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IMAGE: NBC News President Steve Capus
Frederick M. Brown  /  Getty Images file
NBC News President Steve Capus said, “You can either ride the wave or you can drown, and we intend to ride the wave.”
By M. Alex Johnson Reporter
msnbc.com
updated 10/25/2006 6:54:39 PM ET 2006-10-25T22:54:39

NBC Universal announced a reorganization Thursday that will mean big changes for NBC News and MSNBC-TV, including job losses and consolidation of many operations at NBC’s New York headquarters.

NBC executives said they planned to slice the news division’s budget through attrition, buyouts and layoffs — the exact number had yet to be determined — and elimination of duplicate newsgathering processes. Much of the impact will be felt at its cable network, MSNBC, many of whose operations will move to the home office at 30 Rockefeller Plaza in Manhattan from its headquarters in Secaucus, N.J., which will close.

The moves are a major part of a larger restructuring to save money at NBC Universal, whose entertainment programming has fallen in the ratings after ruling the TV world for several years. The highly profitable news division had been widely speculated as a target for cost-cutting, but the network will also revamp its prime-time entertainment schedule as part of the initiative, dubbed “NBCU 2.0,” which aims to save $750 million by the end of 2008.

General Electric Co., NBC Universal’s parent company, reported last week that third-quarter profits rose 6 percent. It said its performance was dragged down by a weak showing from the NBC unit, where profits fell 10 percent from the same quarter last year.

‘We intend to ride the wave’
The news division hopes to improve efficiency by consolidating operations under fewer roofs, NBC News President Steve Capus said in a series of interviews.

“We need to be greater than the sum of our individual parts. We’ve got all these wonderful businesses,” he said, ticking off NBC News itself; the network-owned and -operated stations; MSNBC-TV; NBC’s financial channel, CNBC; its Spanish-language network, Telemundo; and Telemundo’s local affiliates.

“They’re all leading in many ways, and yet it’s not enough,” Capus said. “You can either ride the wave or you can drown, and we intend to ride the wave.”

That wave will carry many of MSNBC’s roughly 500 Secaucus-based personnel to 30 Rock, where two floors will be gutted and rebuilt as a modern digital home for NBC News, MSNBC-TV and MSNBC.com’s East Coast operations. Others will be transferred to CNBC’s headquarters in Englewood Cliffs, N.J.

Capus pointedly denied industry speculation that MSNBC would be targeted for heavy cuts. If anything, he said, he wants to recharge the main news division with the cable operation’s innovations, which have yielded gains in both the ratings and its journalism.

“The operation that we have at MSNBC cable is vibrant and on the leading edge of the news all day every day,” he said. “I look forward to that energy and excitement coming into NBC News at 30 Rock.”

The move means that some operations, duplicated at 30 Rock, Secaucus and Englewood Cliffs, will merge, notably guest booking and graphics.

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NBC, MSNBC and CNBC producers and bookers often compete for the same sources and guests, but “I envision a day now where people who have been involved in production of the ‘Today’ show will also be involved in the production of MSNBC, and vice versa,” Capus said.

Similarly, some correspondents now report only to individual shows, rather than share their reporting across the network — “the sort of thing that gives executives gray hairs,” Capus said.

“It makes no sense in the year 2006 to have individual businesses doing the same exact work, and in some cases even competing against each other in those areas,” he said.

Still, he acknowledged that “cost cuts are part of it. We say that without apologizing.”

“We need to run a smart, efficient business,” he said, because “if you can reduce costs in certain areas, you end up having money to invest in expanded coverage.”

Some recent developments support Capus’ contention. Even as it has been planning to cut costs, NBC has been pouring new resources into its core hard-news operations. For example, it has doubled its investigative staff in recent months and hired several field reporters, in addition to opening bureaus in Beijing; Beirut, Lebanon; Bangkok, Thailand; and New Orleans.

Rank-and-file unrest predicted
Even so, former NBC correspondent David Hazinski predicted that many front-line producers would bristle at the changes, especially the centralization of graphics and the mandate that reporters and crews report across the network, rather than for specific programs.

“They’ve been trying to do that for 20 years because it makes for a lot more efficiency,” said Hazinski, who is head of the broadcast news sequence at the University of Georgia’s Grady College of Journalism. “But the problem is the producers of those shows want to design the show as they want it for marketing purposes, so it’s a constant conflict between the shows and, basically, efficient operation.”

Hazinski said it was troubling that even the top-rated and most profitable network news division was under pressure to make changes.

“The numbers are coming down. And ironically, NBC is, to me, the one network that’s done best at leveraging its correspondents and its anchors across multiple outlets — the Web, MSNBC, CNBC, the NBC main network. They’re very good at that,” he said. “But the numbers are being reduced to the point where even they have to pay attention.”

Hazinski predicted that viewers would eventually notice “even more redundancy than there is now” as the same reports popped up on multiple shows.

“We just don’t have as many people in the streets collecting information, creating a differentiated product,” he said. “So this trend will mean more processing, more in-studio things, probably more star celebrities to get people to watch based on the personalities, and less real news.”

Sherrie Mazingo, a former news editor of “NBC Nightly News,” said “the most frightening aspect” of the changes would be not in what viewers saw, but in what they wouldn’t see.

“When these cost-cutting measures are taken, it’s often hard to see on air what the real effects of such cuts are,” said Mazingo, who is the Cowles Media Fellow at the University of Minnesota School of Journalism. “Those people who work behind the scenes, they know what the impact is. They know what the viewers are not getting and are not seeing.”

Capus challenged that assessment, saying: “I’m not going to hurt the ‘Today’ show, and I’m not going to hurt the nightly news, and I’m not going to hurt MSNBC.”

“We’re still in the news business,” he said. “It has to stay fresh. It has to stay relevant. We intend to continue to do as we do, to break news, to advance stories.”

Dominant everywhere but in cable
Most of the network news divisions don’t report their specific revenue and profit in their parent corporations’ financial statements, but figures compiled by the Project for Excellence in Journalism indicate that NBC News is significantly more profitable than its rivals at ABC and CBS. Its flagship programs, “NBC Nightly News,” “Today” and “Meet the Press,” have led the ratings in their categories for many years.

Not so, however, in the cable world, where MSNBC’s estimated $250 million in 2005 revenue lagged that of CNN and its sister channel Headline News (nearly $1 billion), and Fox News Channel (nearly $600 million).

But Capus insisted that MSNBC’s financial value to NBC was secondary to its usefulness in newsgathering and reporting. Besides giving NBC an outlet to report breaking news ahead of the competition, the channel also airs repackaged NBC material, allowing the network to spread its costs over multiple advertiser-supported broadcasts.

“I’ve said any number of times one of the things that differentiates us is we have MSNBC[.com], the No. 1 Web site, but we have the same thing with cable,” he said. “We have a very successful 24/7 news cable channel. We believe that has made our division stronger.”

Moreover, while ratings for cable networks’ prime-time schedules have fallen significantly at CNN and Fox this year, they have held essentially steady at MSNBC, bolstered by two hours a night of long-form taped programming.

That doesn’t mean MSNBC will be getting out of the live news business any time soon, said Capus, who dismissed industry speculation that NBC would eventually move coverage of breaking news to CNBC and repackage MSNBC solely with taped programming.

“We’re doing this to ensure the future of MSNBC,” he said.

MSNBC.com expansion not affected
As for MSNBC.com, a joint venture of NBC News and Microsoft Corp., it will not immediately be affected by Thursday’s announcement, said Charlie Tillinghast, the Web site’s president and publisher. MSNBC.com has expanded its staff by 25 percent in the past year, and Tillinghast said it was authorized to expand by about 10 percent more by the end of fiscal 2007.

Editor in Chief Jennifer Sizemore said the revamped news structure would play to MSNBC.com’s strengths in multi-platform reporting.

“We’ll be able to move our staff into one location sitting with our NBC News colleagues, which we’ve wanted to do for a long time,” Sizemore said. “We’ll be able to more tightly coordinate on core reporting, ensuring we deliver the most effective reports online.”

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