GUY RAZ, host:
On the NBC comedy "30 Rock," a network executive, played by Alec Baldwin, is constantly coming up with schemes to make NBC profitable. Now, one of them is Seinfeld Vision. The idea is to insert a computer-generated animation of Jerry Seinfeld into every one of the network's primetime shows.
(Soundbite of TV show, "30 Rock")
Mr. JERRY SEINFELD (Actor, Comedian): (as himself) Is that really your pitch?
Mr. ALEC BALDWIN (Actor): (as Jack Donaghy) Okay. I get it. This is a two-way street. All right, Jerry, what NBC shows do you want to be digitally inserted into?
Mr. SEINFELD: (as himself) I like "Lost." Is that you guys?
Mr. BALDWIN: (as Jack Donaghy) Jerry, don't be difficult. The fact of the matter is that Seinfeld Vision is perfectly legal and there's nothing you can do to stop us. I'm sorry, but it's business.
RAZ: Now, the real NBC isn't quite desperate enough to try Seinfeld Vision - at least yet - but network President Jeff Zucker has been taking a lot of heat this week for the failure of his big programming innovation - that was moving Jay Leno into primetime last September and now out of it again.
But in at least one classroom at Harvard Business School, Zucker's move has drawn praise. I caught up with Professor Felix Oberholzer and he explained why.
Professor FELIX OBERHOLZER (Business Administration, Harvard Business School): The logic for creating a slot for comedy in primetime I think was impeccable for a business point of view. To fill that slot in primetime with a drama would cost NBC roughly $300 million a year. If comedy does well in this particular slot, the cost of producing "The Jay Leno Show" at primetime is roughly a third of that.
RAZ: Very cheap.
Prof. OBERHOLZER: Well, I don't know if $100 million is very cheap, but it's cheap relative to drama. So, one implication is even if the size of the audience declines quite substantially, economically speaking, this is still a good move. And in particular - so think about NBC not having any great shows at the moment.
RAZ: They don't have anything in the top 30 right now, except for professional football (unintelligible).
Prof. OBERHOLZER: Right. If you look at the top 20, really football is all there is.
RAZ: Yeah/
Prof. OBERHOLZER: What you're going to think about as an executive of NBC or any of the networks really is how are you going to make your business fly in an environment where possibly ad revenues will not come back the way they have in the past because of competition from the Internet, and in an environment where the audience fractures across many activities and many shows.
RAZ: I mean, in a sense, isn't NBC doing precisely what you as a professor at Harvard Business School would suggest your students not do, which is putting short-term profit over long-term value creation?
Prof. OBERHOLZER: I don't think that's right. So, what strikes me as interesting is how little experimentation there is. Think about innovation and comedy. We now get very excited if Mr. Leno is not using a desk. That's about the extent of innovation since the Carson...
RAZ: I was very excited by that.
(Soundbite of laughter)
Prof. OBERHOLZER: But it's measured against sort of what innovations could you possibly think of. And so what they're doing is, in large part I would say, the responsible thing. They're trying to think about how can NBC stay a viable player in an economic environment where the cost side's got to move; the cost side has to give.
RAZ: But doesn't there have to be some gestation period? I mean, if you experiment, don't you have to be willing to watch that experiment work or fail over a period of time?
Prof. OBERHOLZER: The problem that's created is the much smaller lead-in effect from primetime into local news. So, this is almost like you and I being in a joint venture. I'm NBC and I'm looking at profitability of my shows. But you're my partner and you're looking at revenues. And what you're seeing is a more profitable but far smaller Jay Leno slot before local news is actually hurting the local affiliates. So...
RAZ: It's hurting the local affiliates because fewer people are watching Leno, so then fewer people are staying to watch the 11 p.m. news.
Prof. OBERHOLZER: That's exactly right. You can - in TV, you cannot think about individual shows in isolation because each show is an important lead-in to the popularity of the next show.
RAZ: So, do you think it's unfair that NBC President Jeff Zucker is being portrayed as this kind of corporate monster?
Prof. OBERHOLZER: There are two things that I like about what he did. First, he seriously thought about the cost side of TV. The second part that I really like is he tried an innovation. Everyone who now claims, oh, we've seen this all along, this could not possibly work, Americans are not used to watching these kinds of shows in primetime, I think there's a good deal of Monday morning quarterbacking that's going on now.
RAZ: Felix Oberholzer is a professor at Harvard Business School.
Felix Oberholzer, thanks so much.
Prof. OBERHOLZER: Thank you.