Zucker's Busy New Office

NBC typically doesn't rely on an idiot boss to dig itself out of a hole. But as chairman Bob Wright recently noted, these are "desperate" times. So for help NBC turned to "The Office," a ratings-challenged sitcom from a season ago featuring an earnest but impolitic boss (Steve Carell of "The 40-Year-Old Virgin"). Last month NBC released reruns on iTunes, then recently added the series to a revamped lineup on Thursdays. "The Office" was an instant podcast hit, and its weekly TV audience grew by millions. Could it be that video iPods are helping decide prime-time winners? "You can never prove anything for sure, but it hasn't hurt and probably helped quite a bit," Jeff Zucker, newly anointed CEO of NBC Universal Television, said last Friday, after another encouraging showing for the network the night before.

You'd be hard pressed trying to find a more vivid example than NBC of the abrupt upending of the media world. For most of the past two decades, it dominated prime time with an urban, upscale sensibility. But all that changed last season. The network sank to the ratings cellar. Every part of NBC seemed to cool off, fray or come apart. Last month its partnership with Microsoft partly collapsed when the software giant pulled out of low-rated cable news channel MSNBC. Its Bravo channel lost heat when ratings fell for "Queer Eye.'' By summer, the "Today" show could lose Katie Couric to CBS News. Execs make a strong case that NBC Universal's fortunes are rebounding or surging beyond its highly visible prime-time woes. And suddenly there are even promising signs of an uptick in prime time, notably on Thursdays, where NBC also has a hot new comedy, "My Name Is Earl," and where "The Office" is generating the unmistakable buzz of a breakout hit.

But buzz alone won't satisfy NBC's once proud-as-a-peacock parent, GE. The network's problems are a blow to GE's rep of management excellence and are weighing on its financial results. On Friday, when GE reported fourth-quarter earnings, NBC Universal was the lone division that slid--profits were off 7 percent, to $801 million. (A massive one-time expense of $2.9 billion related to GE's exit from the insurance business pounded overall corporate profits.) And with profits expected to languish all year at NBC Universal, GE chairman Jeffrey Immelt is facing more questions from Wall Street, including whether GE's Hollywood ambitions are worth the trouble.

Immelt's support is unwavering. "I think we can drive consistent earnings growth and consistent returns" at NBC Universal, he said when addressing Wall Street analysts last month. "We are investor-friendly in this whole game, and we'll continue to see if there are better ways to run it as an enterprise." Two days later, after extensive consultation with Immelt, Wright reshuffled management and TV assets. The brash and confident Zucker, who began his rise as executive producer of "Today," nabbed the CEO post. One surprise appointment: Beth Comstock, a former NBC exec now returning from an eight-year stint at GE with broad powers to shift NBC Universal into the digital age.

Ostensibly, the changes streamlined management and consolidated the far-flung TV assets, leaving Zucker and Comstock in fighting form for the rating and digital wars. "We are organized around those issues," Wright told NEWSWEEK. But the changes also signal the beginning of the end of his brilliant 20-year reign. Wright, 62, hasn't disclosed any plans to retire. And although NBC has no mandatory retirement, it's customary for a top exec to exit at 65. Most signs point to Zucker as his successor. Wright has even joked that Zucker would rise, perhaps in two years--if he helps NBC win on all fronts. Yet Wall Street veterans and media execs with close NBC ties say to watch Comstock, too. She's been a star at GE, polishing its environmental image with the "Ecomagination" marketing campaign and helping to generate billions in new business through an innovation push.

Both execs know their futures will rest on results. "Our two biggest priorities are supporting prime time and moving the company into the new digital space," Zucker said. "Beth and I have a long relationship. We worked together for many, many years." Asked whether she could be in line for the top job, Comstock simply answered: "I've got work to do here now. That's what I'm focused on."

And that means lots of meetings. A recent topic was video-download pricing. iTunes, where NBC has a growing lineup, charges $1.99 each. Too low, too high--who knows? "It's a learning opportunity that is adding revenues," Comstock says. How much? So far, $2.5 million, one third of it from "The Office."

These days, she's pondering all the vexing issues of the digital realm. Business models have to be developed. NBC shows have to be protected from being pirated. As a result of her high-level GE role, "I understand--and at a level that's pretty deep--where NBC has been and the challenges it faces," she says.

Zucker, too, has been busy crisscrossing his expanded turf. Recently, he flew to Miami (Telemundo, NBC's Spanish-language network), and dropped in on the Consumer Electronics Show in Las Vegas, where digital media was the hot topic. He also held a town-hall meeting at CNBC headquarters. With Microsoft now out of MSNBC, Zucker told the audience he might change its name by spring, staffers said. About Rupert Murdoch's plans for a CNBC rival, he told them he didn't know if there's room for two financial-news networks. "But if there isn't room for two," he added, "the one will be us."

Despite stumbling, NBC Universal remains a formidable media giant. Its USA network reaches the most homes in cable. At Bravo, "Project Runway" drew the highest ratings of any cable offering last week, and could become another "Queer Eye"-size hit. Although MSNBC is an also-ran in cable news, it and CNBC are profitable parts of a potent NBC News operation. In February, NBC will spread coverage of the Olympics across its TV empire, using the telecasts to promote its shows. "I feel very good about where everything is in the company, save for prime time," Zucker says. "We're in the turnaround phase in prime time."

That bullishness is a hallmark of GE, echoed in the tone of CEO Immelt when he discusses the media business. "We're not in it just to be in it," he told the analysts last month. "I like the content angle." That means Immelt believes there's gold in TV shows and movies delivered to iPod, Xbox and the rest of the proliferating digital universe of "multiplatforms." Of course, his view could change. "If it ever became apparent that there was some breakup [of NBC Universal] that would create extraordinary shareholder value, we'd be crazy not to look at it," said Immelt.

Performance-review time: the boss who counts most around NBC offices is no idiot.