NHK execs, board to share pain of 10% cut
Written by Writer on Friday, October 24th, 2008
NHK execs, board to share ‘pain’ of 10% cut
Takashi Kawabe / Yomiuri Shimbun Staff Writer
NHK recently announced a 2009-11 corporate plan in which it spelled out that it would “return” 10 percent of subscription fees to viewers starting in fiscal 2012 after it had finished investing in the establishment of terrestrial digital broadcasting infrastructure.
Just hours before the announcement was made on Oct. 14, senior NHK executives were still locked in argument over the plan with the broadcaster’s Board of Governors, chaired by Shigetaka Komori, president and chief executive officer of Fujifilm Holdings Corp. Members of the board are appointed by the prime minister.
A week earlier, the board had proposed a “reduction” of 10 percent to the viewing fee, but the senior executives did not agree to this. On Oct. 14, the executives demanded that if the board were to pledge a 10 percent “reduction,” then the board must take responsibility for such a promise since the executives were not prepared to make such a commitment given the unpredictable nature of future economic conditions.
The board later filed a motion to revise its own proposal, enabling the two sides to settle on a rewording of the plan to describe the reduction as the “return” of 10 percent of license fees, partly in the form of a fee cut for satellite broadcasting viewers.
After making the announcement, Komori said at the press conference that from the viewpoint of maintaining an equitable share of costs, an across-the-board cut should be carried out in principle.
“To improve its management, NHK needs a definite goal,” he said.
NHK governors and executives have long wrangled over cutting the viewing fee for the first time in the broadcaster’s history.
The corporate plan was originally set to be approved in September last year, but the executives’ draft, which talked of lowering the viewing fee by 50 yen to 100 yen a month, or up to about 7 percent, met resistance from the board.
The Board of Governors, the supreme decision-making body, decided to give the executives a year to revise its draft. Clearly the board want to see a larger cut than that proposed in the first draft.
On Oct. 7, the executives presented a new draft, saying the new three-year corporate plan would refer to an unspecified subscription fee cut from fiscal 2012. But the board was not happy about the absence of a specific figure and deferred a decision on the plan until a week later.
Some NHK sources refer to the board’s insistence on a 10 percent cut with cynicism, pointing out that Komori needs to achieve the reduction or he would lose face. Komori was instrumental in having Shigeo Fukuchi appointed NHK president in January. An NHK executive said, if the 10 percent cut was not approved, Komori would be held responsible.
Both sides seem to be involved in a thinly veiled attempt to pass the buck over who would be responsible for making the 10 percent cut. One board member insisted that the executives themselves should declare a 10 percent cut.
“Without a specific goal, NHK would be regarded as not taking its business improvement efforts seriously enough,” he said.
The executives, however, held their ground, saying that as it had already conveyed its proposal to the governors, the decision was now up to the board.
The tug-of-war ended with the Board of Governors revising its position and agreeing to share responsibility for the cut with the executives.
But if Komori insists the words “return” and “cut” have the same meaning, why did the board decide against using the word “cut” in the corporate plan?
An NHK executive said that as the board made the revision to the plan, it might later be seen to as responsible for achieving the reduction. To defend itself, he said, the board used an expression that would give it some room to maneuver in the future.
NHK is projected to earn about 635 billion yen in viewing fees in fiscal 2008. Based on this figure, a 10 percent cut would come to 63.5 billion yen. The public broadcaster plans to improve its business efficiency to make up for the 10 percent “return” by increasing the number of people paying the viewing fee and by abolishing fee collecting on doorsteps.
A 10 percent reduction across the board, if implemented, would lower each household’s financial burden by about 135 yen per month. However, there are some calls for NHK to produce better programs instead of meager cuts.
The corporate plan calls for reducing NHK subsidiaries from 17 to 12 or 13 over a five-year period.
On Oct. 14, Fukuchi released a statement saying NHK staff as a whole would work harder and continue to reform the organization by creating high-quality programs and providing services that would be of more benefit to viewers.
Whether NHK’s reform plan will impress viewers depends on the extent to which it actually is realized.
(Oct. 25, 2008)
