Digital Media and Prime Time Changes

By Russell Hickey

Yesterday NBC Universal announced a plan to restructure the company in order to save $750 million over two years.  Part of the restructure includes a new plan for prime time programming and increased investment into "digital initiatives."  The new plan for prime time includes less scripted shows (expensive to produce) and more reality and game shows (relatively inexpensive to produce).

Two quotes from NBC Universal chairman and CEO Bob Wright that appeared in two separate articles seemed to provide the big picture:

First, regarding the prime time plan, Wright told the Los Angeles Times that "the audience just isn't there.  We have some of our best stuff at 8 o'clock, and it's struggling."

Second, regarding the investment in the digital media, Wright told CNNMoney.com that "success in this business means quickly adjusting to and anticipating change. This initiative is designed to help us exploit technology and focus our resources, as we continue our transformation into a digital media company for the 21st century."

In other words, it's a lesson straight from Economics 101: supply and demand.  The media companies who will be most successful in the era of convergence will be those who capitalize on the fractured nature of consumers.  If more consumers can be found via the Internet, get more of your content on-line.

From an insurance perspective, getting more content on-line will push entertainment companies toward (if not beyond) the limits of their traditional media coverage.  In other words, it will be critical for entertainment companies and their brokers to make sure their insurance policies include coverage for cyber and technology exposures.

From the consumer perspective, one has to wonder whether the prime time plan will only cause further fracturing of the consumer base.  Will the reduced emphasis on scripted television shows only push more consumers to look for entertainment elsewhere?

Russell Hickey is a Claims Counsel at Media/Professional Insurance.

Comments

[Bob London]

Agree, very much on point given today's environment.