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@ Ad Age Digital: NBCU’s Zucker: Microsoft/Yahoo Would Be Good For Business

After a few jokes about other interviewers being too busy (“Joe Franklin couldn’t be here, so they called me.”), Donny Deutsch, CNBC talk show host/chairman of Interpublic Group ad agency Deutsch Inc., opened the second day of the Ad Age Digital Marketing Conference by asking Jeff Zucker, NBC Universal’s (NYSE: GE) president and CEO, some touchy-feely questions before asking him his hopes and fears about the media industry’s transition to digital.

MSFT/YHOO: Weighing in on Microsoft’s (NSDQ: MSFT) proposed acquisition of Yahoo (NSDQ: YHOO) during the audience Q&A (which were conveyed on a texting device and sponsored by Yahoo), Zucker said: “I understand Microsoft’s intentions. We have relationships with both companies, so I don’t want to insert ourselves. But I don’t think it would be a bad thing. [If the companies merged it] would give us opportunities. We’re not in the market for an acquisition of that magnitude. But it wouldn’t impede anything we do.”

Economics of social net buys: Why wouldn’t NBCU go out and buy a Facebook? “We want to build social networking ties and that is becoming more important to the business. But as for buying one, the economics don’t make sense for us to do that.”

On YouTube: “We made the decision not to go with YouTube because they were not not willing to put the filtering in place that they were capable of doing. We also wanted to control our destiny and the environment in which our content exists. We have Hulu because it’s a place for premium content, without the uncertainty that goes along with user-gen.”

More from Deutsch’s interview with Zucker after the jump.

A work in progress: At the beginning of the presentation, Zucker was asked to rate the company’s work on transitioning to digital. Reluctant to give a specific grade for how well NBCU has done on that front (“If I do, it’ll follow us forever”), Zucker said it’s still a work in progress. “We’re all making use of digital technology. We’ve made mistakes, we’ve done exciting things. Anyone who tells you they have an exact digital strategy and knows where things are going to end, is just making it up.”

Fear factors: Zucker was asked his biggest fear about the digital transition: “It’s two things. I worry about piracy, people taking our content and not paying us for it. That will end our business. I just read Antigua is going to make piracy legal because they’re upset with the U.S. trade policy. That’s troubling to me. The other thing we struggle with is how we’re going to make this digital transition and not completely destroy the way media has been traditionally consumed and has made this business, while allowing consumers the freedom to take their content any way they want.”

Strange bedfellows: Deutsch opened a series of questions about NBCU’s arrangement with News Corp (NYSE: NWS). on Hulu with an odd characterization. “So you and Rupert [Murdoch] are rolling around in bed together. Wait, that’s a strange image. Banish it from your thoughts.” Zucker, after looking both amused and disturbed, offered his usual take on Hulu: “We believe we have the germ of an idea in Hulu and it will continue to shape consumer behavior and give advertisers an opportunity an experience unlike anywhere online. Usage in the first weeks have exceeded our expectations.” Zucker didn’t offer any actual numbers on either expectations or the actual number f views. As for the unique ad experience, he pointed to the use of overlays, which although not sui generis, “can allow advertisers to get their message across without corrupting the consumer experience. We were in uncharted territory when we launched this idea with News Corp. It’s still uncharted. Still have and that’s still viable. But both are complementary distribution channels.”

Democratizing content: The conversation then turned to user-gen and how that’s influenced Saturday Night Live’s digital shorts. “My son is 9-years-old and loves making videos for his friends on YouTube. But in terms of professional content, nothing beats the resources that make a great piece of content, whether it’s a 3-minute short or an hour-long drama. There’s something to be said for something with a beginning, a middle and an end. Ultimately, that’s why NBC and Hulu will succeed.”

Upfront update: The big extravaganza of years’ past will be scaled back significantly. “Advertisers want a more intimate basis and sales people want it over in less than an hour. So we’re going to have small sessions of less than 70 people. We’re going to go to Chicago, LA and have the conversations face-to-face. We’re going to end up spending more money this way. We’re going to have a big presentation on May 12 – a coming out party really – and we’re going to bring not just NBC, but cable and online digital assets and Universal theme parks. This is about NBC Universal; it’s not just NBC, the broadcaster, any more.”