"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue into next year," Zucker wrote. "The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all our business leaders are being asked to cut their spending projections for 2009."
Variety has reported that NBC Universal is planning to cut $500 million in spending next year to prepare for an expected continuation of the worldwide economic slowdown. The article states President and CEO Jeff Zucker announced the cuts Friday in a staff memo. The reduction would equal 3 percent of the company's budget. Variety says division heads will decide how to reduce their spending. But Zucker's memo suggested several ways, including staffing reductions and cutbacks in budgets for travel, entertainment and promotions.
NBC Universal faces additional pressure because its parent, General Electric, has been coping with money woes on an epic scale, especially given its reliance on financial services in a frozen credit environment. When GE reported third-quarter earnings on Oct. 10, NBC Universal was one of the few positive spots, with revenue up 35% from a year earlier to $5.07 billion and profit that increased 10% to $645 million. But on a conference call, Keith Sherin, GE's chief financial officer, said the company is worried about profits and advertising at the local station level and at the NBC broadcast network. "We are cautious on the outlook here," he said.
Local stations, including NBC Universal's, are taking a hit due to declines in local advertising, especially from the automobile and retail industries. Overall ad spending on local stations was already down 4.4% in the first half of 2008, according to TNS Media Intelligence.
Variety said the memo didn't specifically mention any layoff plans and a person familiar with the situation said that no target has been set for reducing the company's headcount.
The announcement comes a day after NBC's Spanish-language Telemundo division announced that it was cutting 5% of its workforce, about 85 jobs, to cope with an advertising slowdown. The cuts, made last week, came in response to automotive and financial services paring back ad budgets, said Telemundo spokesman Alfredo Richard. "Clients who have cut down spending may have cut down first on multicultural," Richards said. "We're feeling the impact probably a little bit sooner than the general market."
The downsizing of Telemudo, based in Florida operating 16 stations in the U.S., comes even as its audience grew 160 percent from last year to 1.9 million viewers on its nightly 10 p.m. novela, "Sin Senos No Hay Paraiso (Official site)" ("Without Breasts There Is No Paradise" (Wikipedia)) based upon the book "Without Tits There is no Paradise", about a prostitute who gets breast implants to lift herself out of poverty by attracting a rich cocaine smuggler and cast members who star in porn.
Several on-air personalities were let go, including Alfonso De Anda, former co-host of the morning show "Cada Dia," soccer commentator Alejandro Blanco, and Mexico-based entertainment reporter Luis Magana.
NBC Universal is the first media giant to outline specific cuts since the Wall Street meltdon.