NBC Cuts Jobs Due To Weak TV Ad Performance

[Emma]

TWO YEARS AFTER NBC UNIVERSAL Television took an $800 million ad revenue drop in the upfront, it will make $800 million in cuts from staff reductions and production savings. Is there a correlation between the advertising--especially in today's environment--and the layoffs? Absolutely.

"It is a response to current advertising conditions," says Mark R. Fratrik, vice president of Chantilly, Va-based BIA Financial. "With J&J not being in the upfront, with automotive cutting back, it has been a long time in NBC's thinking."

Analysts say NBC is concerned about being in fourth place among all the networks. But the real issues are the increasingly troubling equations of production costs versus advertising sales, says Fratrik, especially when high-priced dramas yield mediocre ratings.

For example, published reports claim that rookie NBC show that "Heroes" costs a whopping $2.7 million an episode. The good news is that "Heroes" is doing well, with almost a 6.0 rating in adults 18-49--the highest among all new network shows. But shows like "Studio 60" cost about the same as "Heroes," yet deliver half the 18-49 rating that "Heroes" does.

During the upfront, according to Ad Age, "Heroes" grabbed $171,000 for a 30-second spot; "Studio 60" took in $210,000. The price tag for "Heroes" will no doubt rise--perhaps in the $200,000 to $240,000 range.

With 20 national spots per hour, at $200,000, that would reap a gross $4 million per episode. Of course, NBC also has re-run availabilities, as well as consumer pay-per-play fees and ad revenues from its many digital platforms.

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