NBC to Cut 700 Jobs in Digital Makeover

In the face of an increasingly fractionalized and rapidly changing media landscape, NBC Universal this week announced a major restructuring plan to reduce costs and expand its digital offerings.

Dubbed "NBCU 2.0" the reorg spans the company's broadcast, cable, film and theme parks, and will result in the elimination of 700 jobs--or 5 percent--from the NBCU payroll. The combination of job cuts and increased digital services--focusing primarily on the Web--is expected to save the company up to $750 million by the end of 2008, according to company officials.

Among the other changes in store, MSNBC, NBC Universal's 24-hour cable news network, will move its operations from Secaucus, N.J. to NBC network headquarters at 30 Rockefeller Plaza in New York, as well as Englewood Cliffs, N.J., home of CNBC, the company's 24-hour finance channel. The company said it will also consolidate its news facilities in Burbank, Calif., which will house the news operations for NBC, its Hispanic language network, Telemundo, KNBC, KVEA and KWHY. NBCU said it is reviewing additional options to consolidate news operations worldwide.

NBCU said it plans to improve how media is gathered, shared and distributed, implementing such changes network-wide, as well as in local stations. The company plans to reduce its dependence on "traditional" content distribution methods in favor of emphasizing distribution across multiple platforms.

Although NBC Universal has initiated a number of digital media outlets in the last several years including the launch of NBC WeatherPlus, and broadband services such as nbbc, nbcsports.com, cnbc.com, interactive TV and d-cinema applications, the company--whose broadcast network is in third place--has seen rival networks, like CBS, sprint ahead. The Tiffany network has been ramping up its own digital services, illustrated by the announcement of alliances with YouTube and Yahoo!, earlier this week.

"NBC Universal 2.0 will prepare us for future growth from a position of strength," said Jeff Zucker, CEO of NBC Universal Television Group. "With new momentum in primetime at NBC, continued leadership from NBC News real growth at Telemundo, and solid performances in virtually every other division of our Television Group, there is no better time to re-engineer the company for the revolutionary changes to come. We have to recognize that the changes of the next five years will dwarf the changes of the last fifty."

NBCU 2.0 represents an important strategy among the broadcast networks, which are seen by many as dinosaurs, facing competition from iPods, video-on-demand and Internet upstarts like YouTube and Myspace.com.

"The present media landscape is vastly different than it was just five years ago and does not even resemble what it was twenty to thirty years ago," said Mark Fratrick, vice president of BIA Financial Network, a media thinktank based in Chantilly, Va. Fratrick adds that such "drastic change" is necessary, given the competitive landscape.

"NBCU and the other over-the-air networks have to adapt and react to the cold realities of the present media environment," he said.