NBCU’s Zucker to Cut $500 Mil, Citing Economy

Oct 17, 2008  •  Post A Comment

NBC Universal President Jeff Zucker is seeking company-wide cutbacks of $500 million next year, saying “it is increasingly clear that the worldwide economic slowdown will continue well into next year.”
In an internal e-mail Friday, Mr. Zucker said the cuts amount to about 3% of the overall NBCU budget.
He said executives have been asked to focus on reducing promotion expenses, discretionary spending for such things as travel and entertainment and outside consultants, as well as staffing costs.
“We have also asked them to find savings by going through our sourcing department for all major purchases,” Mr. Zucker said in the internal memo.
Today’s message followed a very upbeat e-mail sent just week.
On Oct. 10, after parent company General Electric reported a 22% drop in net income for the third quarter, Mr. Zucker had summarized some of the reasons that NBCU posted is eighth consecutive quarter of increased operating profit, up 10% from a year ago.
Record ratings and double-digit growth in its cable properties had played a large role in offsetting a slight decline at the NBC broadcast network and a 40% decline in its local media division. Other financial challenges resulted in NBCU’s Telemundo cutting its work force by 5% this week.
Mr. Zucker’s memo today, first reported by Broadcasting & Cable, was delivered almost two years to the day after his predecessor, former NBCU Chairman Bob Wright launched NBCU 2.0. That strategic initiative involved cutting 700 jobs and $759 million in expenses by the end of 2008 and investing in digital projects.
Spokespersons for the company Friday described Mr. Zucker’s action as proactive management. They said the cuts are an acknowledgement of the economic environment everyone faces and the kinds of actions they may have to take if they wish to weather the downturn and to emerge from it stronger.
“This kind of message is never easy, but it is the right step to make, and the right time to make it,” Mr. Zucker said in the memo. “We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.
“We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so,” he concluded.
(Editor: Baumann)


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