Media tipping point? NBC slashes jobs, costs; says "it's not our fault" (it's no joke)

Summary:The Merc's Charlie McCollum writes: How bad are things at NBC?....Well, Jay Leno said on "The Tonight Show'' late last week that things are so bad, ``our interns are calling Mark Foley, looking for work.

The Merc's Charlie McCollum writes:

How bad are things at NBC?....Well, Jay Leno said on "The Tonight Show'' late last week that things are so bad, ``our interns are calling Mark Foley, looking for work.'' He also asked guest Howie Mandel, host of "Deal or No Deal,'' whether as a cost-saving measure that show would start using paper bags instead of its signature metal briefcases....It was pretty funny stuff -- but what happened last week at NBC Universal, the parent company of NBC, wasn't very amusing if you happened to work there....The company announced that it is going to cut expenses by $750 million and will lay off 700 people, about 5 percent of its workforce....

...The suits at NBC -- most notably Jeff Zucker, CEO of the NBC Universal Television Group -- tried to paint all this as part of an overall industry downturn, sparked in large part by competition from digital and cable media.

Regarding the same news, the Trib's Phil Rosenthal wrote:

What NBC is going through is increasingly common in the media business these days. It reported a nearly 15 percent profit margin on $3.6 billion in revenue for the third quarter, but because the $542 million profit was off 10 percent, it was cast as a drag on [NBC parent] General Electric..."Success in this business means quickly adjusting to and anticipating change,'' NBC Universal Chairman and Chief Executive Bob Wright said. "This initiative is designed to help us exploit technology and focus our resources as we continue our transformation into a digital media company for the 21st century.''....That's a nice way of stating that while NBC Universal spends money to build up the digital platforms it hopes will produce more than $1 billion in revenue by 2009, it plans to take a hacksaw to costs.

Back to McCollum's piece in the Merc: 

NBC Universal will try to beef up its digital operations. Essentially, Zucker said: Don't blame us (and certainly don't blame me), because we're fighting changes beyond our control.

Sorry. Someone is accountable. It's not like the bite that the Internet's been taking out of traditional media hasn't been reported on a few thousand times over the last five years. More recently, studies in the UK indicated that certain market segments had finally crossed the tipping point where they were spending more time with digital media than with traditional media. In a story titled Young drive radical media shift, the BBC reported:

Ofcom chief operating officer Ed Richards said: "Our research reveals dramatic and accelerating changes across all communications industries.

"The sector is being transformed by greater competition, falling prices and the erosion of traditional revenues and audiences."

Check out the chart at the bottom of the story (title: Reduced consumption driven by Net use). It's like a traditional media executive's nightmare. I can't tell you how many people I'm bumping into today -- some of whom are C-level execs at IT companies -- who tell me they're addicted to YouTube. They just sit there on their living room couches with their WiFi notebooks selecting new videos and pressing the play button. The TV, visible just over the lids of their notebooks, is off.

Over the last few years, so many people saw this coming and publicly said so that you can't even count the news stories and blog posts. Is NBC really fighting changes beyond its control? Or, has it chosen to stand on the sidelines as those changes take place?

Almost two years ago, while at the Blogging, Journalism, and Credibility conference that was hosted by the Havard Law School's Berkman Center for Internet and Society, I had a chance to speak with MSNBC president Richard Kaplan. I asked him if he had looked into the technology that underlies podcasting (RSS enclosures, then only a few months old) and how that was perhaps an opportunity to reinvent his business. I essentially got the "Thank you very much but we know what we're doing."  As I sat at the conference and listened to him and other traditioanl media executives talk about their businesses, and as I considered the TiVo-like time-shifting capability of RSS enclosures, the light bulb in my head didn't just go off, it was like a 1000-watt strobe light that followed every thought (which is what prompted me to approach Kaplan with my question). But what do I know about digitial media and how it can help the TV business?

Apparently, not much.

Sure Jeff. Blame Google for buying YouTube. Better question. Why didn't NBC buy YouTube? Or why doesn't it buy one of YouTube's competitors? Now? Every day that goes by is one less day the media giant will have to use its shrinking pipeline into our living rooms as a tool to manage audience loyalty while its viewers shift mediums (which is what they're doing, in droves, today). Update: Although there have been fits and starts, maybe Blockbuster's example serves as a case study for how to take advantage of existing channels in order to win in the new ones.

This could very well mark the beginning of the traditional media's version of global warming. I'm not exactly sure what is meant when a TV exec talks about digital media. But assuming it means becoming a much more Internet saavy company than it is today, planning to right the ship by 2009 sounds like a major part of the problem. In the TV industry, I guess you can wait 3 years to finish cleaning your house. The problem is (and proving that NBC is far from a state of digital saaviness) that three years is an eternity in Internet time. Furthermore, having TV executives figure out a digital plan sounds a lot to me like expecting a phone company to get hip to Voice over IP or a shrink-wrap software company to switch gears into a software-as-a-service provider. 

Perhap part of the problem with traditional media is that they don't recognize their competition. The "Internet" has been a convenient scapegoat, but how do you compete with the Internet? No single entity crystallized as the competitor that a traditional media outlet like NBC could marshall its resources against and until one did, coming up with countermeasures was impossible because there were no measures to counter. Now that Google has acquired YouTube, perhaps the traditional media have finally got a tangible enemy that does tangible things, and therefore, it has something to base its own tangible moves on. And that's the problem with the traditional media. It's is virtually incapable of leading.  It must wait for Google or someone else to come along first and drop some hints about what they should be doing. 

Maybe that's what is meant by "we're fighting changes beyond our control" (sounds a lot like the pathological liar that believes his own lies).  

You.  Yes you, Mr. TV executive. Drop your weapon (whatever that isn't) and step away from the Kool-Aid (and don't wait until 2009 to do it).

Update 1: Via Robert Scoble, Roxanne has this How-To for media executives that are like deer in the headlights.

Update 2: Regarding how their heads have been in the sand and the ship-righting that will supposedly take place by 2009, I wonder if Jeff Zucker or any of his contemporaries have read The Cluetrain Manifesto or Malcom Gladwell's Blink. Or, perhaps we shouldn't blame them for not reading either of these digital media anthems. 

Update 3: Tower records is having going-out-of-business sales. There are probably people there (at Tower Records) saying "it's not my fault" as well. Tomorrow's record store will be a kiosk with a USB port on it and there will be no physical inventory (at least not for audio or video). 

Topics: Social Enterprise

About

David Berlind was fomerly the executive editor of ZDNet. David holds a BBA in Computer Information Systems. Prior to becoming a tech journalist in 1991, David was an IT manager.

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