August 24, 2013, 9:13 a.m. ET

Inside Comcast's $30 Billion TV Bet

NBCU's Steve Burke Has Weeded Out Executives and Scrubbed the Culture

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Cameras popped as celebrities stepped out of tinted-window vehicles at a Manhattan ballroom where E! cable network was hosting an event for advertisers. Kim Kardashian preened on the red carpet while Ryan Seacrest chatted with fans. But Steve Burke, the CEO of E's parent, NBCUniversal, was decidedly not in a partying mood.
"I want to kill myself," he said before ducking into an elevator. "They tried to get me to do the red carpet, but I said 'no'," he laughed. When the doors opened, a woman asked him to pose for a picture with the Olympian swimmer Ryan Lochte. "You're a good sport to put up with all of these suits," he told Mr. Lochte, leaning in for the photo.


Daniel Acker for The Wall Street Journal NBCU Chief Steve Burke, shown in Sun Valley, Idaho, last month, has purged senior executives and sought to scrub competing fiefdoms.

In the two years since Comcast Corp. CMCSA -0.38%bought NBCUniversal, Mr. Burke has shown a zeal for shaking things up with little sentimentality, weeding out some of the company's most well-known personalities in the process.
A straight-talking Harvard Business School graduate, Mr. Burke belongs to a new generation of media chieftains—including Time Warner Inc.'s TWX -0.02%Jeff Bewkes and Viacom Inc.'s VIAB -0.20%Philippe Dauman—who are more enamored with the bottom line than with Hollywood glamour. He refrains from hanging out in the news rooms and indulging stars—hallmarks of his predecessor Jeff Zucker. Warren Buffett, who made him a director on his board at Berkshire Hathaway, BRKB -0.42%describes him as "a personable guy, but not flamboyant."
Mr. Burke is the man in charge of pulling off a colossal wager.

With Comcast's two-stage, $30 billion deal completed in March, the cable giant is betting that its distribution business, combined with a content company, can create outsize benefits.

That logic, of course, runs counter to the trend of big U.S. media companies breaking themselves into smaller pieces. Time Warner Inc. spun off its cable operations in 2009 after failed bids to happily marry its content and distribution arms; Viacom Inc. carved out its CBS broadcast television and radio business into a separate company in 2005.



Mr. Burke argues that the Comcast model is different, and that the company he took over from General Electric Co. was "very broken."
"You don't get a chance to buy a company like NBCUniversal unless it's not doing well," he said in his first major interview, sitting in an office notable only for its multiple television screens and many framed family photos. "We started from the premise there is a lot of opportunity here."
Draining the Swamp

His "secret sauce," he says, is a plan to knit together Comcast NBCU's sprawling assets to create an uber platform to launch new ventures, be they shows, movies, park rides or videogames.
To that end, he has spent the past two years digging into the operations, trawling for value, and pouring money into the broadcast and cable television, movie and Universal theme park businesses. More than $12 billion has gone into sports, one of the few remaining genres where audiences tend to watch events live—and can't skip ads. Last month, NBC struck a 10-year $4.2 billion deal to wrestle Nascar from its longtime home, ESPN.
Along the way, he has been busy scrubbing a culture of intrigue and competing fiefdoms—"a swamp that he's been draining," as one former executive put it. Of the 20 most senior executives he inherited, only five remain. Other layers of management have also been streamlined.
One casualty of the purge: Dick Ebersol, the longtime czar of NBC Sports. Mr. Ebersol was accustomed to running the sports empire with little interference, including oversight of the Olympics, the company's flagship asset, people familiar with the situation say.
"These two guys were never going to mix," says one person familiar with the situation between the two men. "Oil, meet water. Water, meet oil."
The two ultimately clashed over Mr. Ebersol's compensation and as NBCU prepared a new bid for the Olympics, Mr. Ebersol resigned. Despite the veteran's absence from the team, NBCU won the bid, paying a record $4.4 billion to broadcast the Olympics from 2014 to 2020.
Mr. Ebersol describes any whiff of tension between him and Mr. Burke as "mythology after the fact."
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Two and a half years into his tenure, progress at NBCU is mixed. Mega hits like the singing competition "The Voice" have helped restore some sheen to NBC, but the network also suffered an embarrassing blow when "Today" ceded its 15-year reign as the top morning show to ABC's "Good Morning America."
Overall, NBCU's profits have grown since the takeover—in the second quarter, for instance, operating cash flow, a measure of profitability, rose 21%. But the company's cable-networks cash cow, which accounts for 80% of profits, have also suffered some ratings stumbles. On Aug. 16, Comcast extended Mr. Burke's employment agreement through 2018 and awarded him a $5 million bonus, citing his "outstanding work" in integrating NBCU and Comcast.
Unlike his rivals who proselytize their vision—from CBS's efforts to grow fees from pay-TV operators to Viacom's mission to lure younger viewers—Mr. Burke hasn't been one to broadcast his plans.
With the other companies, "You can see where they are coming from," says John Tinker, an analyst at the Maxim Group. "But Steve has been less clear."
That mystery extends inside the company. Former staffers are quick to recall the first time they met their new boss soon after the merger. In a conference room at Rockefeller Center, Comcast CEO Brian Roberts gave an impassioned speech about the new company. But when he handed over the room to Mr. Burke, he merely waved to the crowd, according to people in attendance.
The CEO may be known for his buttoned-up nature, but he chafes at anything that smacks of inertia.
"The hardest thing in physics is to get a body that isn't moving, moving," he says animatedly in his midtown Manhattan office. "I'm a very competitive person…I've run 12 marathons! I kayaked around Manhattan 29 miles in October! I ran the Berkshire Hathaway 5K! And I want every part of the business to compete—and play to win."
Mr. Burke, 55 years old, grew up in a wealthy Irish Catholic family, the son of Dan Burke, a television executive who rose to become Chief Executive of Capital Cities/ABC. Right out of college, he jumped to Harvard Business School, joining classmates like James Dimon, now chief executive at JP Morgan Chase JPM +0.21%.
"Like all of us, he drank beer and he wasn't in great shape, but he was very competitive," says Mr. Dimon, who appointed Mr. Burke to JP Morgan's board in 2003. "He decided to take up marathon running. He ran and ran and ended up running his first marathon in 2 hours, 39 minutes."
His first job of note was in corporate strategy at Walt Disney Co., where former chief executive Michael Eisner says he would poke fun at him for "being so serious."
In 1998 he headed to Comcast as the No. 2 to Mr. Roberts. There, he saw an opportunity for empire building: the duo went on an acquisitions spree, growing Comcast's cable business to more than 20 million subscribers, up from four million. Then they went on the hunt for a content deal and landed NBCU.
Project Symphony

By the time Mr. Burke arrived in his new office on the 52nd floor of 30 Rockefeller Center in New York in January 2011, his new corporate team was taking shape. One strategic hire was Bob Greenblatt from Showtime for the key role of programming at the struggling NBC network. Mr. Greenblatt had cleaned up the cable channel's soft-porn-laced schedule and introduced shows with more broad appeal like "Weeds."
Mr. Burke then set about using Comcast's deep pockets to fix what he saw as years of underinvestment by GE—an assessment that isn't shared by GE.
"We are proud of our management of NBCU over the two decades we owned the business," said a spokesman for the company.
Mr. Burke dubbed the heart of his strategy Project Symphony—an orchestral play on the word "synergy," which he finds trite. NBCU veterans say it's a strategy that has been tried before, although not on the scale of the combined company and without Mr. Burke's push for all divisions to participate.
Four times a year, he gathers some 150 managers at Studio 8H, home to Saturday Night Live, to plot cross-pollination Symphony strategies. To tout this summer's hit, "Despicable Me 2," for example, the company had the movie's yellow cartoon characters pop up on NBCU channels, sometimes scurrying across the bottom of the TV screen during NBC's sports events or reality television shows. Comcast also got in on the action, airing exclusive snippets of the movie on its video-on-demand channels.
Other synergies have proved more problematic, according to people familiar with the projects—pitting some branches of the company against others.
For instance, several NBCU cable channels, such as horror-themed Chiller and mystery-based Cloo, have had trouble getting carried on Comcast's cable system, potentially stunting their growth. The reason: Comcast negotiates with NBCU like any other competitor, fearing it would otherwise upset deals with rivals.
Such internal tension "makes it a more complex company to manage," Mr. Burke says. "But there is less conflict than you think."
Still, Symphony has its detractors: "Everyone likes to promote synergy," said Richard Greenfield, an analyst at BTIG. "It's overplayed."
Mr. Burke concedes it is hard to measure Symphony's success but he notes there are enough hits like "The Voice" to suggest it is working.
Mr. Burke has also taken on NBC's old boy's club culture, one he describes as historically dominated by "bigger than life producers…all chomping on cigars."
At an early off-site meeting with managers in the Universal park in Orlando, Mr. Burke described his professional ethos: No ego, he told the 150-strong crowd, should outshine the institution. Those who act simply to protect their turf wouldn't last long, he said, according to people at the gathering.
He brought together the broadcast and cable channels under one roof for news, sports and advertising, bridging a divide he felt was inefficient. He also put the fractured cable network and news businesses under single chiefs, Bonnie Hammer and Pat Fili-Krushel, respectively.
Even as he was busy restructuring, demographic trends were threatening the guts of the business: the cable networks. Ratings among several of the 15 cable networks, including USA Networks and E!, dipped last year. Many cable networks have seen ratings sag, but NBCU's declines were greater than the competition.
Some observers say NBCU's cable networks have been slower to respond to shifting appetites among younger viewers who have gravitated toward more cutting edge shows like AMC Network Inc.'s "Breaking Bad." To catch up, NBCU's leading network, USA, recently added reruns of the hit comedy "Modern Family" and it has been pumping up its schedule with new original series, including the legal drama "Graceland." In a departure from its long-favored reality TV hits, E! is developing new scripted shows such as "Laurel Canyon," about a young woman returning to her dysfunctional family after the death of her rock-star father.
Trying to Save NBC

The biggest trouble spot remains NBC. Once a media crown jewel, the network has lagged behind in the ratings for nearly a decade. It saw a brief run as number one last fall in prime time for ages 18 to 49, thanks largely to "The Voice," and Sunday Night Football. It later sank back to third place, without the boost of Sunday Night Football and as newcomers like "Smash" missed the mark.
Notable disappointments have included a show Mr. Burke had helped devise: Rock Center with Brian Williams. Mr. Burke had been keen to insert the newsmagazine into the schedule, seeing it as a relatively inexpensive way to fill a primetime hole. The show won accolades, but never found a large audience and was recently canceled.
"Comcast gets good marks in the early going for stabilizing NBC and making use of its considerable cable and Internet resources," says Tim Brooks, a TV historian and former NBC executive. But he adds: "NBC needs to develop more of a personality, as CBS has done with crime dramas."
Vital to NBC's turnaround now is its fall schedule of six new shows, including a comedy starring Michael J. Fox, who is making a return to television after disclosing his Parkinsons disease diagnosis in 1998. A new espionage thriller, "The Blacklist," stars James Spader. Despite its ratings weakness, NBC was one of the few networks to secure price increases for its advertising as media buyers expressed some enthusiasm for the fall schedule.
Mr. Burke is reluctant to articulate any failures thus far: "You're not going to get me to talk about that." After a pause, he says: "There are movies and TV shows I wish we didn't make, sure, but we're in the business of creating things that are not all going to work."
Write to Merissa Marr at merissa.marr@wsj.com and Christopher S. Stewart at christopher.stewart@wsj.com

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