NFL football will make a glorious return to CBS later this year, but the 8,000 employees of the broadcast network already are experiencing a bruising rough-and-tumble–one that comes with the increase of profit pressures in network television.
CBS, which this week signed a $4 billion contract to broadcast NFL football over the next eight seasons, has ended its long-standing policy of automatically making matching contributions to employee 401(k) retirement plans. Future payments will be tied to CBS meeting overall company objectives and profit goals.
Although the policy switch was made before CBS announced its expensive return to NFL broadcasts, employees are grumbling that the football contract will only heighten corporate cost pressures.
“People are upset. It’s like a pay cut,” said Craig Dellimore, a reporter at CBS-owned WBBM-AM and co-shop steward for the American Federation of Television and Radio Artists, the union representing on-air personnel. AFTRA is in contract negotiations with CBS, and the issue of 401(k)s, which are tax-deferred retirement accounts, is a major point of contention with the union, as well as non-union employees at CBS.
“A company that has already taken on a lot of debt, just from expansion, is now spending even more money to acquire football. . . . Maybe this will make them money–and we wish them well–but we don’t want to see this as an excuse for them to tighten the belt around our necks,” Dellimore said.
A common refrain from CBS employees is that after years of hearing corporate sermons about the importance of cost-cutting, the company paid $4 billion for football and acknowledged it may make, at best, very little money on the venture.
“People are infuriated. It looks like they’re balancing the cost of this on the backs of employees,” said one employee.
A CBS spokesman declined to comment on the charges, and said the company does not publicly discuss pension and benefit issues.
The move by CBS was greeted with surprise by the other networks, which are under the same cost pressures but which, to date, have not linked their retirement plan contributions to company performance goals. One network executive said: “I feel sorry for the folks at CBS.”
Union sources said plans are under way to file a lawsuit against CBS, claiming the network does not have the legal authority to impose the benefits policy change without first obtaining approval from the union at the bargaining table. Dick Moore, a spokesman for AFTRA in New York, declined to comment on the possibility of legal action. Moore did, though, call the new CBS policy, which affects the several hundred AFTRA members as well as all other CBS employees, “a very disturbing development.”
The high cost of network television was vividly on display this week as CBS, FOX and Walt Disney Co.’s ABC and ESPN committed themselves to spending $17.6 billion to broadcast NFL games over the next eight years. The four-year contract that is about to end cost $4.6 billion.
NBC lost out in the football competition this week, but signed a contract Wednesday to pay Warner Bros. Television $13 million per episode of “ER,” over the next three TV seasons. “ER” was about to become the television equivalent of a free agent, and NBC, which currently pays $2 million per episode, did not want to lose the popular program on television.
Though the audience for football and most entertainment programming is shrinking, the costs for professional sports and popular shows like “ER” are skyrocketing because networks know they are the best vehicles to reach a large, albeit declining, audience. In effect, the networks feel they cannot afford not to have NFL football.
When CBS announced its football deal on Tuesday, CBS station chief Mel Karmazin said the network is not “taking this package to make a lot of money. We’re not looking to make a large profit margin” from football.
“What you basically have are networks that are chasing declining audiences, and they’re investing on the screen to do that,” said Tom Wolzien, industry analyst for Sanford C. Bernstein & Sons.
“You could argue that the investment in the NFL, whether you think it was overpriced or appropriately priced, you’re putting your money on the screen. The networks are willing to spend more on content, even if they have to make cuts elsewhere . . . and that may include employees,” Wolzien said.
While all networks are facing greater programming costs, CBS is the only one to respond with a change in its pension financing.
