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Hollywood tightens its belt

The sluggish advertising market and events of Sept. 11 have begun to take their toll on Hollywood. The major broadcast networks, studios and cable channels are cutting costs behind and in front of the camera.

"This corporation as a whole isn't doing anything that every other media company on this planet isn't in the process of doing, which is really battening down the hatches," says Fox Entertainment Group Chairman Sandy Grushow. "To be fair, I'm not sure that we shouldn't have been doing most, if not all, of these things prior to the events of Sept. 11, given the realities of the economics of our business. It's now obvious we don't have a choice."

Says ABC Entertainment Television Group Co-chairman Stu Bloomberg, "I think this is causing us to take a hard look at every aspect of how we do business, from production costs to development costs to how much we pay for talent." The network, he says, may opt to produce presentation tapes rather than more-expensive pilots during the upcoming development season.

So far, none of the broadcast networks, cable channels or studios have announced layoffs, but industry sources say some are possible over the next several months if the economy doesn't pick up. Talent, writer and producer development deals at studios and networks are expected to slow to a snail's pace in the coming months.

At Fox Cable Networks, CEO Jeff Shell sent an internal memo last week explaining new cost-cutting measures. Among them: a hiring freeze on both new and replacement positions and no first-class airfare. Other measures eliminate company holiday parties, business gifts, and company-paid subscriptions to non-trade magazines and certain newspapers.

"In the wake of the events of the last month, along with the continually worsening economy and advertising market, we have been forced to re-examine the cost structure of Fox Cable Networks and face certain economic realities of our business," Shell said in the memo. "It is our goal to meet our financial objectives by significantly reducing what I deem to be 'non-essential' costs while still attempting to preserve our most important asset, that of our employees."

Last year, NBC laid off about 10% of its work force and cut back production of movies and miniseries. The network also stopped acquiring high-priced theatrical releases and has found recent success with cheaper programming, including reality series like Fear Factor.

"We got ahead of this a year ago and decided to cut costs and get out of the movie business," says NBC West Coast President Scott Sassa. "It's going to take us three seasons to do it. We'll do some big miniseries here and there, but buying big theatricals is not something we will do anymore."

Executives at the UPN and The WB say they may escape the brunt of the tough times. Both networks are enjoying strong starts to the new season and have minimal staffs.

"There aren't any people to really cut here," says The WB President and COO Jed Petrick. "We service this network as bare-boned as we can."