New NBCU CEO Jeff Shell Makes Tough Moves and Splits With Old Ways of Doing Business

By Brian Steinberg

LOS ANGELES (Variety.com) – Jeff Shell wants a break.

The new NBCUniversal CEO, who took over the role from Steve Burke earlier this year, made one thing clear May 4 when he shook up his company’s senior ranks: He wants to cut ties to structures that might slow down the massive Comcast-backed media conglomerate as it’s trying to compete in a complex new world. That means putting multiple controversies that have erupted at NBC News in the past — even as fresh word surfaces of a recent investigation of activity there by the New York attorney general’s office — and restructuring the company for the streaming wars that lie ahead.

Shell’s new NBCU puts all of the company’s news operations — NBC News, MSNBC and CNBC — together for the first time in several years under the aegis of a traditional corporate manager, not someone tied to the newsroom. (CNBC has existed independently since Pat Fili-Krushel, a former head of news operations, departed.) And it consolidates the company’s TV-production and distribution assets under another executive, Mark Lazarus, a signal that Shell sees cable, broadcast and streaming as parts of a larger operation, rather than businesses to be managed separately from one another.

“This is the right structure to lead NBCUniversal into the future during this transformational time in the industry,” Shell said earlier this week in a statement. The exec had been examining NBCU’s organizational framework for several months, says a person familiar with the company, and made the moves out of a desire to be more efficient and competitive.

As part of that consideration, this person says, Shell decided NBC News could use a fresh start. Andy Lack, who has run NBC News and MSNBC since 2015, is leaving earlier than anticipated, and Shell is giving Lack’s job to someone other than his heir apparent, NBC News president Noah Oppenheim. Lack, a veteran who was serving a second stint as a senior executive at NBCUniversal, had been expected to leave his post after the 2020 election; his tenure has encompassed big programming swings as well as a spate of controversies. He is being replaced by Cesar Conde, the NBCU executive who oversees its large Telemundo Spanish-language business and who serves on the corporate boards of Walmart and PepsiCo. Oppenheim is expected to continue in his current role, says the person familiar with the company.

“There are at least two things that Lack didn’t lack, and that is, he didn’t lack talent and experience and he didn’t lack controversy,” says Jeffrey Sonnenfeld, senior associate dean for leadership studies at Yale School of Management. “So this was in the cards for a few months now. And Shell is just getting it behind him as they of course get ready for [the launch of] Peacock,” the company’s streaming service.

Disclosure of the legal investigation adds a new wrinkle. The New York attorney general’s office late last year launched an investigation into allegations of sexual harassment, retaliation and gender discrimination at NBC News, Variety reported. “We are not aware of any inquiry,” NBCUniversal says. A representative for the New York attorney general’s office declined to comment. It’s unclear if the investigation is ongoing.

The news division could be critical to Comcast and NBCU in weeks ahead. As more consumers opt to watch their favorite comedy or drama via streaming video, live news and sports will become the TV networks’ most reliable tool for capturing big crowds who cannot skip past ads. NBCU has launched news products for streaming video, Snapchat and Quibi and even a kids version of “NBC Nightly News.” NBCUniversal’s news operation is rivaled in only by AT&T’s CNN in scope and global presence.

But even as it has expanded, NBC’s news unit has lurched from one scandal to the next. In 2015, before Lack arrived, former “NBC Nightly News” anchor Brian Williams was suspended after being accused of making false statements on air and during public appearances about a reporting trip to Iraq. Since then, NBC News has drawn scrutiny for everything from a failed multimillion-dollar bet on former Fox News anchor Megyn Kelly to its inability to break news on an “Access Hollywood” tape that contained footage of candidate Donald Trump acknowledging he felt free to assault women sexually. “Access Hollywood” is part of the NBCU empire.

Activist organizations have put the news division under scrutiny. They have protested NBCU’s handling of not only Matt Lauer’s ouster after the anchor was accused of sexual harassment (he has denied many of the claims made against him) and a subsequent internal investigation, but also NBC News’ decision not to move forward with reporting by Ronan Farrow over allegations of sexual assault by movie mogul Harvey Weinstein. Some NBC News digital employees formed a union late last year, citing in part their concerns over how sensitive stories were handled by news executives.

UltraViolet, one group that has pressed for change at NBC News, called the succession move at NBC News “a positive development that suggests NBC is beginning to take issues regarding its workplace culture seriously.”

Shell has many things to consider at a time when the coronavirus pandemic is wreaking havoc on media economics. The pandemic has spurred Madison Avenue to cut back on advertising, and scuttled dozens of large-audience sports events — including some of NBC’s biggest properties, such as NHL games (currently suspended) and the 2020 Tokyo Olympics (postponed). It has also hurt operations like NBCU’s theme parks (closed) and its movie business. NBCU’s revenue in the first quarter fell 7% to $7.7 billion, compared with $8.3 billion in the year-earlier period.

Shell became CEO of NBCU in January and has kept his thoughts about operating the enormous media company to himself and his associates. But since the advent of the pandemic, he has slowly grown more vocal. When asked during a Comcast investor call last week if NBCU’s business was “right-sized for the current environment,” his answer was direct: “Probably no.”

“We have to address our costs, but we are going to come back at some point,” Shell told investors. “I think what we’re trying to do is address our cost base in a way that comes out of this in a different way, that we look like a different company. And we can shift our business as we adjust our cost base. But we’re spending a lot of time on our cost base. And certainly, over the next weeks and months, we’ll make pretty significant adjustments there across our business.”

One way to do that is to break down silos between operations that are often in the same line of business. Now that more consumers are binge-watching their favorite programs on demand, the cable, broadcast and streaming businesses have become distribution windows — and a rising generation of viewers doesn’t see much of a difference between NBC and, say, USA.

Other media companies have come around to the concept. At ViacomCBS, a move is afoot to rethink its cable operations. Executives from Comedy Central, among other places, were laid off as part of a broader effort to cut costs at the recently merged entity. Chris McCarthy, who oversees ViacomCBS’ entertainment and youth brands, told staffers that his unit was “shifting from cable to content, which is at the center of everything we do,” and “moving from strong siloed brands to a powerful entertainment portfolio.”

Media executives increasingly realize they need to produce as much content as possible and put it everywhere people might want to watch it. NBCU’s moves will combine production operations while allowing the company to winnow down overlapping functions.

The same dynamics hold true at NBCU’s combined news operations, where staffers are wary of some of the changes, according to one person familiar with the division, because they could mean layoffs. Both CNBC and NBC News have in recent years built up new digital newsrooms, hiring reporters dedicated to media, politics and technology. An NBC News spokesperson declined to comment on the potential for staff reductions.

NBCU could not continue as it had, says Paul Argenti, a professor of corporate communication at Dartmouth College’s Tuck School of Business. In the current environment, companies are either committed to weathering the storm or making cuts to operations. Argenti says he had expected Shell to make moves “within six weeks” of taking the reins.

Elizabeth Wagmeister contributed to this report.