When NBC Universal announced a corporate downsizing this month, the company specifically mentioned news and entertainment facilities in Burbank and Universal City.
However, a closer look at the reorganization plan indicates cuts will be dispersed throughout the media conglomerate’s empire, and the local net effect actually could be positive.
The plan, called NBC 2.0, aims to reduce the company’s annual operating expenses by $750 million by the end of 2008. It also will reduce payrolls by 700 people, or about 5 percent of NBC Universal’s total workforce.
However, given the plan’s larger purpose of re-channeling resources toward the Internet, the news operation looms as the first priority and that could benefit NBC’s Burbank facility. The plan calls for an extension of the centralized news-gathering strategy developed by the NBC Universal Stations Group, which created regional hubs for news elsewhere in the country.
The 2.0 plan specifically mentions Burbank, where local station KNBC-TV (4) is located and NBC News already has a large presence. According to the plan, the complex will support a number of news and information operations, including the NBC and Telemundo networks, as well as Spanish-language KVEA-TV (52) and KWHY-TV (22).
“By consolidating our operations in Burbank, we will ultimately put all of our news and information groups the network, the local stations and CNBC in one place,” said Allison Gollust, vice president of communications at NBC News. “This will make workflow more efficient and allow for better sharing of resources.”
While the net effect on jobs is unclear in Los Angeles, the regionalized news strategy will involve job cuts spread across numerous markets. “Reviews are also under way at NBC News bureaus and facilities around the world,” the plan states.
On the flip side, most of the savings will be reinvested in high-growth segments, especially Internet-related media. The plan forecasts digital revenues of $1 billion by 2009. It also points to examples of broadcast-Internet synergies, such as the partnership between Internet portal Yahoo Inc. and Telemundo, the Spanish language television network owned by NBC Universal.
The idea is to develop a successful Spanish-language Internet site and support other sites with content, such as nbcsports.com and cnbc.com.
“Everyone who is producing content at this point is producing for multiple platforms,” Gollust said. “Our news content is made available to the network, MSNBC Cable, msnbc.com, local stations, their Web sites, NBC Radio and NBC Mobile.”
Cost reductions
For advertisers, NBC 2.0 won’t change the bottom line because the cost of a 30-second TV spot depends on ratings.
Elsewhere in the company, a strategic realignment of domestic theatrical, home entertainment and television distribution will trim costs. Also, consolidation of locations and job functions will occur among the company’s international film and TV distribution units. Finally, the Parks & Resorts Group will continue to look for cost reductions in both Universal Studios
Hollywood and its sister operation in Orlando, Fla.
From a cost-cutting perspective, the projected $750 million in annual savings would amount to only half a percent of NBC Universal owner General Electric Co.’s $150 billion in 2005 revenues. At the same time, NBC 2.0 reflects the strong emphasis in GE corporate culture, first implemented by former chief executive Jack Welch, on periodic reviews to reallocate budget to high-growth segments.
According to Gollust, NBC 2.0 grew out of just such a strategic review last summer called TV 2.0, which expanded to look at all the company’s operations.
“It was an unprecedented review of how we did business one that many people across the many divisions of NBC News participated in,” she said. “The announcements of last week were the first culmination of those reviews.”
