New reality for NBC Uni
700 layoffs, changes at 8 p.m. part of 2.0 revampNBC Universal on Thursday outlined a sweeping restructuring plan that will cut 700 jobs throughout the company and save $750 million annually in an effort to remake the company in the digital world.
NBCU 2.0 is an effort to not only respond to NBC Uni's changing fortunes after its fall from longtime dominance on broadcast TV but also to successfully navigate the shifting media landscape in a company that executives said was built on an old business model.
Plans include moving most high-cost scripted NBC dramas and sitcoms away from 8 p.m., relying more — but not exclusively, executives stress — on its in-house production studio and merging booking, newsgathering and technical operations in the company's large news division on both coasts.
And MSNBC, the 24/7 cabler that has been based in Secaucus, N.J., for a decade, will move to NBC News headquarters in Manhattan, with some operations going to CNBC in Englewood Cliffs, N.J.
The idea of NBC abandoning scripted programming in the 8 p.m. hour and increasing its commitment to in-house product set off alarm bells in the creative community.
This fall, fewer than half of the new series NBC has introduced so far have come from its in-house studio. Among them is this season's breakout hit "Heroes."
NBC Uni Television Group CEO Jeff Zucker eased concerns that the network would close its doors to outside suppliers.
"I don't think you can cut yourself off from great content wherever it comes from," he said. "There's no question that owning as much of our content as possible is something that we talk a lot about because it allows you to exploit that material better through other platforms, but you can't cut yourself off from great programming, which comes from so many different places."
Still, sources at non-NBC-affiliated studios indicated that the combination of NBC's ratings slump, decreased inventory with fewer slots dedicated to scripted programming and a mandate to rely heavily on its in-house studio would make them reluctant to pitch shows to the network.
NBC's decision to make the 8 p.m. hour free of scripted programming is considered the latest blow to comedy and drama producers who over the past few years had to adjust to the demise of Saturday as a night of original programming, the ascension of the reality genre and the loss of a broadcast network to sell to when WB Network and UPN merged this year.
Indeed, some of NBC's development budget now will be used to develop unscripted programming for the 8 p.m. block, NBC Entertainment president Kevin Reilly said.
"You're going to see more of a commitment to it on our part," Reilly said. "Although we've had success in unscripted programming with 'The Apprentice' and 'Deal or No Deal,' we've probably dedicated less of our budget toward that compared to some of our competitors."
He was quick to note that by diverting development money toward unscripted programming, NBC is not planning to abandon its efforts in such high-end scripted areas as single-camera comedies and hourlong dramas.
"We're going to stay in that business … but we are going to need to balance our portfolio so that we can afford to continue to do that business because the margins are getting tougher and tougher," Reilly said.
While the emphasis at 8 p.m. will be on reality programming, not every show in the hour will be unscripted. For instance, NBC is happy with Thursday's "My Name Is Earl" and "The Office," Reilly said.
"We're not going to unwind that success," he said.
At NBC Uni TV Studio, it is expected to be business as usual, studio president Angela Bromstad said.
"Our primary focus has always been the network," she said. "We've known for a long time that NBC would rely more and more on the in-house studio, so we've stepped up, building a big talent roster with people like Peter Berg and Paul Haggis."
While NBC will remain NBC Uni TV Studio's priority, the studio also will continue to develop for other networks, Bromstad said.
NBC executives refused to be pinned down on the number of layoffs that would be required. There will be cuts in the entertainment division, but executives said it was a comparatively lean organization as it is, so there wouldn't be extensive cuts. News will see cuts spread across the company from network news, MSNBC, Telemundo, the station group and the NBC News Channel.
Buyouts, retirements and not filling open positions will make up an unspecified number of the 700 job cuts.
Questions about layoffs were front and center in employees' minds during a town-hall meeting Thursday with Zucker, NBC Universal chairman and CEO Bob Wright and other top execs. While the execs talked about the need to streamline NBC Uni's operations for the future and tearing down walls in response to a move to a digital world, employees wanted to know how many layoffs there would be. No one flinched from talking about the certainty of layoffs or when the threat would be concluded, according to multiple sources.
One employee on the call said in an interview that Zucker and other executives noted that "there will be serious cuts, and they repeated there is no single date they can say when all the cuts are over and everyone is safe." The cuts will be the steepest since NBC cut 560 jobs, or 10% of its work force, in 2001.
NBC News president Steve Capus disputed the idea, expressed before and after the announcement, that the news division was being unfairly picked on in the restructuring.
"The honest answer is that it's just not true," Capus said. "We're proactively doing this, and it's the right thing to do. There are seismic shifts in the business that (we) have to deal with, but we'd like to do it from a position of strength."
He said that many areas of the company's news operations have significant opportunities for streamlining. MSNBC's booking department, for instance, will be merged with the "Today" unit when MSNBC's operations move to 30 Rockefeller Center.
"There's no entity of network news that is hands-off, that is immune," Capus said. "There's room to change for all of them."
A state-of-the-art newsroom for MSNBC and other news operations will be built on the third and fourth floors of Rockefeller Plaza, and West Coast operations for NBC News, Telemundo, MSNBC and three stations also will be merged.
Capus — the only one of the three network news presidents to grow up in the news business, working his way up through the ranks — said the cuts weren't going to affect the quality of NBC News or its No. 1 "Today" or "NBC Nightly News."
"We're not going to cut so deeply that it hurts," Capus said. "What we're going to do is have an honest assessment and look at the strength for the size of the work force."
Digital will become an increasingly important part of NBC's business, with the company predicting that it will have more than $1 billion in digital revenue by 2009. Zucker said it didn't mean that the company would be investing heavily in original digital media content — though he didn't rule it out — but he said that it was going to smartly use the content that it was creating for all sorts of platforms.
"It's no secret in the business that there are some very, very serious issues looming, and that takes a real discipline not to put off or deny those issues but to meet them head on, proactively," Reilly said.
An independent analyst said a drastic change was necessary for the company to compete in today and tomorrow's media landscape.
"They have to recognize that consumer choices are so plentiful that maybe they cannot profitably provide the same level and amount of programming that they have historically provided," BIA Financial Network's Mark Fratrik said in a report released Thursday. "They have to continue to invest in other distribution channels … to move their product to all audiences, young and old."
Paul J. Gough reported from New York; Nellie Andreeva reported from Los Angeles. Andrew Wallenstein in Los Angeles contributed to this report.