Broadcasting & Cable: NBC Universal -$500M Budget Reduction

[morjana]

(NBC Universal is the parent company of the SciFi Channel.)

At Broadcasting & Cable:

(Please follow the link for the complete article.)

Zucker Calls For $500M Budget Reduction At NBC Universal

NBC Universal chairman tells staffers in internal memo that the company will cut spending by $500 million next year, 3% of the company's budget.

By Ben Grossman -- Broadcasting & Cable, 10/17/2008 5:03:00 PM

NBC Universal chief Jeff Zucker told staffers in a memo Friday that the company will be cutting spending by $500 million next year. According to the memo, that figure equals about 3% of the company’s budget.

“We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year,” Zucker wrote. “As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations.”

The internal announcement comes on the heels of NBC Universal showing a 10% bump in third-quarter profits.

A source close to the network pointed out that the move positions the company to not only handle the current economic slowdown, but potentially be better positioned on the other side to avoid further cutbacks...

[digitalred93]

Let's hope that 3% budget cut affects the NBC/Universal administration and not the show budgets. Don't forget the old adage, "when things get tough, people go to the movies." Or television (which wasn't around during the Depression).

[prion]

Let's hope that 3% budget cut affects the NBC/Universal administration and not the show budgets. Don't forget the old adage, "when things get tough, people go to the movies." Or television (which wasn't around during the Depression).

The folks at the top are the last to be cut. Yuo'll have office staff who actually works, get fired, and oh yes, they'll can non-productive shows very quickly. Look for an increase in reality shows. But MGM is footing most of the bill on SGU, so.... and they're not doing great either after Meltdown Monday...

[MediaSavant]

Let's hope that 3% budget cut affects the NBC/Universal administration and not the show budgets. Don't forget the old adage, "when things get tough, people go to the movies." Or television (which wasn't around during the Depression).

It doesn't matter if people watch more TV, if the advertisers are cutting back. The difference between movies and TV is that your ticket dollars go towards the cost of the movie. In TV, it's the advertisers who are fitting the bill, while you pay very little, except to the cable company for your service. You don't pay the cable company according to how much you watch.

On the subject of show budgets, if SciFi has contracted for a set license fee for the show, they can't legally change it. But, if MGM is feeling the squeeze on their end, they can always decrease their costs even if SciFi is paying the same.

Keep in mind that NBC Universal is also a subsidiary of GE, who has been hit hard by the downturn.

[prion]

In regards to the economic meltdown and how it might affected TV/movies…

http://online.wsj.com/article/SB122446111020448791.html
Oct 20 2008

Wall Street Journal
Signs of a pullback in Hollywood

Excerpt:
Paramount Pictures' abrupt decision to delay two major holiday films -- including one with Oscar aspirations -- may be an early sign of Hollywood's retrenchment in the midst of the U.S. economic crisis. (this is a pay article but you can grab it off newsstands too)

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http://money.cnn.com/2008/10/17/news...ion=2008101717

Tense times in Hollywood's dream factory
The entertainment biz is holding up nicely amid the financial meltdown, but it won't be immune.
By Richard Siklos, editor at large
Last Updated: October 17, 2008: 5:22 PM ET

Excerpts:


LOS ANGELES (Fortune) -- Even in the land of make-believe, where the meltdown on Wall Street feels a million miles away, these are tense days. While no one can say for sure how the financial crisis will affect Hollywood, a prevailing view is that the film business is relatively protected for at least a year or two, but that the TV industry which was already impacted by last winter's writers' strike could be in for a rocky ride.

…………………..What this means is that whatever films are already in the works don't have to worry about how they are going to be financed, and relatively few big Hollywood players are going to have an imminent need for cash. The only deal that has been held up by the crisis is the $700-million debt financing for the Dreamworks studio's new venture with India's Reliance group, but no one has expressed fears that the financing is in doubt. (There are of course question marks on the horizon, such as $3.7 billion of MGM's debt coming due in 2012, and relentless chatter about the capital needs of smaller shops like the Weinstein Company.)
"Hollywood is pretty well financed in terms of enough money being there right now," says a finance chief at one of the studios. "What it looks like two years from now, I don't know."

………………………Also worrying: To the extent that Hollywood's growth is driven by the adoption of new technologies - a lot - a bleak outlook for selling new gizmos this holiday season could lead to further sluggishness in home video and ancillary revenues, a big cash engine for the studios from both film and TV.

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http://www.variety.com/article/VR111...goryid=14&cs=1
NBC Universal tightens belts
Zucker calls for major budget cuts
By DADE HAYES, MICHAEL SCHNEIDER

EXCERPT:
Memo also comes as NBC U division heads prepare to go over their 2009 plans in a meeting with Zucker. Chiefs will be given discretion to decide how to make their 3% cut. In his note, Zucker suggested a variety of ways, focused on three areas: discretionary spending, such as travel and entertainment; promotion expenses; and staffing. He also stressed the need for managers to go through NBC U’s sourcing department before making major purchases.


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http://online.wsj.com/article/SB122446152768748797.html

Wall Street Journal
October 20, 2008

excerpts:
NBC Universal is looking to shave $500 million from next year's budget, in a new sign that the broader economic crisis is likely to exact a stiff toll on the media sector.

The General Electric Co. unit, which includes broadcast and cable-TV networks, local television stations and a movie studio, says the cuts will amount to 3% of its 2009 budget.

NBC Universal’s cable portfolio is a bright spot, with strong performance across the board, including from Bravo and the recent acquisition Oxygen. Through Sept 28., for instance, USA Network has averaged 6% more primetime viewers than at that point in 2007, and Sci Fi is up 8%, according to Nielsen Media Research