NBC Uni faces $500 mil cut
EmptyNBC Universal must slash $500 million — or about 3% — from its budget next year, Jeff Zucker told employees in a memo that referred to cuts in staff costs but stopped short of indicating layoffs were coming.
Beyond "staffing costs," the CEO said in the Friday memo that the savings will come through a reduction in promotional expenses and in such discretionary spending as entertainment, travel and outside consultants.
"This kind of message is never easy, but it is the right step to make and the right time to make it," Zucker said.
The announcement comes as stock in General Electric scrapes multiyear lows but also as NBC Uni proves it is one of GE's better-performing units. Although GE profit fell 12% in the third quarter, NBC Uni's profit rose 10% to $645 million, its eighth straight quarter of gains.
Nevertheless, Zucker said cost-cutting measures are necessary because the economy is sick and might get sicker.
"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide slowdown will continue well into next year," he wrote in the memo.
Insiders said Zucker's intention is to encourage employees to rein in costs significantly enough so that layoffs are not necessary. Some jobs, though, are expected to be lost through attrition.
NBC Uni employs about 12,000 people.
Not even Jay Leno's staff is safe, insiders there say. Leno's last day as host of "The Tonight Show" is in May, and Conan O'Brien is expected to choose his own employees when he takes over as host.
But Leno — and therefore his staff — might stay on in some capacity beyond May if negotiations between him and NBC culminate in a deal.
Zucker's move Friday marks the latest reduction in expenses for NBC Uni. In 2006, the company announced it would cut expenses by about $750 million, including a workforce reduction of about 700 jobs.
TV networks and studios in general have been curbing spending in the face of the economic downturn, including trimming travel and event budgets, but NBC Uni is the first media conglomerate to implement across-the-board, companywide cuts.
James Hibberd contributed to this report.