NBCUniversal CEO Steve Burke Explains How New Streaming Service Will Take Shape (Q&A)

Amid an executive reorganization, the conglomerate is launching an ad-supported offering in early 2020.

NBCUniversal took a back seat in 2018 as rivals Disney and WarnerMedia unveiled big plans for their streaming plays. But instead of waiting idly for a direct-to-consumer future to sweep Hollywood, CEO Steve Burke and his team were quietly making plans for a streaming service of their own.

NBCU is planning to leverage the reach of cable corporate owner Comcast, new portfolio company Sky and other programming pipes. The service that will launch in early 2020 will be free for Comcast Cable and Sky pay TV subscribers, and Burke says he hopes to strike similar deals with Charter, DirecTV, Dish Network and others. “We’ve come up with what we think is a very innovative way of planning to get into the streaming business and that is to be, first of all, free to the consumer,” Burke tells The Hollywood Reporter.

To orient the NBCUniversal business around the new streaming offering going forward, Burke on Monday announced a significant reorganization of his top executives that put cable chairman Bonnie Hammer in charge of a new direct-to-consumer and digital enterprises division that will oversee the launch of the service. Assuming responsibility for Hammer’s cable portfolio is longtime sports executive Mark Lazarus, who also adds NBC News to his purview. Film chief Jeff Shell, meanwhile, adds NBC Entertainment, Telemundo and international to his portfolio; and Universal Pictures’ Donna Langley is becoming sole chairman of Universal Filmed Entertainment. As part of the reorg, Burke’s number of direct reports falls from 18 to 12.

“We’re giving two people in Jeff Shell and Mark Lazarus more responsibility, and they’re two people who have earned more responsibility,” Burke explains. “At the same time, as we go through and try to figure things out like which shows do we put where, it’s going to be a simpler company because Jeff and Mark and Bonnie and I can get in a room and make a decision.”

After announcement of the forthcoming streaming service, Burke called THR to discuss whether he will pull The Office from Netflix, how the executive shake-up impacts NBC News and the future of NBCU's relationship with Hulu.

NBCU has been expected to launch a streaming service for a while. Why now?

It’s a big decision. It’s taken us a while to develop it, but we’ve come up with what we think is a very innovative way of planning to get into the streaming business. That is to, first of all, be free to the consumer, which I think will get us a lot of attention and a lot of usage. The way we make money is by interactive advertising. We think we can get around $5 a month from people who would use a free service. If you look at it, you would have gotten maybe double that if you were charging. Will you get twice as many users for free as you would get by charging? I think the answer is that you will get a lot more than twice as many. So we then said, "OK what’s the best way to launch a free ad-supported service?" And we decided that the best way to do it is to do it in concert with the cable and satellite companies. In the U.S., of course, that will be Comcast Cable, our sister company. In the U.K., Italy and Germany, that will be Sky, which we now own. All of a sudden, you’ve got 52 million customers with Comcast and Sky. Then we would hope to add Charter, DirecTV and everyone else, all promoting and offering a service to customers at no cost. We think this is our best chance at getting scale quickly.

Did you learn anything from sitting back and watching your competitors reveal their streaming strategies in 2018?

I don’t think we’ve sat back that much. This is all still early going. To me, it’s more important to get it right. We’ve been working on this very diligently over the last year or so, and we think we’ve got a great plan. Obviously, we announced Bonnie Hammer as leading the effort, but we’re going to be using the technical team that has launched Sky’s successful OTT platform in Europe, it’s called Now TV. Two of their senior executives are coming over to the U.S. and going to help us launch this. There’s been a lot of planning and that takes time. You do these things when you feel you’ve got it right.

You’re not worried about launching after Disney+ and WarnerMedia?

We’ll probably launch in about a year, and my understanding is the other services are going to launch at the end of 2019. We’re talking a few months, and I don’t think that makes any difference in the scheme of things.

You mention partnerships with the other cable providers. How will that work?

People talk about cutting the cord all the time, but about 80 percent of the homes in America subscribe to cable or satellite, so 80 percent of the universe would get this for free. The other 20 percent of the universe could pay for it. And if you really didn’t want the ads, you would be able to get it through Spectrum or Comcast Xfinity and there would be a tier where you could pay to not get ads. But we think the real focus, particularly in the beginning, will be [free with ads].

Will NBCU continue to sell shows to other networks?

We’ve always sold to our own channels like NBC and USA and Syfy and Bravo, but we’ve also sold to other broadcasters. We have a show that we’ve developed that’s on CBS, we had a show called Bates Motel that was on A&E and we’ve sold to Netflix and Amazon and Hulu. When you’re in the business of creating content, you should be open to selling to everyone. We as a matter of policy plan to sell to everyone. It will be attractive for us to have another buyer in the form of our own direct-to-consumer service, but we’re going to constantly be looking at all the alternatives and put shows where they belong and where they maximize value.

So a showrunner with a first-look deal at UCP shouldn’t be worried that the relationship with outside buyers will change?

No. It’s just another buyer.

How will you evaluate whether to pull library shows like The Office from Netflix or other third-party streamers?

The Office is often the No. 1 show on a monthly basis on Netflix. Netflix has The Office through 2021, and when the time comes we’ll look at our existing direct-to-consumer service and what kind of volume it has and how much we could expect to make if we moved it over, and we’ll have a discussion with Netflix and we’ll decide what’s right for the show.

Are you able to launch an NBCU streaming service and remain in Hulu?

We have plenty of product while remaining in Hulu. Everybody is going to compete with everybody. Disney is going to have services that compete with Hulu. Obviously Netflix will. Amazon will. It’s a big world and there will be a lot of different competitors. This is just a new one.

You can be a Hulu competitor and a Hulu owner at the same time?

Sure.

How does the acquisition of Sky impact the future rollout of the streaming service?

It’s going to give us more scale. I think Sky has a lot of attractive TV shows that we can bring to the U.S. We have a lot of attractive shows that we can bring to Europe. It gives us a nice leg up in a very important market as we try to get scale. Eventually these businesses are all going to be global businesses.

What was behind the executive reorganization?

We are making the company easier to manage. I had [18 direct reports]. I will now have 12. We’re giving two people in Jeff Shell and Mark Lazarus more responsibility, and they’re two people who have earned more responsibility. At the same time, as we go through and try to figure things out like which shows do we put where, it’s going to be a simpler company because Jeff and Mark and Bonnie and I can get in a room and make a decision.

How does the reorg impact the film business? Will Donna Langley have sole greenlight power?

Donna is going to be the sole chairman of the studio. We all talk about big films before we make them, but Donna is superbly qualified to run Universal.

What does Andy Lack’s future at NBC News look like under the new organizational structure?

I think Andy Lack has done a great job. NBC is No. 1 in the morning, No. 1 with Nightly News, No. 1 on the weekend. He’s done a great job and has my support, and Mark Lazarus feels the same way.

In promoting Mark Lazarus and Jeff Shell, are you starting to look for a future successor?

They are both very, very capable people who deserve more. This is primarily about setting ourselves up for OTT and giving them more responsibility, and I’m not going anywhere.