EXPECTED. THAT’S CLEARLY WHAT’S HAPPENED. YOU LOOK AT THE SCATTER MARKETPLACE FOR INSTANCE AND YOU ASK ABOUT IN DIGITAL AND IT HAS BEEN AN AREA THAT’S REALLY DRIED UP AND REALLY SLOWED DOWN.

Faber: WHAT ACCOUNTS FOR THAT? RELUCTANCE ON THE PART OF ADVERTISERS?

Zucker: I THINK IT WAS THE LAST THING WE WENT INTO. THE FIRST THING WE’LL COME OUT OF TYPE OF MENTALITY. WHETHER THAT’S RIGHT OR WRONG, I THINK THAT IS WHAT HAPPENS. THE DIGITAL MARKETPLACE IS MUCH MUCH SLOWER THAN ANYBODY HAD ANTICIPATED. SO WHERE IS DIGITAL? I THINK IT’S STILL AN OPPORTUNITY. I THINK IT’S GOING TO CONTINUE TO GROW. IT’S NOT GOING TO BE WHAT PEOPLE THOUGHT IT WAS. CERTAINLY IN THE SHORT-TERM.

Faber: THAT’S NOT GOOD NEWS.

Zucker: PEOPLE HAD BEEN COUNTING ON THE DIGITAL EXPOSURE. I HAD BEEN TRYING TO TALK ABOUT THE FACT THAT EVEN AS IT GREW, IT WAS NOT NECESSARILY THE BIG GROWTH ENGINE FOR THESE LEGACY MEDIA COMPANIES THAT WERE TRADING THOSE ANALOG DOLLARS FOR DIGITAL DIMES. WE’RE NOW UP TO DIMES. THAT’S AN IMPROVEMENT.IT’S STILL NOT A DOLLAR FOR A DIME KIND OF BUSINESS THAT I WOULD LIKE TO BE IN.

Faber: BUT IT IS THE LONG-TERM FUTURE OF THIS INDUSTRY

Zucker: IT’S LONG-TERM BUT NOT — WE’RE GOING TO HAVE TO CONTINUE TO REDEFINE THE ECONOMIC MARKETPLACE WITH REGARD TO DIGITAL BECAUSE WE CAN’T JUST EXCHANGE THOSE ANALOG DOLLARS FOR WHATEVER THE DIGITAL DIMES ARE.

Faber: OBVIOUSLY WE’RE ALL PART OF A LARGER COMPANY FOCUSED ON QUARTERLY EARNINGS TO A CERTAIN EXTENT, HOW DO YOU INVEST FOR THE LONG-TERM WHEN YOU HAVE SO MANY SHORT-TERM PRESSURES?

Zucker: I THINK THAT MEDIA AS A WHOLE IS STILL A VERY GOOD LONG-TERM INVESTMENT.I THINK THAT THERE ARE A LOT OF REASONS TO BE OPTIMISTIC ABOUT MEDIA AND CERTAIN ASPECTS OF MEDIA LONG-TERM.

Faber: MAYBE UP TO 2009?

Zucker: AND THAT’S THE POINT. WHAT’S YOUR — HOW FAR OUT ARE YOU LOOKING? SO I THINK THE KEY IS TO RUN THESE BUSINESSES TO BE SAFE AND TO BE PRUDENT AND TO BE SMART IN THE SHORT-TERM. BUT AS A LONG-TERM INVESTMENT, PEOPLE WANT TO CONSUME OUR MEDIA. THEY’RE FINDING OUR MEDIA WHETHER IT IS ON TELEVISION SCREEN OR ON THEIR COMPUTER AND WHETHER THEY’RE WATCHING YOU ON CNBC OR CNBC.COM, THEY’RE STILL GOING TO OUR MOVIES. SO THEY WANT OUR CONTENT. WE JUST HAVE TO FIGURE OUT OVER THE LONG TERM THE BEST WAY TO MONETIZE IT.

Faber: NOT TO END ON A DOWN NOTE, BUT LAST WEEK WAS NOT A GREAT WEEK AT NBC UNIVERSAL. WE HAD LAYOFFS. IS THAT IT OR DO YOU HAVE TO REVISIT THAT AS 2009 MOVES AHEAD?

Zucker: OBVIOUSLY WE HOPE THAT THAT IS ALL THAT WE’LL NEED TO DO. WE THINK WE HAVE GOTTEN OUT IN FRONT. THAT’S WHAT WE ALWAYS TRY TO DO. WE TRY TO BE PRUDENT ABOUT THE MARKET AND WHAT WE SEE COMING. WE TOOK THE STEPS THAT WE THOUGHT WE NEEDED TO TAKE. I THINK THAT IS ALL WE SEE UNLESS THERE’S A TREMENDOUS CHANGE IN THE WORLD THAT WE DON’T ENVISION. I THINK WE’VE TAKEN THE NECESSARY STEPS.

Faber: JEFF, THANKS FOR STOPPING BY.

Zucker: GOOD TO BE WITH YOU, DAVID.

Faber: JEFF ZUCKER, BACK TO YOU GUYS.

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