NBC Universal’s break with the past

This morning’s stunner from NBC Universal is just the beginning of what is a necessary top-line strategy shift for broadcasters of all stripes. Bob Wright, Vice Chairman of GE and Chairman and CEO, NBC Universal, announced that the company is laying off 700 people and cutting $750 million in expenses by the end of 2008 in a massive restructuring. Dubbed “NBC 2.0,” the plan is wide-sweeping and includes some truly remarkable elements. Here’s what Variety wrote this morning:

“This initiative is designed to help us exploit technology and focus our resources as we continue our transformation into a digital media company,” Wright said.

The restructuring will touch all divisions of the company, which has in recent years, been the least-profitable division within GE. It is also a test of Wright’s heir-apparent Jeff Zucker, who is spearheading the initiative.

In television, the cuts will mean abandoning high-cost dramas in the 8 p.m. hour, because advertiser interest in the timeslot doesn’t justify the expense, NBC U Television topper Zucker told the Wall Street Journal.

Deep cuts are planned in news operations across the company. NBC News shows like “Nightly News” and “Today” have been bright spots within the network even as primetime has struggled.

Nevertheless, Zucker announced deep cuts to the $1.5 billion the network spends on newsgathering. NBC News will consolidate bureaus and cut staff, including on-air talent.

Cory Berman of Lost Remote called the announcements a “wake up call for television news.”
“Either you drown or you ride the wave,” said NBC News chief Steve Capus about 2.0, which he calls a necessary response to the “tsunami” of change. In a nutshell, TV news staffers need to quickly expand their skill sets and become proactive about contributing content on multiple platforms. They now have to compete with a tech-savvy workforce for these new digital positions. (Recent events have shown that media companies do not automatically shift TV staffers to the web. They lay them off and hire someone else who’s qualified.) And I also believe it’s critical that we redefine the nature of news and expand its boundaries…

…I would challenge the definition of “news” and focus on innovating new products that engage our users through the marriage of information and technology. While it won’t look anything like TV news, it will still inform, educate and enlighten. And journalism will still play an important role.

Cory’s right, of course, but I think the wake-up call took place a couple of years ago. This is more like Louisville Slugger across the ol’ skull.

While I certainly like some of the statements I’m reading, the proof will be in how they execute all of this. The first sentence in the press release defines NBC Universal as “a leading global content company,” and that has only limited applications in a truly Media 2.0 world. It’s tough to compete with a leading global aggregation company like Google when your core business is content creation.

Wright’s statement that NBC is being transformed into “a digital media company” reminds me of the statement to shareholders this spring by Antonio Perez, president of Kodak. “We are now a digital company,” he told the gathering. In both cases, the transformation is essential for survival. Kodak admits that it waited too long before moving into the digital world. I don’t think that’s the case for NBCU, and I think they’re making a very, very smart move here.

I’m sorry people are losing their jobs, but let me state for the millionth time that this is inevitable. I think 2007 may well be a bloodbath, and that which isn’t drained next year will certainly flow freely in 2009.

It would be classless for me to say “I told you so,” so I won’t.

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