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NBC Universal to cut 700 jobs, shift strategy

NBC Universal plans to cut its operating expenses by $750 million by eliminating employees, cutting back on scripted shows and slashing its news budget Chairman and CEO Bob Wright said Thursday.
/ Source: The Associated Press

NBC Universal announced Thursday it will cut 700 jobs, abandon MSNBC’s New Jersey headquarters and shift spending from traditional broadcast TV to digital entertainment, reflecting both hard times at the network and changing times in the media world.

The company, a unit of General Electric Co., said the various moves were expected to save $750 million by the end of 2008.

“You have to think about the tremendous changes that are taking place in the media landscape,” said Jeff Zucker, chief executive of NBC Universal’s television group. “The pace of change over the next five years is going to dwarf the pace of change over the last 50 years and we’re going to have to get out in front of it.”

Whether or not Zucker can do that will determine whether he eventually succeeds Bob Wright, NBC Universal’s current chairman and CEO.

In what’s partly a real-estate move, NBC said it would close MSNBC’s headquarters in Secaucus, N.J., splitting studios and office space between NBC’s headquarters in Manhattan’s Rockefeller Center and another NBC facility in Englewood Cliffs, N.J. Similarly out West, NBC will consolidate network, Telemundo and local news facilities in Burbank, Calif.

The company announced no format changes for MSNBC, which has run third behind Fox News Channel and CNN in cable news for much of its 10-year history.

(MSNBC cable is wholly owned by NBC Universal. MSNBC.com is a joint venture of NBC Universal and Microsoft.)

The television news restructuring is a reflection of how the industry is changing, Zucker said. “The growth in news is in different places — it’s online, it’s on wireless.”

The moves follow three lackluster years at NBC Universal, where operating profit fell 10 percent in each of the past three quarters, cutting into GE earnings.

NBC’s fall from first to fourth place in prime-time has driven the slump. Things are looking brighter for the network this year, in large part due to its acquisition of NFL football rights for a Sunday night broadcast. NBC has also seen a promising start for the supernatural serial “Heroes” on Monday nights. However, the costly and high-profile “Studio 60 at Sunset Strip” has yet to catch on, and the new drama “Kidnapped” flopped.

In a reflection the network can no longer support high programming costs in an atmosphere of diminishing advertising revenue, NBC said it would no longer show expensive scripted comedies or dramas during the first hour of prime-time at 8 p.m.

That means more reality or game shows like “The Biggest Loser” and “Deal or No Deal” at that hour. NBC’s new drama “Friday Night Lights” was critically acclaimed this fall, but costs more than twice as much per episode as “Deal or No Deal” and is drawing a smaller audience.

“We want to be sure that we continue to provide the best programming possible,” Zucker said. “We just want to put the programming where we get the highest rate of return.”

He notes that ABC has quietly made the same move in the past year, filling its 8 p.m. hour with less expensive shows like “Dancing with the Stars.”

NBC has failed to develop the wide-ranging hits that their rivals have in recent years, including “Grey’s Anatomy” on ABC, “American Idol” on Fox and the “CSI: Crime Scene Investigation” franchise on CBS.

NBC’s moves come amid wider network cutbacks in programming. Over the past few years, the major networks have given up making original entertainment shows for Saturday night, and viewers are more likely to see planned repeats on the schedule — like ABC rerunning “Grey’s Anatomy” on Friday nights.

NBC’s effort to wring profits from a property is evident with “Heroes,” Zucker said. Within 24 hours of an original episode’s airing, it is offered for sale via iTunes and streamed — with different advertising — over the Internet. Then it’s rerun Friday on NBC Universal’s Sci Fi channel.

ABC, CBS and NBC have all begun experimenting within the past month by offering free downloads of some series over the Internet.

NBC Universal has also been aggressive in creating broadband-only channels, and in trying to beef up its new property Telemundo, currently the second-rated Spanish-speaking network. NBC Universal has set up a partnership between Telemundo and Yahoo to create a popular Web site for Hispanic viewers.

NBC Universal’s revamp will also affect the company’s Universal Studios business, where cuts will be made to consolidate support and marketing functions.

NBC’s cost-saving plan involves laying off people from the company’s 11 news divisions, including on-air talent, but no details were immediately available.