NBC Universal to make $500 million in cuts
NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.
Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.
The cuts were first reported by Broadcasting & Cable.
NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.
The Zucker memo in full:
"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.
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 leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.
While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs. We have also asked them to find savings by going through our Sourcing department for all major purchases.
This kind of message is never easy, but it is the right step to make, and the right time to make it. 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.
Thank you for your support.
Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press