Culture shock likely as Comcast takes over NBC

In the NBC sitcom "30 Rock," the self-absorbed television chief executive, played by Alec Baldwin, obsesses over what will happen to his career when his company — NBC — is taken over by Kabletown, a fictional cable systems operator from Philadelphia.

On Friday the real-life cable company from Philadelphia — Comcast Corp. — assumes control of NBC Universal, the real-life entertainment colossus that is featured in the show. And while Steve Burke, the new chief executive of NBC Universal, is a fan of "30 Rock," one of his priorities will be to reform the NBC Universal corporate culture, one that has condoned politicking and aggrandizement, the very workplace parodied by the sitcom.

"Doing the right thing and treating people the right way. We think integrity and honesty are the foundation of a productive working environment," says the Comcast credo distributed to NBC Universal's nearly 30,000 employees Thursday. "We take our business seriously, but do not take ourselves too seriously."

Even before Comcast's official takeover Friday several key NBC executives were shown the door, including former Chief Executive Jeff Zucker. The face of MSNBC, anchor Keith Olbermann, found himself without a job too, just days before the new owners arrived. Although Comcast says it did not instigate Olbermann's ouster, his departure served as a warning that people who spar with bosses won't be tolerated.

Infusing Comcast's and Burke's management approach, one that encourages teamwork and takes a dim view of office politics, into the sprawling NBC Universal could take years.

But Burke, 52, has been in training for the job nearly his entire life. He spent his early career at Walt Disney Co., working in theme parks, retail stores and the ABC broadcast network, before joining Comcast in 1998. His father, Dan Burke, confronted a similar challenge a quarter-century ago when his Capital Cities Communications acquired the larger ABC network, which had fallen to third place, and cut layers of management and clamped down on a perks-laden culture.

Now it's up to Steve Burke to fix the once-invincible NBC, ramp up revenue at the Universal Pictures studio, elevate the Spanish-language Telemundo network and navigate a new digital world where profits remain elusive.

Comcast has vowed that it will strengthen NBC Universal by stepping up investments in programming and attractions. For the last 25 years, NBC has been owned by industrial giant General Electric Co., better known for building jet engines, wind turbines and medical devices — not creating entertainment. GE, which manages its finances with an eye toward quarterly results, scaled back investing in entertainment when the advertising recession hit and the marquee NBC network started bleeding about $500 million a year.

Two years ago, with NBC on the ropes, Comcast Chief Executive Brian Roberts and his second-in-command, Burke, approached GE Chairman Jeffrey Immelt, expressing interest in acquiring NBC Universal, which last year generated $2.3 billion in operating profit on nearly $17 billion in revenue.

The agreement hammered out during the fall of 2009 required Comcast to put down about $6.5 billion in cash and fold in its cable channels — including E! Entertainment, the Golf Channel and regional sports networks — to claim 51% of the new entity. Wall Street analysts say Comcast secured the media crown jewels at a bargain price.

GE, which negotiated the sale during a market trough, will retain 49%. Within seven years, GE will be able to exit the business entirely.

The merger — which gives Comcast full operating control — is the fruition of Comcast's long-held ambition to become a major-domo in the entertainment industry. Although Comcast owns a handful of TV channels, until now it has not been in the league of conglomerates Disney, Time Warner Inc. and Rupert Murdoch's News Corp.

Now Comcast will own some of the premier assets in the industry, including the USA, Syfy and Bravo channels, cable news outlets CNBC and MSNBC, Universal Studios, a library of films and television shows, Telemundo and the NBC Sports empire.

Roberts continues as CEO of Comcast while Burke — the company's chief operating officer — has been put in charge of NBC Universal.

"This isn't foreign territory to Comcast," said Bob Wright, who was NBC's chief executive until 2007. "But their challenge is to show momentum. NBC Universal has been stuck in the neutral zone for 18 months."

During the last year, while waiting for the federal government to approve the merger, Burke began meeting with executives and familiarizing himself with operations. Early on, according to close associates, Burke determined that reforming NBC's dysfunctional corporate culture was crucial to coalescing his team, which is mostly drawn from current NBC Universal management.

The first move was telling.

When the two forceful executives who run NBC Universal's cable channels — Bonnie Hammer and Lauren Zalaznick — separately hinted they would leave the company if the other was put in charge of the entire cable group, Burke informed each of them they were free to go, according to people familiar with the conversations. Neither executive was handed the portfolio she sought, although both were entrusted with additional duties, and Burke succeeded in keeping two talented executives in the fold.

Burke also recruited Robert Greenblatt, the respected head of programming at Showtime, to run NBC Entertainment. Now they must decide how to revive NBC's struggling prime-time lineup, which fields only one program that consistently makes the top 20 — "Sunday Night Football."

There will be other challenges. Burke and Greenblatt must decide whether they want to continue filling the 10 p.m. hour with expensive dramas, which during the last year have lost tens of millions of dollars for the company as numerous attempts to trot out new shows have failed to muster a hit. But Comcast has signaled to the TV industry that it wants to rebuild NBC's schedule, even if it costs money.

This year Comcast also must decide whether it wants to aggressively bid for the 2014 and 2016 Olympic Games. The Olympics have been the hallmark of NBC Sports. But last year the company lost more than $220 million on its telecast of the Vancouver games. Sports properties, including "Sunday Night Football," lost $300 million, a person familiar with the financials said.

Like all media companies, Comcast must grapple with wringing revenues from Internet streams of its TV shows and movies — without allowing the Internet to erode NBC's core business.

But unlike the other entertainment giants, Comcast is in position to benefit as an Internet service provider. That also poses the knottiest challenge. Roberts and Burke will have to decide which side of the company — content supplier or content distributor — to favor in sticky negotiations. For example, should they make movies available on cable system video-on-demand services earlier to better compete with the likes of Netflix?

At a town hall meeting Thursday, Burke told employees that during the last year workers suggested 100 new ideas, which Comcast intends to roll out.

"The first," Roberts said, "Is that Kabletown is not spelled with a K."

meg.james@latimes.com

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