BANFF – Kevin MacLellan, chairman, global distribution and international for NBCU, today sat in conversation with Barbara Williams, EVP and COO of Corus Entertainment, and gave a tour de force account of where he sees the business going and where Canada fits in.
NBCUniversal was honoured as the company of distinction this year.
MacLellan, 51, started as a producer and grew up in Brooklyn when that ‘hood wasn’t yet cool. He was the youngest of eight children in an Irish Catholic family where his dad made ends meet by installing AT&T phones. Probably his biggest break came with the harsh and ironic reality of his father dying and MacLellan receiving a “hardship scholarship” from the church to attend a Catholic college in upstate New York.
From there came an academic transfer to university in the U.K. along with a burning passion to get every penny out of his $300 EurRail Pass. In that sequence of biographic events, “I fell in love with the world” he said.
Along the way he and his husband had two beautiful little boys (Alexander and William) and he arrived in Banff as a major honcho within Comcast – a US$85 billion company that considers itself still not big enough.
Brace yourself for a writer’s take on gob-smack big data: Comcast Cable has 29 million customers in the U.S., is the largest cable TV and home internet service in that country, and the third largest home telephone provider. Married to that colossus is NBCU which is the fastest growing major media company south of the 49th, along with being number one in prime time and having the top Spanish-speaking TV network.
Its brands include: 12 networks with the likes of NBC, Bravo, Telemundo, Oxygen and E!; six television production companies such as Universal and Wilshire; another half dozen film studio companies; ten digital entities including Hulu and Rotten Tomatoes; five theme parks; and a massive global distribution company.
These folks are in 165 countries with 56 linear channels, have launched over 20 new media businesses along with Hayu now in seven countries and coming to Canada in September, and they distribute over 120,000 TV episodes and 4,000 feature films in 200 territories – including with Bell and Corus here in Canada.
It’s not much of a surprise then that the U.K. and Canada are their most important foreign markets; but it was interesting to hear MacLellan say that Canada has the edge because of our simulcast practices.
Moreover, NBCU spent more than US$1.1 billion over the last four years on productions in Canada – double its spending in any other market.
MacLellan was quick to suggest that more Canadian economic activity is the offing, perhaps with digital effects and animation, and possibly through Vancouver-based Lark Productions with which they have a distribution and development deal.
In one of those quirky little Banff moments, MacLellan regaled the audience about how he lobbied Heritage Minister Mélanie Joly and CRTC chair Ian Scott at dinner last night on how to get more impactful results from our overall Cancon spend – less tonnage and more focusing of economic resources on fewer but more dollar per hour programs.
This would produce “better global content and financial return to Canadians “because the talent is here”.
As for the Comcast/NBCU juggernaut having any size envy, it’s pretty simple: “Margins on many products are thinning, so we need more scale, which means going beyond our own domestic boundaries.” Comcast is preparing takeover bids for European pay TV giant Sky as well as Fox’s TV and film group.
Part of that can be “accomplished with the wwweb,” he added, but while 10% of Comcast’s pocket jingle ($) already comes from outside the U.S., “we need more, so buying an asset like Sky or Fox when it becomes available makes sense,” said MacLellan.
“An international asset like Sky can reach scale quickly and diversify revenue streams, plus compete more effectively with online players… we’ll have 23 million new subscribers if we get Sky”.
“Canadian companies need to figure out how to work together, as seems to be happening in the U.K…. you should be opening up ways of working together given the global threats to this market.” – Kevin MacLellan, NBCUniversal
In the perennial party game of “how many players will there be at the media end of days?” MacLellan’s gypsy ball says three to five at first, but then… loads more.
His reasoning is that number range, Netflix being one, will do the heavy lifting of changing consumer behaviour for general audiences, then others will come in to provide specialized, personalized offerings appealing to different demo/psychographics.
“Netflix took out the friction points such as ads, low cost, privacy, assuring the consumer comes first… and that’s been successful… but to use American parlance, we’re only in the second or third inning of grasping this international business” he says.
(Completely irrelevant writer’s note: thank God for the Orioles or the Jays would be the worst team in MLB, it’s Canuck parlance too!) In a cross border gesture of solidarity MacLellan, though not going as far as Robert DeNiro in Toronto, agrees in Banff with a Canadian on a matter of commercial trade.
He gives Williams a polite wink and projects that advertising is not going away any time soon and neither is linear television. “Linear has the reach and digital has the targeting… with a single show we get the broadcast reach then spend the next 30 day’s with OTT… with product that is $5-to-$6 million per episode that’s the only way that it works financially” for NBCU.
Now comes the rub.
As I mentioned above, Hayu is coming to Canada in September. That all-reality content OTT offering will carry programming that competes directly with Corus and Bell content for the attention and engagement of women. Indeed some of that Hayu content is already licensed to female-focused entities owned by those two Canadian companies.
True, MacLellan’s crew tried to “convince (Corus) and Bell to work together on a Hayu partnership” but our twin-headed Maple Leaf side couldn’t get there from here.
True, Hayu in Canada will have both produced and acquired Cancon, but Williams was clear “I’m not crazy about this idea… but we’re not able to stop OTTs from coming in… we’re still too dependent on U.S. content”.
MacLellan stuck to the diplomatic high road, hints that he’s shared this next point at our Ministerial level too, and says “Canadian companies need to figure out how to work together, as seems to be happening in the U.K…. you should be opening up ways of working together given the global threats to this market.”
To which Williams riffed with a timely touch of humour, adding “that seems like a more difficult summit negotiation than the one going on in Korea!”
Appropriately, she then brought this international Banff mini-summit to a marketer’s close by enjoining the crowd to come back next year to see how it works out.
“This is the year of conversation, next year well see what the impact has been… CBS Access is also coming… Amazon Prime (is around) and YouTubeTV (with 60+ cable free networks) might be next”.
And by then Comcast/NBCU will be yet that much bigger again.
