Companywide budget cuts, layoffs loom
NEW YORK — NBC execs are moving closer to implementing long-rumored budget cuts, with insiders at the Peacock now predicting job losses of between 200 and 300 staffers companywide.
NBC topper Bob Wright is expected to issue an internal memo today outlining the need for the trims, which have been expected for weeks (Daily Variety, Aug. 14).
The across-the-board cuts are expected to average between 4% and 5%, with some divisions and departments — particularly those not directly related to programming — likely to take a larger hit. The sports division, for example, may have to trim 8% of its budget, in part because of the absence of NFL football.
Estimates vary on the exact number of jobs which will be lost, with some insiders projecting cuts “in the low hundreds” and others predicting the loss of between 100 and 150 positions. NBC employs around 6,000 people, making the overall workforce reduction relatively small.
NBC is not alone in cutting costs.
CBS will trim a few hundred employees from its payrolls, with the bulk of the cuts coming from the news division (Daily Variety, Aug. 27). Expenses are also being closely watched by Eye web execs.
ABC has slashed its development budget and, just weeks into the development season, is already slowing down and may possibly cap off its drama development early in order to save money. “We’re close to fulfilling our needs,” said one ABC source, who points out the lack of drama timeslots available at the Alphabet web and the fact that more will be done inhouse at Disney.
Virtually all divisions at NBC — including its local stations and cable channels CNBC and MSNBC — will feel the pinch, though jobs won’t be lost in every department. The staff reductions will be made through attrition, buyouts and some pinkslips.
The ultra-profitable news division will not be immune to the budget ax, with a few dozen jobs expected to be trimmed. One or two bureaus may also be closed or consolidated, insiders say.
“Dateline NBC,” which most industry insiders believe is the Peacock’s most important and valuable show, has had to slow down the expansion of its staff even though it’s now producing five nights per week of programming. Insiders say the newsmag will reach full staffing levels by early next year.
On the West Coast, NBC has decided to merge the staffs of its electronic and print publicity staffs, with between five and 10 positions likely to be eliminated. While the merger will save money, NBC execs also believe a combined PR operation — which is standard operating procedure at other webs — will be more effective.
In his memos to staffers, Wright will likely point out that the cost savings are necessary to prevent dramatically expanded programming costs from eroding the GE-owned web’s operating profit.
An NBC spokeswoman noted that “the television landscape is changing. Our cost for talent and production has increased. We’ve been working hard to maintain our profitability.”
Nevertheless, tensions are high and morale low at the web, as employees fear for their jobs.
“People are nervous,” said one NBC source. “Most people here have never faced this kind of thing, so you can imagine how scary it is to people. It wreaks havoc with morale.”
A money-saving push at NBC began in earnest about three months ago, following the conclusion of the upfront ad market, when preliminary revenue projections showed NBC’s profits potentially dropping from between $450 million and $500 million last year to around $300 million to $350 million in 1998 because of stagnant ratings, increased rights fees for the NBA and higher license fees for its hit shows “ER” and “Mad About You.”
Despite the projections, NBC execs are driven by GE topper Jack Welch and his commitment to growth. “There’s no reason our performance couldn’t be just as good as it was last year,” one exec said.
Among the numerous penny-pinching policies being implemented: Overtime has been eliminated for the majority of employees and freelancers, travel and expense account expenditures are being tightly scrutinized and restricted, advertising and promotional budgets have been cut back and non-essential production elements — such as unnecessarily lavish set pieces for NBC-produced entertainment series or educational study guides aimed at younger viewers — have been curtailed or sharply reduced.
In addition, Peacock employees must now justify the use of overnight mail or messenger services on a case-by-case basis and, assuming a trip is even approved, plan business travel as far in advance as possible to ensure the lowest possible airfare. Some publicists and low-level execs have been asked to reduce the number and cost of business meals. Cell phones and beepers may also be reclassified as non-essential for most staffers.
(Jenny Hontz in Los Angeles contributed to this story.)