NEW YORK — NBC staffers are bracing themselves for the worst period of belt-tightening in five years as determined Peacock execs try to prevent dramatically expanded programming costs from eroding the GE-owned web’s operating profit.
The cost-cutting goes beyond the usual fiscal frugality associated with GE, insiders at the network say, though there’s no indication of pending layoffs. As part of a general budget freeze, managers at all levels are being forced to find savings, and some staffers fear that program quality may suffer.
The money-saving push began in earnest about two 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 between $300 million and $350 million in 1998 because of stagnant ratings, increased rights fees for the NBA and higher license fees for “ER” and “Mad About You.”
Despite the projections, NBC execs, guided by the strong growth philosophy of GE topper Jack Welch, decided that “there’s no reason our performance couldn’t be just as good as it was last year,” as one company exec put it. In addition to maximizing ad revenue and income from outside sources, such as sales of videos of NBC-owned programs via direct marketing, the execs decided on more belt-tightening.
No more OT
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 are having to justify the use of overnight mail or messenger services on a case-by-case basis and, assuming a trip is even approved, plan business trips as far in advance as possible to ensure the lowest possible fares. 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.
The cutbacks and cost savings are being implemented throughout NBC, even at successful broadcasts, such as the news division’s “Dateline” and “Today,” the entertainment division’s latenight and daytime shows and NBC Prods. primetime series.
Not surprisingly, many staffers are bristling at the belt-tightening, with some concerned about the impact on program quality. The cost-cutting is particularly hard to take, they say, because NBC is the top-rated web, and has been for several years.
“It’s not one department; it’s companywide … (and) people are very upset,” one worried Peacock employee said. “We’ve made the network No.1, but there’s this feeling that it’s not about the quality of the production. It’s all about shareholder value.”
Adds one senior producer of an NBC-owned program: “The atmosphere (of fear) is real. Everybody is feeling the pinch.”
Staffers at high-rated, profit-generating programs — some of which are cash cows for NBC — feel particularly galled that they’re being asked to take fiscal hits that could make it harder for their broadcasts to stay on top. “It’s raised more than a few eyebrows around here,” a staffer said.
‘Lean and mean’
The view from the 52nd floor of 30 Rockefeller Center, where NBC’s exec offices are located, is different.
“To maintain our competitive edge, we have to be lean and mean,” an NBC spokeswoman said, adding that the web’s goal is ” to control our costs. It in no way should affect our program quality.”
Other NBC execs point out that budget axes are starting to fall at other webs, noting reports of layoffs at ABC News and penny-pinching at CBS. “If we had bought the NFL, it would be even worse,” one NBC exec said, predicting more severe budget cutting at NBC’s competitors, none of which is expected to turn a profit next year.
Employee raises have not been impacted and no widescale layoffs are expected, management sources add. The bottom line, they say, is that NBC is only eliminating waste from its budget.
“When you’re successful, people get a little fat and happy. They take things for granted,” one Peacock exec said. “The goal of all this is to get people to not take being No.1 for granted.”