Friday, October 20, 2006

TV Takes a Page Out of Newspaper Hardships

NBC's plan to realign underlines the media's painful choices in dealing with difficult Internet competition.

By Matea Gold and Thomas S. Mulligan
Times Staff Writers

October 20, 2006

NEW YORK — NBC Universal's plan to reorganize its news operations as part of a companywide streamlining serves as a vivid indication that the technological forces squeezing newspapers have spread to TV.

By consolidating units of its cable and broadcast news divisions and paring its staff, NBC hopes to free resources to devote to serving viewers who have embraced the Internet as a source of information.

"All the trends indicate that we need to realign," said NBC News President Steve Capus.

The widespread migration of news consumers to the Web has triggered painful adjustments in the industry in recent years, particularly on the print side, where newspapers coping with declining circulations and stagnant advertising revenue have cut staff and newsprint.

Thursday brought another reminder of those challenges as Tribune Co. — parent of the Los Angeles Times, the Chicago Tribune, KTLA-TV Channel 5 and other newspapers and TV stations nationwide — reported a larger-than-expected decline in third-quarter advertising revenue. New York Times Co. on Thursday also reported lower quarterly revenue and profit.

Although broadcast television networks have scaled back their news operations in recent years, particularly in foreign bureaus, they have largely avoided the kind of extensive layoffs that have plagued their print brethren. In the meantime, network news divisions have moved aggressively to package their content for online and mobile viewing, hoping to hold on to its audience with Net casts, podcasts and blogs.

"Everybody is going in the same direction, which is to cut people on the traditional broadcast front and to try to expand on the digital front," said Richard Wald, a former NBC News president and ABC News vice president who teaches at Columbia University. "How well they do it is the real question."

NBC executives said they hoped that honing their news-gathering operations would help ward off the dour economic climate that had settled over the newspaper industry. Their aim: to free resources for new digital products and eventually expand their reach.

"This means an investment in news coverage," Capus said. "All of the models are under attack, whether here or the Tribune Co. or AOL or Disney. Everyone is seeing it for what it is and everyone is responding. We're doing it on our terms, and while we're in a leadership position."

As the top-rated broadcast news division, NBC News continues to generate a healthy profit for the company. But it is unclear whether the network's restructuring will help it solve endemic problems such as the steady drop in viewers for the evening news over the last several decades.

Officials said the changes were largely aimed at reducing duplication, such as the separate units that book guests and handle design graphics at NBC News and its sister cable channels, MSNBC and CNBC.

The network plans to consolidate its broadcast and cable operations in cities such as Los Angeles, where a regional bureau would house network and local staff. MSNBC's offices in Secaucus, N.J., would be shuttered and its staff transferred to NBC's Rockefeller Center headquarters, where cable shows such as "Countdown With Keith Olbermann" would be produced. Other MSNBC personnel would be transferred to the CNBC offices in Englewood Cliffs, N.J.

Capus declined to say how many jobs would be lost in the process but said he hoped most of the cuts could be accomplished through attrition and buyouts.

NBC anchor Brian Williams said the restructuring reflected "a new electronic reality" and would not change the news division's operations.

"If, at any time, the actions taken by my company today end up compromising our mission to gather and report the news, I will make my feelings known loudly and promptly," he wrote on his blog, "The Daily Nightly."

But some television news veterans viewed NBC's cutbacks with apprehension.

"It always breaks my heart, because as much as they will make it sound as though the product is going to be as good as it ever was — no, it won't," said former ABC anchor Ted Koppel, who produces news and documentaries for the Discovery Channel.

In particular, Koppel said he was afraid the reductions in news personnel would accelerate the decline in foreign news coverage, the most costly kind of reporting.

"It worries me that in their effort to be economically competitive, they're giving up this responsibility," he said.

Capus rejected that notion, noting that NBC News had recently opened bureaus in Beijing, Beirut and Bangkok.

Executives said they hoped the reorganization would help finally realize the promise of MSNBC, the 24-hour cable news channel that NBC and Microsoft launched with great fanfare a decade ago, only to see it overshadowed by Fox News and CNN. The network has struggled to turn a profit, landing in the black for the first time just two years ago. It's expected to earn about $65 million this year, according to Kagan Research. Business network CNBC fares better; it's on track to make close to $300 million in profit this year.

"This will make MSNBC stronger," Capus said. "Suddenly, they're going to be sitting literally side by side with 'Today' and 'Nightly News' and the network desk. Their mandate is to be much more in tune with NBC News."

While NBC executives cast the cutbacks as a preemptive move to keep their news operations robust, it remains to be seen whether they can completely evade the fate that has befallen print journalists.

For big-city newspapers and their owners, the loss of readers and advertisers to the Internet has led to nearly nonstop cost-cutting, both of payroll and of newsprint usage. The Los Angeles Times and New York Times, among others, have reduced both the page count for news and the physical size of their broadsheets.

To lure advertisers, newspapers also have made concessions that would have been unthinkable in better times, such as selling ads on section fronts.

Wall Street in the last couple of years has begun to view the newspaper industry as doomed to unending declines in circulation and advertising, analysts said. What's happening with NBC "could be part of the same structural issue," said analyst Edward Atorino of Benchmark Co. "Because of what's going on in new media, we're seeing dramatic changes in consumer behavior that will impact the big picture for years to come."