TERENCE SMITH: What, in your view, and from your perspective, is the reason for some of these cross-ownership rules and caps to be lifted?
BOB WRIGHT: Well, first of all, these rules go back into [broadcasting's history] – they started in 1941 with radio and then they were largely incorporated with some more detail in 1953 to television, so we're talking about some pretty old-time rules here.
The deregulation of radio took place in the late 80s, early 90s, and it finally was effective in the mid 90s, and was completely deregulated. Cable has been completely deregulated. There are no caps, effectively. The courts keep pushing out the ones that do exist but they basically don't have many at all. Cellular phones don't have any. The newspapers have only one left, and that's the one that's just been vacated by a federal court of appeals, which is cable-press ownership.
So there is asymmetry going on here, but television is the only regulated thing left in terms of ownership and things of this sort. So it's a very unusual situation, and I think you're seeing the courts taking a very active role now in the deregulatory process with Congress and the FCC in some respects kind of watching.
TERENCE SMITH: Is it essential in that atmosphere for media companies to get bigger?
BOB WRIGHT: Most of the people that have cable television today have 90 channels or more of programming, and so you have tremendous opportunity to find things of interest that aren't on broadcast television stations.
Localization, I think, is going to be the critical element going forward, which means you're going to have to produce more and more local programming. That is kind of a big company thing. It's very expensive to do that because you're only broadcasting it for one market, and you're going to have be competitive on production values and things of that nature. People are going to compare you to other channels, which are national channels.
TERENCE SMITH: There are people in Congress, such as Sen. [Byron] Dorgan, who are worried that bigness means less localization and the elimination of local ownership and local control.
BOB WRIGHT: Well, some might feel that, but in my opinion it's going to be exactly the other way around. Each NBC station has 30 hours a week of local programming. That is a lot of local programming, and, you know, we may have to do more of that, rather than less going forward. It's expensive; it is necessary.
There is an opportunity to give people something of interest because all the cable and satellite programs, by and large, are nationally distributed; they're not in real time – the majority – only the news programs are. The others are taped or filmed. And good local programming has a place, but it's expensive. It requires a company to be well-financed to do this, and as you get more and more channels in the home, companies are going to find it harder to borrow money; they're going to find it harder to invest in these kinds of programs.
So it is ironic that people would say, well, local isn't important. I think it's critical, but it's not something for the faint of heart. It requires money, it requires financing, and I think that's why you have to have larger companies involved in the process to ensure that that takes place.
TERENCE SMITH: People say that further consolidation is inevitable as a result of these rules being largely set aside. Is it?
BOB WRIGHT: I think it is. It's very much like the newspaper business. We went through periods where New York had 20 newspapers – it may in the suburbs today – but newspapers that cross over markets now, one, two or three is the most you see anywhere.
TERENCE SMITH: Well, an analyst we talked to at Morgan Stanley said that he felt that that would put a company like NBC in a position to go out and aggressively try to acquire as many of its affiliates as it can.
BOB WRIGHT: We've acquired a number of our affiliates. We do that usually under very friendly terms when there's an opportunity to do something. It probably isn't plausible for us to be buying all of the NBC affiliates, and we look for other areas as well...that's how we got into Telemundo, that's why we're in MSNBC, and CNBC, to take advantage of the fact that viewers are interested in more niche programming.
But we would still like to do as much as we can in broadcasting. These caps, this geography cap – there's no symmetry to that measurement anywhere else. Everybody else measures actual viewers or listeners. In our case we measure geography. That's why the federal court basically said to send it back to the commission. These rules won't stand up on appeal, I mean, that's the reality of it, so it's a question of how long before…they get re-done.
TERENCE SMITH: Do you expect networks other than NBC to try to gather into their fold as many affiliates and local outlets as they can?
BOB WRIGHT: I think they will do that. Fox has been doing that for some time. I think other companies will come along, though, to do it themselves if the rules are more flexible.
We've seen something happen in the UK, which is really quite different. Just last week the Labor government announced its plan to introduce legislation with a complete deregulation of ownership, and that's quite surprising because they've had historically a very heavily-regulated environment. So they're going to complete deregulation, and I think that our Congress and our FCC have to pay attention to that. And I'm sure our courts will when they're asked to look at some of these issues.
TERENCE SMITH: What do you conclude from it? What do you think is the driving force behind deregulation, and how do you think it applies here?
BOB WRIGHT: I think they're concluding that it's a complex world, and they're not quite sure that it's in the consumer's or the viewer's interest or the government's interest to be deciding who gets to own what under what circumstances and how many.
And I think they're just looking at the same multi-channel world. They see B Sky B, a privately held company with enormous viewership, and they see their television viewership not being able to react as well, it's not as well organized. So I kind of think they're just sort of saying, "we're not sure how this will pan out, but we're going to put television on as attractive an economic basis as possible and go compete."
TERENCE SMITH: In this consolidated world is competition real or illusory? In other words, if a large company owns many of those 90 outlets that you're talking about, and a lot of the news and information sources that come into your home, is that real competition?
BOB WRIGHT: Well, I think you clearly have traditional antitrust laws that have to be looked at in terms of going forward. If you have people that are acting in a manner that are foreclosing other people from competing in an unfair way, then that's what antitrust laws are about. And I think over time that will be a concern. It will be a concern of cable operators owning too many programs because they're the distributor and ...they own a lot of advertising time.
So I think there are underlying rules: historic, you know, fair trade, antitrust that will have applicability and govern the ownership outside of these historical artifacts of geography and things of that nature, which the FCC has been more focused on.
TERENCE SMITH: This makes these companies more valuable. Is NBC for sale?
BOB WRIGHT: No, NBC is not for sale.
TERENCE SMITH: Is NBC going to be for sale?
BOB WRIGHT: NBC is making every attempt that we can to grow our business — in the media business, in the entertainment business. We're primarily a news and information company with a lot of entertainment as well, but we're looking like everybody for opportunities to grow. That's why we got involved with Telemundo. That's why we're involved with Paxson; that's why we're involved with Value Vision Television. We're trying opportunities that we can bring our skills and ambitions to.
TERENCE SMITH: What else might NBC want to acquire, not necessarily specific, because you can't announce that, but in the field. What would make sense for NBC to acquire?
BOB WRIGHT: We're in the television business. So if it's television related, we're interested in it, more so than we would be if it's print or data or some other things of that nature. That may be things we do in the future but primarily we're interested in television
TERENCE SMITH: As these corporations get bigger, isn't one reality that the news operations become smaller and smaller pieces of the whole?
BOB WRIGHT: That's not true in our case.
TERENCE SMITH: Of the whole?
BOB WRIGHT: Of the whole. I mean we have grown our news operation significantly. We've got MSNBC, CNBC, and NBC News. And every time we buy another television station, we add another news operation. In the case of Telemundo, they were struggling; they did not have the financial backing they needed. They could not do local programming, and they really were very modest in their local news. We will have a disproportionate number of the people at NBC will be in the news and information business on television going forward, so we're going the other way.
TERENCE SMITH: Within NBC.
BOB WRIGHT: Right.
TERENCE SMITH: But NBC, of course, is owned by General Electric, of which you're vice chairman. Aren't all of NBC's news and information operations pretty small in terms of General Electric as a company?
BOB WRIGHT: But that's not the way GE looks at businesses. Other people add up the businesses. When I'm on the GE side of my day, what we do is we're looking at companies, we're looking at businesses, we're looking at financial, we're looking at good opportunities, we're looking at how well they're run, how they perform against their competitors.
And that's the way NBC is looked at – and the issue is, how do you grow your business in an intelligent way with a good return on shareholder equity – and we do pretty well with that with NBC and with a lot of support from GE.
TERENCE SMITH: Is there cause for concern from the public's point of view about possible conflicts of interest? Can NBC legitimately report on problems with aircraft engines made by GE?
BOB WRIGHT: The answer is yes and does quite often, probably more so than our competitors do. There's a feeling that we should take a lead in that sort of reporting. Or at least we should never be second if we could be first.
TERENCE SMITH: You're conscious of the appearance of conflict?
BOB WRIGHT: If anything, we're a little overly tough on GE and GE-related entities when it comes time to report something, whether it be aircraft engines or whether it be the military discrepancies of time cards in the late 80s and things of that nature – I think we try to make sure that we are out there reporting.
We try not to overdo it, but generally we're first, and oftentimes we're quite a bit ahead of our peers; they can count on us for being hard against them. I think you have to be sensitive about that. We do understand that. The perception of conflict in news reporting can damage your reputation; can damage our credibility. We don't need that. We try to avoid that, and GE often wishes we were probably a lot less interested in some of the foibles that happen in a large business, but I think that comes with the territory.
TERENCE SMITH: When you look at this increasingly consolidated industry, there are other conflicts that may not necessarily apply to NBC, but they exist. For example, if the news operation is asked to review movies made by a studio owned by the same company, or a sports reporter covers a ball club that's owned by the company that he works for. Should consumers be worried about this?
BOB WRIGHT: Well, I think some of it's very obvious. I don't think it's much of an issue. I mean we don't have those things, so I can say this I guess in a somewhat neutral way. People are aware of it, other sports writers will be quick to criticize a situation where somebody seems to be favoring the company-owned team. We don't see much of that at all; at least I don't see much of that.
In the movie business, well, you know, the movie business is fun; it's entertainment. It's not serious in that regard, so people are going to promote it and they're going to promote it heavily. I think that just comes with the territory.
TERENCE SMITH: There's a notion that television is a different kind of industry, but mergers are occurring through industry, so it's not unique at all in that sense now. Should television be held to a different standard in terms of consolidation?
BOB WRIGHT: Well, it is now. It's got this odd standard that doesn't have any real applicability to reality. I think every business needs some kind of regulatory format that it operates in. And I think since we operate on a licensed basis, and so does cable and radio and cellular and everybody else, we always have to have some kind of regulatory posturing. I'm not opposed to that, but it should make sense.
It has to be against some standards of scale and size and appropriateness, and I think that's yet to be...it has been looked at in those other media areas. It has been looked at in telephony, it has been looked at in wireless, it's been looked at in satellite. What it hasn't been looked at seriously in of late has been television. We'll see that happen.
TERENCE SMITH: But if this consolidation continues, will the choices be real? Are the voices genuinely different?
BOB WRIGHT: Well, I think that when you have 90 channels, even though only one company owns control of all that, which is the legal monopoly that cable is, you're always going to be concerned about it, but I think there are places, ways to raise that issue.
It's funny, nobody seems to pay much attention to that, and I think, in fact, the cable operator has done a pretty good of making sure that voices get out there even though they're making that decision almost unilaterally in each market.