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10.23.2006
Originally featured on BroadcastEngineering.com
NBC layoffs signal changes in broadcasting

Behind the sharp budget cuts announced last week by NBC Universal are some fundamental changes now rippling through the TV broadcasting industry. Much of it involves the rapid migration of news reporting from television to the Internet.

Many of the 700 jobs cut — 5 percent of the total workforce — are in the 11 news divisions of NBC Universal. The network is shifting news programming from traditional TV newscasts to new distribution outlets. The reason, “The Wall Street Journal” reported, is that NBC “sees limited growth potential in the (television) news business.”

However, the network insists its cutbacks don’t represent a diminishing commitment to news, but reflect how the TV industry is changing.

While consolidating it’s existing broadcast operations, NBC Universal said under its new initiative — called NBCU 2.0 — it would exploit new forms of digital media, and expected to save $750 million in operating expenses by 2008.

NBC Universal, news reports said, expects digital revenue to exceed $1 billion by 2009, up from a projected $300 million this year.

Among the changes, MSNBC, the network’s 24-hour cable news channel, will move many of its operations to a new central newsroom to be built on the third and fourth floors of NBC’s headquarters in Manhattan’s Rockefeller Center. The MSNBC facility in Secaucus, NJ, will be closed.

NBC’s TV station group will also create a consolidated news facility in Burbank, CA, that will support NBC as well as Telemundo, its Spanish-language service.

The cutbacks will also affect primetime, where NBC will stop scheduling premium dramas and comedies between 8 p.m. and 9 p.m. Instead, the network will air low-cost, unscripted game or reality programming during that hour.

Although NBC has recently suffered from poor ratings and a resulting fall in advertising revenue, “The New York Times” asked whether the fundamental business model of advertiser-based television might now be broken.

“I don’t know if it is irreparably broken, but the economic model is under a tremendous amount of pressure,” CEO Jeff Zucker said.

The risk in sending such a message, NBC chairman Robert Wright conceded, is that supporters of the traditional ad-supported TV business model could begin to lose faith in it. According to Wright, networks need to try to generate additional digital revenues, while still maintaining revenues from the traditional business model.

NBC News president Steve Capus said that some job cuts — which will include on-air talent — would take place this year, and the majority would probably occur in 2007. He said that the changes were part of a strategy as an investment in the future of the organization.



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