News of an $8 million cost overrun in the news, current
affairs and lifestyle program areas of the Nine Network are sending a
chill through staff.
The May-June period at the Nine Network is always hectic, especially for
program heads, executive producers and bean counters. It’s when budgets
for the present financial year and the new financial year are crunched,
updated and compared.
And lately, cut.

Figures have to be prepared for a series of meetings at Nine and then at
PBL in Park Street in the Sydney CBD where Packerdom and the money resides.

News, current affairs and lifestyle program are some of the major cost
centres for Nine. But the budgeting is not all easy peasy spreadsheets
and dry analysis.

Park Street and the bean counters require budgets and financial analysis
to be based on a financial year for things like the annual report and
forward projections.
But the Network actually operates on a Calendar year. The ratings period
is from early February to late November and everything is really based
on budgets which accommodate that period.

For programs that come and go from the schedule, there are ‘on air’ and
‘off air’ budgets, usually at the beginning and end of the calendar
year. Sometimes these also pop up in the middle of the year when a
series goes on a break and comes back late in the ratings season.

Its a combination of black art and number crunching.

Budgets can then be matched against revenue targets or revenues achieved
per programme. Budgets are also compared to costs, both above the line
and internal. Everything at the Nine network is charged off against
programmes or cost centres, such as the third floor management area,
even the humble videotape, newspaper subscription, studio time.

It’s been that way for years and is not some new invention of the new
management and its bean counters.

Since the advent more than two years ago of the new management of John
Alexander and David Gyngell, plus the army of business managers,
analysts and resources specialists hired to improve Nine and its
culture, the cheese paring has become more intense.

In short its a series of long nights, lots of weekend and home work and
lots and lots of meetings.
For the foot soldiers its always a time of fear and loathing.Cost cuts,
program rumoured to be in trouble.

Unlike the period late October onwards when its usually which programs
will or won’t be returning in the new year, who’s leaving, who’s staying
and a lot of in-house job hunting.

But the last couple of months of the financial year bring their own
special brand of fear and loathing.
This year it seems to be more intense than usual.
In fact some unkind souls have been heard to ask if Fairfax can have a
redundancy scheme, why can’t Nine?

But the big problem this year is ‘The Black Hole’. Specifically an $8
million cost overrun in the budgets of news, current affairs and
lifestyle programs. Five million dollars is in the news and current affairs area and three
million in lifestyle.

One million dollars has already been saved by the cost cutting in London
where Jim Rudder, the head of News and Current Affairs at Nine, visited
last month and reduced the size of the operation basically to a one
reporter/one crew operation. The second reporter, Brett McLeod is
returning early and the Bureau head, former news EP, Mary Davidson is
now a cost saving.

The size of the overruns has started people thinking whether programs
might be axed or curtailed, like the ABC, with fewer programs going to
air with their seasons being shortened by a month or so.

Revamping programmes like the News, A Current Affair, the Sunday
programme, Business Sunday and Today has cost a lot of money in the past
six months. But the justification was that they needed refreshing,
especially for digital television broadcasts and that the money will be
amortised over a period of time.

Some people wonder if the extra spending, while signed off on by
management late last year, has now been lumped into the overall budgets
of news and the other programmes in some sort of bean counter pea and
thimble trick.

All this at a time when there are signs of a bit of creaking and
groaning in Nine’s traditional dominance of News and Current Affairs,
one of the key differentiators of the Network over its rivals at Seven
and Ten and one of the strengths from Nine’s ‘old culture’ now much
attacked and derided by the new Alexander-led team.

Today Tonight has closed the gap on ACA. And while Nine’s news does well
on Sunday nights, brilliantly in fact sometimes, week nights are seeing
closer competition. The margin over Seven, especially in Sydney, is
narrowing.

Today is being cleaned up by Seven’s Sunrise and on Sunday’s, Business
Sunday is being beaten by Seven’s Sunday Sunrise.

For Nine there’s now a challenge in an area of traditional strength they
haven’t experienced for a decade. In fact apart from John Westacott who
oversees 60 Minutes and ACA, very few people are left at the top of Nine
who can remember when Seven last got close to the 6pm news and ACA back
in the early 90’s.

That saw changes at the top of both news in Sydney, where the pressure
is greatest, and ACA nationally.

And, while Nine in Brisbane is under pressure from Seven, and from the
Third Floor at Willoughby, Nine in Melbourne at GTV is running rings
around the opposition and the rest of the network. But even there Seven
is making more than the occasional gain.

Where Nine is doing Seven and Ten is in the strength of its mid-evening
US and local product such as CSI, Millionaire, ER, Getaway and McLeod’s.

So at a time of the greatest pressure for a decade, Nine’s new
bean-counter approach is pushing the decision towards cutting costs and
budget to stay on track.

While right in the usual terms of managing costs, hacking into costs and
programmes could be the very thing that Nine doesn’t want to do now. Not
for the cost reasons, but for morale.

As David Gyngell has been heard to remark on numerous occasions ( and at
the PBL lovefest at Crown Casino last month) Nine’s big strength is its
creative people.

Well, from reports, they are still being creative, but they are
increasingly fearful.
And all this in the biggest boom in television advertising for years.
Makes you wonder about what is really going on at Nine with costs.