The businessmen now at the helm, however, needed no broadcast experience to read a balance sheet or evaluate a style of management, and what they found when they took over at all three networks appalled them. Staffing, salaries and expenditures were out of control in news and entertainment divisions alike.
That came as no news to John R. Corporon, president of Independent Network News. He says inflated network costs of ”pool” coverage, in which ABC, NBC and CBS take turns handling coverage of special news events and feeding the results to other stations for fees ranging as high as $100,000, long had shackled INN with a bill it barely could pay.
”Covering a news conference is about as simple an exercise in news gathering as you can find,” he said in a March 11 speech before the New York Television Academy. ”But the networks manage to turn a press conference into a Hollywood production. At President Reagan`s news conference on Nov. 19, 1986, NBC spent $32,047 covering live for the pool. Now $32,000 is not a mountain of money, but it`s indicative of how networks have approached cost containment. NBC uses six cameras to shoot one man at a lectern and his questioners. Six cameras? Why? Tradition. It has little to do with better journalism.”
There were several reasons for such a tradition, and ABC`s flamboyant News and Sports President Roone Arledge was one of them. Late in the opulent 1970s Arledge set out to turn what wags once had dubbed the ”Almost Broadcasting Company” into the No. 1 network. In his effort to do so, he already had made Barbara Walters the first million-dollar anchor. Then he went after Dan Rather, CBS star correspondent and eventually heir to Walter Cronkite as anchorman for the CBS ”Evening News.”
Arledge didn`t get Rather, but in the process of trying, he triggered a bidding war that sent Rather`s salary to $2.5 million at CBS and brought pay for other anchors and star correspondents at all three networks into unprecedented ranges. NBC now pays Tom Brokaw $1.8 million to anchor its
”Nightly News,” and Peter Jennings earns $900,000 on ABC`s ”World News Tonight.” In recent renegotiation of her contract as a correspondent on ”60 Minutes,” Diane Sawyer cracked the million-dollar mark even as layoffs swept the rest of the news division.
There were other forces at work driving costs into orbit. With Walter Cronkite gone and a new generation of anchormen fighting for supremacy, there no longer was a clear champion in network news–a ”most trusted man in America.” Rather, Brokaw and Jennings each were competing to hold and expand upon almost one-third of an evening news audience that had dwindled from 72 percent of all television homes in 1981 to 63 percent this season.
The battle was fierce and expensive. The CBS News budget soared from $89 million in 1976 to $300 million in 1985, and figures at ABC and NBC followed the upward trend. Robert MacNeil, cohost of PBS`s ”MacNeil/Lehrer NewsHour” and a onetime correspondent for NBC, says the intensity of competition created a financial hemorrhage.
”A couple of years ago, when it was hitting the fan in Beirut, CBS had nine crews there,” MacNeil says. ”ABC had 11 crews and NBC had some competitive number. Now what were those crews there for? They were there because each network was desperately anxious that one of the other networks, by some freak or fluke, would get a shot of a bomb exploding or a shell landing in an apartment building: the most picturesque glimmer of violence that day.
”Under that kind of competition, it became a case of more cats to watch more mouseholes without really telling the audience anything about the
significance of Beirut. Calculate the cost to send and keep a single crew in a place like that, and with 9 or 11 crews, it`s absolutely extraordinary. I came to NBC from a wire service (Reuters), and the atmosphere of profligacy that I found there just shocked me. Money came so easily and went so easily.”
Rosenfield says the entertainment side of commercial television also tended, in the balmy `70s, to profligacy.
”There`s no question that the networks were lavish in their spending and lavish in their habits, but it was a 30-year environment,” he says. ”I started at NBC in 1954, two years after the network was formed from coast to coast. It was the beginning of what we know as modern network television. I grew up all the way through it, and in the 30 years of my experience in the business we never, ever had a downturn. We never, ever, had to truly adjust costs significantly because there was so much growth that all the
inefficiencies were covered by the expanding marketplace.
”Then, all of a sudden, we started talking about downsizing, and it seemed a tremendous dislocation, having to cut 5 percent of our people across the board. What an extraordinarily upsetting, dislocating thing we had to do! We`d never done it before. Even the year we lost cigarettes (advertising), we didn`t have to do it. I can remember in 1970 or `71 we were worried about the fact that $155 million was going to come out of the marketplace because of the loss of cigarettes and the broadcast group had to cut 5 percent. We accomplished the cuts in December, and by March we were back into an explosive economy.”
”This is a first,” Rosenfield says of the layoffs that began in September, 1985, at CBS and surged through March of this year. ”Those of us who grew up with television really were not prepared for the psychological trauma. It took somebody from the outside to come in and say, `Guys, there`s so very much fat and inefficiency. We have to zero-base everything we do, so we`ll cut everything out and build back up again later.` That kind of dislocation is very hard to live with.”
In an accord so unanimous and coincidental as to seem almost orchestrated, the new owners at all three networks set out to cut costs, and though they moved across the board, cutting the bulk of jobs from corporate and entertainment spheres, long-pampered news divisions were, if not hardest hit, at least loudest in their wails of anguish.
More than 1,000 jobs in all divisions had been eliminated at CBS by the end of 1986. NBC, first in prime-time ratings for the first time in its history and the only network projecting a profit for 1987, had laid off 400;
and ABC, deep in debt and buried in third place, had let about 1,200 go and was looking for other branches to prune.
CBS News was hit twice–for 74 people in 1985 and for 70 last year when the network surrendered the sober ”Morning News” to show-biz glitz. Then, in March, following an order (Tisch says it was News President Howard Stringer`s idea, then backed off the claim) that Stringer trim the budget by $50 million more, 230 were fired. It was the third and most brutal purge of Edward R. Murrow`s old network, putting out to pasture such veteran correspondents as Fred Graham and Ike Pappas.
At NBC, Wright and News President Lawrence Grossman lost no time in colliding over cost issues. Wright, who made his name as president of General Electric Financial Services, the nation`s largest diversified finance company with net earnings and assets of $20.2 billion, was not happy with the way things were being done at NBC, and in a memo, promptly leaked to the press, he let his managers–Grossman included–know it.
In addition to fiscal efficiency, Wright wanted his network to found a political action committee to which every NBC employee would pay dues, it was hinted, at peril of career. Grossman, citing conflict of interest for reporters who would be covering the very activities their PAC would be supporting, won on that point, but he did not win at the bottom line.
He rescued his budget, said to be in the neighborhood of $250 million, by canceling the fledgling magazine ”1986” with Roger Mudd and Connie Chung. The move saved NBC News $20 million in staff and production costs and took the pressure off the budget, but it also cost NBC Mudd`s services. A buyout of his contract was arranged, and Mudd, who publicly denounced the cancellation as tantamount to ”killing a newspaper,” became an essayist for the MacNeil/
Lehrer NewsHour” at a fraction of his former pay.
Grossman denies persistent published reports that his news division still faces a CBS-style budget reduction.
”It`s just dead wrong,” he says. ”We are working on an orderly change in the way we do business. I don`t want to suggest that it will be business as usual, but not in the sense of budget crunches. There are major changes brought about by enormous technological developments, and we`ve put tremendous capital investment into computerizing the news division and into satellite equipment which is lighter and easier to handle, but there will be no mass firings or layoffs. That`s not to say that as we get half-inch (videotape)
equipment that we will not change the way we operate and reduce the complement of crews where appropriate.”
Still, NBC News has hired the management consultant firm of McKinsey & Co. to take a look at its operation, and rumors of additional staff cuts continue to circulate through an apprehensive division. A corporate executive who asked not to be identified confides that more job cuts, networkwide, are in the offing.
”We`ll probably see another 300 or 400 gone by the end of the year,”
the executive says, ”but you can bet they`ll be phased out very gradually to avoid the negative press impact.”
At ABC, Capital Cities had been clipping and trimming and fighting with the unions over the new manpower-reducing technology for a year before the bombs went off at CBS. Two hundred were cut from the news division in anticipation of the squeeze, before Capital Cities took over, and the new owners promptly eliminated 75 more positions. They also ordered pay raises restricted to 2 to 4 percent and canceled standard employment contracts with a majority of their news producers, raising the specter that they might face layoffs yet to come. News vice president Richard Wald admits more budget blood probably will be shed.
”We started a drive toward budget-cutting and efficiency about a year ago, and we are continuing that,” he says. ”Our management will be a little more sensitive to it as a result of the hubbub over at CBS. There is not here the kind of new heavy budget-efficiency push that seems to be happening at CBS, but that`s because we started before they did.”
Shortly thereafter, the subject erupted at ABC News in a high-level firefight between Arledge and ”20/20” producer Av Westin after Westin made public a memo he had written to Arledge in which he harshly criticized ABC`s
”World News Tonight” as an operation that has grown ”too fat” and that wastes money and manpower. Westin was placed on indefinite suspension without pay–not for complaining, but for making the complaint public in what Arledge saw as a bid by Westin for his job.
Meanwhile, over at the Manhattan outplacement firm of Drake, Beam, Morin, business was booming. Outplacement firms increasingly are being hired by companies in the throes of budget-slashing or restructuring to help employees suddenly cast off, some after decades in the business, find themselves and start anew. Carol Morrison, a marketing counselor for the firm, says the latest clients were NBC and ABC. ”We have two of the three, and the third
(CBS) is not using anybody,” she says.
A middle-management network executive, laid off at 55 after 30 years, reflects the human trauma. He asked not to be identified lest he jeopardize his severance-pay arrangement.
”It`s been hard,” the executive says. ”I thought I could land something soon, but everywhere I go they seem to want young people. I`ve offered to take a pay cut from what I was making and take a job below the level
I left, but I get the same answer over and over again: `Sorry, you`re overqualified.` What does that mean? Does it mean I`m too old? I am angry. I`m angry that they handled it the way they did. It has nothing to do with the way you`ve done your job. It`s just . . . bottom line. If nothing comes through, I don`t know what I`ll do.”
For journalistic purists, in or out of a career in the melee of restructuring, one disturbing question remains unanswered: Can a network news operation bow to the demand that it become a profit center and still compete with its integrity intact? Grossman isn`t worried.
”There is no one who would more like to see NBC News become a profit center rather than a loss leader than me,” Grossman says, ”but Bob Wright and I recognize that the responsibility for covering and reporting the news is paramount, regardless of whether it makes or loses money. In actual fact, there is not the prospect that the news division is going to make money.”
”There`s no danger yet,” says Wald of ABC News. ”In the parlance of the Pentagon, we used to operate a big two-ocean navy, and maybe we`re going to operate an ocean-and-a-half navy now. It doesn`t mean you can`t cover what you have to cover, but where we were able to cover three or four monster events at the same time, now maybe we`ll only be able to cover two. It has not had any severe impact on our coverage yet, and I don`t think it will, but we would all be foolish children if we said, `Gee whiz, it`s never going to have an impact.` ”
Stringer, who drew the thankless mission of consigning 230 of his colleagues to the unemployment line after he succeeded to the presidency of CBS News following the purge, with Wyman, of his former boss, Van Gordon Sauter, says his news division probably never will operate in the black, although he hopes individual shows like the fledgling ”West 57th” might.
”I have never been asked to make a profit,” he says. ”The irony is that CBS News produced a profit in the late `70s and early `80s. Not a huge one, but now it`s losing $60 million-plus. These cuts will not make this a profit center. They will not even make it break even. All I`ve been asked to do is stop this runaway train.”
Stringer, still suffering the trauma of the staff cuts he was ordered to produce within his news division, will not rule out further cuts at some point in the future: ”Two hundred thirty people create a vacuum, but I wouldn`t have gone through this unpleasant process without a conviction that the news division would survive it,” he says. ”I think the worst is over and that this kind of layoff could never happen again except in a fiscal catastrophe. You can never say `never` over a decade or so. I suppose it`s possible that a network may go under in the next 10 years. I don`t expect it, and I certainly don`t expect it from this network, but I think we bought ourselves a lot of time to do what we can do best here, which is produce our way out of trouble.”
While middle management at all three networks fretted over the mandate to cut costs and targeted staffers in all divisions for dismissal, unions representing besieged workers–many of whom were walking a picket line at CBS and ABC where the writers were on strike–worried about technology. The traditional television crew consists, at minimum, of three persons, a correspondent, a cameraman and a sound technician. But equipment on the immediate horizon–cameras so light a child could carry one of them and beam pictures straight from scene to studio via satellite–threatened to make the traditional teaming obsolete, with a resulting loss of jobs.
”The networks are looking at equipment they think one man could use,”
says Mike Rafaeli, vice president of Local 16 of the National Association of Broadcast Employees and Technicians. ”The new camera has the videotape recorder built in, the microphone is attached to it, so they`re entertaining what we call a one-man band, and it`s a very unsafe situation. When you`re shooting something, your face is buried in that viewfinder. You`ve got one eye closed, and the other eye is in the eyepiece. You`re oblivious to everything else around you. The other man who is with you, whether he`s doing audio or whatever, is also your eyes. He`s guiding you. Many men working alone–usually freelancers–have been injured or killed. We`re totally opposed to it. We`re not fighting meaningful technology. We`re not featherbedding. We oppose it because it`s unsafe.”
Max Berry, vice president of engineering for ABC, disputed the claim, saying use of a solo operator with the new lightweight ”camcorder”
represents a return to the days of 16-millimeter film, before tape recorders were added to the physical burden in 1976.
”It`s no different really than it was before,” he says. ”They`ve (the unions) developed an argument about the safety factor, but it`s not based on fact. History is not on their side.”
While turmoil churned through the networks, the new chieftains whose policies had triggered it headed for higher ground. Tisch, stung by criticism of his massive budget cuts both from the press and his own rebellious staff, hired a public-relations agent to orchestrate future announcements and stopped giving interviews. The furor at CBS News had attracted the unwelcome attention of Congress, where the House subcommittee on telecommunications opened hearings to determine if the public interest was being violated.
ABC`s Sias and Murphy refused to be interviewed for this article. NBC`s Wright was the only major player who would agree to be interviewed. He says the controversial cutbacks would have been inevitable, no matter who was in charge.
