By the early 21st century, much has changed in the television business, but Robert Wright is still chairman, and NBC has been the dominant network in the United States for much of the past two decades, a model of stability in an otherwise turbulent business. NBC has consistently led all networks in attracting the 18- to 49-year-old adults most coveted by advertisers—winning this demographic in seven of the eight years from 1995 to 2003—and has helped to reorient the entire broadcasting industry toward the pursuit of this segment of the audience. Led by a Thursday night lineup that has launched such hits as The Cosby Show, Cheers, and L.A. Law in the 1980s, and Seinfeld, Friends, and E.R. in the 1990s, NBC has the highest advertising rates of any broadcast network and has long been the most profitable, generating profits of $700–800 million from its prime-time schedule in the 2002–03 season. NBC’s dominance extends to virtually every part of the schedule, where its self-produced entertainment and news programs have led the ratings during much of the past decade: The Today Show and Meet The Press in the mornings, NBC Nightly News among evening newscasts, and The Tonight Show with Jay Leno, Late Night with Conan O’Brien, and Saturday Night Live in the late-night slot. Over the same period, NBC has been responsible for many of television’s most acclaimed series, easily overshadowing the other broadcast networks with a mounting pile of Emmy nominations for E.R., The West Wing, Law and Order, Homicide: Life on the Streets, Frasier, Seinfeld, and Will & Grace.

Due to the strength of its network programming, NBC’s fourteen owned-and-operated television stations contribute another $1 billion in annual advertising revenue. Still, the audience for over-the-air broadcasting continues to shrink in the United States as audiences are dispersed among cable channels and competing forms of home entertainment. Like other media companies, NBC has diversified well beyond its original base in broadcasting in order to reach these elusive viewers. NBC now controls several cable channels, including CNBC, a business news network available in 175 million households worldwide; MSNBC, a 24-hour news network owned jointly with Microsoft; and Bravo, a network targeted at upscale viewers. In order to reach the growing Latino audience in the U.S., NBC purchased Telemundo, the second-largest U.S. Spanish-language broadcast network, in April 2002. With international markets as important as the domestic market to GE’s bottom line, NBC programming now reaches viewers in one hundred countries on six continents. All told, NBC Television and Cable operations generate annual revenues of $7.1 billion (still only five percent of GE’s annual sales) and operating profits of $1.7 billion.

In September 2003, GE announced its most ambitious expansion for NBC, a plan to acquire Vivendi Universal Entertainment in a deal valued at $14 billion. The purchase would give GE control of Universal movie studio, the USA Network and other cable channels, a television production unit responsible for the network’s lucrative Law and Order franchise, and Vivendi’s interest in the Universal Studios theme parks. By integrating additional cable networks and a major studio with its broadcast network, NBC Universal (as the new company will be known) will compete with the other fully integrated media conglomerates owning broadcast networks: Viacom (CBS and UPN), The Walt Disney Co. (ABC), News Corporation (Fox), and Time Warner (WB).

Throughout its history, the fortunes of the National Broadcasting Company have been closely tied to those of a parent company. Unlike CBS and ABC, which began as independent programming enterprises, NBC came into existence as the subsidiary of an electronics manufacturer, Radio Corporation of America (RCA), which saw programming as a form of marketing, an enticement for consumers to purchase radio and television receivers for the home. The power and influence of a national network aided RCA as it lobbied to see its technology adopted as the industry standard, particularly during the early years of television and in the battle over color television.

RCA, which had begun as a mere sales agent for the other companies in the combine, emerged in the 1930s as a radio manufacturer with two networks (NBC-Red and NBC-Blue), a powerful lineup of clear channel stations, and a roster of stars unequaled in the radio industry. From this position of power, RCA research labs, under the direction of Vladimir Zworykin, set the standard for research into the nascent technology of television. NBC began experimental broadcasts from New York’s Empire State building as early as 1932. By 1935, the company was spending millions of dollars annually to fund television research. Profits from the lucrative NBC radio networks were routinely channeled into television research. In 1939, NBC became the first network in the United States to introduce regular television broadcasts with its inaugural telecast of the opening-day ceremonies at the New York World’s Fair.

RCA’s dominance of the U.S. broadcasting industry led to government scrutiny in the late 1930s when the FCC began to investigate the legitimacy of networks that linked together hundreds of local stations, or “chain broadcasting” as it was then called. The result was the 1941 publication of the FCC’s Report on Chain Broadcasting, which assailed the network’s control of a majority of high-powered stations and called for the divorcement of NBC’s two networks. RCA challenged the decision in court, but failed to overturn the FCC’s findings. In 1943 RCA sold its Blue network to Edward J. Noble, and this network eventually became ABC.

After World War II, RCA moved quickly to consolidate its influence over the television industry. While CBS tried to stall efforts to establish technological standards in order to promote its own color-TV technology, RCA pressed for the development of television according to the existing NTSC technical standards established in 1941. The FCC agreed with RCA, though the two networks continued to battle over standards for color television until the RCA system was finally selected in 1953. Throughout this period, network television played a secondary role at RCA. In the early 1950s NBC accounted for only one-quarter of RCA’s corporate profits. NBC’s most important role for its parent was in helping to extend the general appeal of television as the market for television sets boomed.

Throughout the 1950s and 1960s, NBC generally finished in second place in the ratings behind CBS. NBC’s prime-time schedule relied heavily on two genres: drama, including several of the most acclaimed anthology drama series of the 1950s (such as Philco/Goodyear Playhouse, Kraft Television Theater), and comedy/variety, featuring such stars as Milton Berle, Jimmy Durante, Sid Caesar and Imogene Coca, Dean Martin and Jerry Lewis, Bob Hope, and Perry Como. In spite of its dependence on these familiar genres, NBC was also responsible for several programming innovations.

Several key innovations are credited to Sylvester “Pat” Weaver, who served as the network’s chief programmer from 1949 to 1953 and as president from 1953 to 1955. Weaver is credited with introducing the “magazine concept” of television advertising, in which advertisers no longer sponsored an entire series, but paid to have their ads placed within a program, as ads appear in a magazine. Previously, networks had functioned as conduits for programs produced by sponsors; Weaver’s move shifted the balance of power toward the networks, which were able to exert more control over their programming and schedules. Weaver expanded the network schedule into the “fringe” time periods of early morning and late night by introducing Today and Tonight. He also championed “event” programming that broke the routines of regularly scheduled series with expensive, one-shot broadcasts, which he called “spectaculars.” Broadcast live, the Broadway production of Peter Pan drew a record audience of 65 million viewers in 1955.

Former ABC president Robert Kintner took over programming at NBC in 1956 and served as network president from 1958 to 1965. Kintner supervised the expansion of NBC news, the shift to color broadcasting (completed in 1965), and the network’s diversification beyond television programming. Programming under Kintner followed the network’s traditional reliance on dramas and comedy/variety. NBC formed a strong alliance with the production company MCA-Universal, whose drama series came to dominate the network’s schedule well into the 1970s.

During the late 1970s, after decades spent battling CBS in the ratings, NBC watched as ABC, with a sitcom-laden schedule, took command of the ratings race, leaving NBC in a distant third place. To halt its steep decline, NBC recruited Fred Silverman, the man who had engineered ABC’s rapid rise. Silverman’s tenure as president of NBC lasted from 1978 to 1981 and is probably the lowest point in the history of the network. Instead of turning around NBC’s fortunes, Silverman presided over an era of ratings that declined still further, desertions by the network’s affiliate stations, and programs that were often mediocre (BJ and the Bear) and occasionally disastrous (Supertrain).

Mired in third place at the depths of its fortunes in 1981, NBC recruited Grant Tinker to become NBC chairman. A cofounder of MTM Enterprises, Tinker had presided over the spectacular rise of the independent production company that had produced The Mary Tyler Moore Show, Lou Grant, and Hill Street Blues. Tinker led NBC on a three-year journey back to respectability by continuing the commitment to quality programming that had marked his tenure at MTM. He and programming chief Brandon Tartikoff patiently nurtured such acclaimed series as Hill Street Blues, Cheers, St. Elsewhere, Family Ties, and Miami Vice. The turning point for NBC came in 1984, when Tartikoff convinced comedian Bill Cosby to return to series television with The Cosby Show. Network profits under Tinker and Tartikoff climbed from $48 million in 1981 to $333 million in 1985.

By the mid-1980s, NBC generated 43 percent of RCA’s $570 million in annual earnings—a hugely disproportionate share of the profits for a single division of a conglomerate. In the merger-mania that swept the corporate world in the 1980s, RCA became a ripe target for takeover, particularly given the potential value of the company when broken into its various components. General Electric purchased RCA, and with it NBC, in 1985 for $6.3 billion. When Tinker stepped down in 1986, GE chairman Jack Welch named Robert E. Wright as network chairman. NBC dominated the ratings until the late 1980s, when its ratings suddenly collapsed, as viewers deserted aging hits like The Golden Girls and L.A. Law. Just one show, Cheers, remained in the Nielsen top ten by 1991, and NBC fell into third place for the first time in over a decade. Network profits plunged from $603 million in 1989 to $204 million in 1992.

The network suffered one public relations debacle after another during this period. The CNBC cable channel, which NBC had launched as a joint venture with cable operator Cablevision, lost $60 million in its first two years, forcing Cablevision to withdraw from the partnership. Wright’s appointment of newspaper executive Michael Gartner to head NBC News ended in a highly publicized scandal over a fraudulent news report on the prime-time news magazine, Dateline. Attempts to name a successor to the retiring Johnny Carson as host of The Tonight Show turned into a public brouhaha as network executives wavered between Jay Leno and David Letterman. Leno eventually ended up in Carson’s seat, while Letterman fled to CBS.

Nevertheless, GE held onto NBC, and Robert Wright remained in charge, gradually bringing stability to the network and returning it to prominence starting in 1993. Wright hired Republican public relations guru Roger Ailes to turn around CNBC, and his success was almost immediate; CNBC reported an operating profit of $50 million in 1995. Wright placed Andrew Lack in charge of NBC News, and Lack led The Nightly News with Tom Brokaw and The Today Show (overhauled by producer Jeff Zucker) into first place. Expanded to three hours, The Today Show became an NBC cash cow, generating advertising revenue of $450 million a year. Wright convinced veteran producer Don Ohlmeyer to join the entertainment division, where he and entertainment president Warren Littlefield returned NBC to the top of the prime-time ratings by 1995, with solid hits in Seinfeld, E.R., Frasier, Friends, and Law and Order. Littlefield passed the torch to Scott Sassa in 1998, and NBC added The West Wing and Will & Grace to its roster of critical and popular success.

Robert Wright and GE management have adapted to some of the conventions of the television industry, but NBC’s accomplishment over the past 10 years is also due to the application of GE’s rigorous management strategies to television, where NBC executives dissect audience demographics and measure the advertising potential of each show developed for the network schedule. This has led to NBC’s intense focus on the 18- to 49-year-old adult demographic, which rarely wavers across its prime-time schedule. It is the rare NBC series, for instance, that centers on families with children—the sorts of series that appear regularly on CBS and ABC, attracting viewers too young or too old for NBC’s desired demographic. This also has led NBC to squeeze every dime out of its Thursday night “Must-See TV” schedule, which has become the most profitable night of television as the movie studios spend heavily on TV advertising for the Friday launch of their blockbusters.

These management strategies also have led NBC to question the economic value of certain types of programming, such as major-league sports, that were considered a network staple just a few years ago. In an initially surprising move, NBC eliminated costly, money-losing sports properties that once defined the power and prestige of a national network, choosing not to renew its contracts with the National Football League, Major League Baseball, and the National Basketball Association.

The competition in prime time has increased over the past several years, as the audience has continued to shrink, the advertising market has flattened, programming costs have risen, new program formats have been introduced, and new networks compete for viewers. There are now six broadcast networks and dozens of cable channels competing for the attention of viewers. Under these conditions it is increasingly difficult to launch a new series, and NBC has not had a breakout hit since Will & Grace debuted in 1998. With the exception of Fear Factor, NBC has not matched the success of other networks in developing non-scripted series. Therefore, its programmers have been forced to squeeze every ratings point out of the existing hits. Under Scott Sassa, NBC introduced two spin-offs of Law and Order, an enduring hit that debuted in 1990 (Law and Order: SVU and Law and Order: Criminal Intent) and there is talk of a fourth version to follow. Since former Today Show producer Jeff Zucker became entertainment president in 2001, he has not launched a hit series, but has kept NBC on top with programming gimmicks, such as “super-sized” episodes of NBC’s Thursday night sitcoms, which add extra minutes in order to keep viewers from turning to a competitor’s program. He also plans to include short films during the commercial breaks in order to keep viewers, particularly TiVo-empowered viewers, watching the commercials.

The cost of holding together a prime-time schedule has increased dramatically over the past several years, and NBC has been forced to spend lavishly in order to keep in place its most successful series. As it is more difficult than ever to turn a scripted series into a hit, producers of existing series find themselves with considerable bargaining leverage. When E.R. came up for renewal in 2000, NBC paid Warner Brothers Television a record $13 million per episode. In order to lure Friends back for a final season in 2003–04, NBC paid Warner Brothers $10 million per episode and reduced its order to just eighteen episodes. In spite of sagging ratings, the Emmy-winning The West Wing was renewed for $6 million per episode.

While broadcast networks have only a single revenue source—advertising sales—cable networks earn money from advertising and from charging transmission fees to cable and satellite delivery systems, which are passed along to viewers as higher service rates. For the most successful networks, such as Disney’s ESPN, these transmission fees can be raised by as much as 20 percent annually. By combining broadcast and cable networks, a company like NBC increases its bargaining leverage over cable and satellite systems when negotiating transmission fees and over advertisers when negotiating advertising rates across a range of networks that can provide access to different sorts of viewers. In addition, a diversified portfolio of broadcast and cable networks allows a company like NBC to reconstitute much of the audience lost by the traditional broadcast networks over the past two decades. Although the audience for the broadcast networks continues to shrink, the five companies that control the broadcast networks still reach more than 80 percent of viewers in prime time, when counting the ratings for their combined broadcast and cable networks. This explains why half of the top 50 cable networks have changed hands since 1990 and why most are now controlled by the five companies that already own broadcast networks.

Cable networks also allow companies to spread operating costs and extend their global reach. NBC has achieved greater efficiency and reach for CNBC by expanding CNBC Europe and CNBC Asia Pacific (both of which are jointly owned with Dow Jones, the publisher of the Wall Street Journal) through a range of localized services using the resources of partners in Japan, Australia, Singapore, Hong Kong, Sweden, and several other countries. The 24-hour news network MSNBC uses the resources of NBC News to provide programming for both cable and Internet. Cable networks also lend themselves to the establishment of brand identities and to cross-promotional opportunities, as networks like ESPN, MTV, and Nickelodeon have proven for NBC’s competitors. After taking complete ownership of the Bravo cable network in December 2002 by purchasing Cablevision’s 50 percent stake for $1.25 billion, NBC spent one-quarter of Bravo’s annual marketing budget to launch a signature program, Queer Eye for the Straight Guy. With its splashy summer 2003 debut, Queer Eye pointed the way toward a future of corporate synergy at NBC. It is relatively inexpensive to produce and loaded with product placements that cannot be ignored by viewers with TiVo. NBC promoted it heavily throughout the network schedule—its cast appeared on the Today and Tonight shows—and has aired episodes in prime time on NBC. Regular episodes on Bravo have drawn as many as 3 million viewers—small by network standards, but the largest in Bravo’s 22-year history. In this intensive marketing campaign, one can glimpse the future of corporate synergy and the strategy for transforming a program and a cable network into a marketable brand.

NBC’s acquisition of Vivendi’s Universal properties follows as a logical step in the network’s expansion and should be viewed as a response to two trends: the rising cost of programming, and the value of cable networks. With the support of new GE chairman Jeff Immelt, Robert Wright pursued the Universal assets when they became available after Vivendi CEO Jean-Marie Messier drove the company to the brink of bankruptcy. The movie studio and theme parks may not play a significant role in NBC’s long-term plans (and there is speculation that NBC will sell the theme parks in the near future), but they are the cost of acquiring Vivendi’s other assets: the television production operation, a library consisting of over 5,000 movies and 34,000 hours of television, and the cable channels USA, Sci-Fi, and Trio. NBC wants its own studio in order to avoid being held hostage in negotiations with producers—or at least to share in the syndication profits of series that achieve success on the network. NBC now owns the Law and Order franchise, which reduces many of the headaches involved in negotiating its renewal (though it creates new concerns about potential conflicts of interest) and cuts the network in on its syndication revenues. The real value of the deal for NBC lies in the expansion of its cable holdings through Vivendi’s three established cable networks. Over the last half-decade it has often seemed like an episode of Law and Order was always on the air, with originals and repeats on NBC or syndicated reruns on A&E, TNT, and USA at virtually any hour of the day. With NBC’s newly acquired library of Law and Order episodes, and a growing portfolio of cable channels, it is not sheer fantasy to imagine that we have moved one step closer to the day when there will be a cable network that consists of nothing but Law and Order, all day, every day.