Tuesday, August 24, 2010

Why your News Director might not be as cheap as he acts

Imagine if you got paid once a year instead of every two weeks. You'd have to really budget your money, and set aside an amount for emergencies. And if you ran out of money there wouldn't be any place to go for more.

That's basically what a News Director faces with an annual budget. So if you're wondering why he worries about nickles and dimes, it is because he wants to get to the end of the year without spending everything. And that emergency he's saving for is the big story.

Let me take you through the budget process so that you can see how this works. Let's say our hypothetical station gives our ND a budget of five million dollars. Once a year the ND has to submit a budget proposal to the GM and the beancounters who control the purse strings.

There are "fixed" items that are easily planned, things that tell you exactly what you'll be spending. The biggest one is salary. If you've got people under contract, you know exactly what you'll be spending. You might also know what you'll be spending on things like toner, paper, etc.

The trick in budgeting is trying to figure out those intangibles, like these:

-Overtime: How in the world can you predict this figure? Well, you look at the previous years, and then add a bit in case the big story whacks your market. For instance, if you're a gulf coast market this year, you've blown out the budget covering the oil spill and probably don't have much left for the rest of the year. So you tuck away a few dollars for election night and tell the staff you can't pay any more overtime for the rest of the year.

-Gasoline: Throw a dart at the wall for this category. No way of knowing what gas will cost, so aim high. If prices stay where they are, you might have extra money. If not, you're outta luck.

-News Cars: You have a pretty good idea if you're going to need a new car or two. But what happens if one of your crews gets into a bad wreck and you suddenly need another car?

-Equipment: You might think you know how long your gear might last, but again you have the breakdown factor. If an editing system suddenly dies, you can't exactly wait around for the next budget cycle. You'll have to buy a new one immediately.

-New hires: You look at your contracts and see that two people will be leaving next year. That means you'll have to spend money on plane tickets, hotels, moving expenses to hire new people. Then again, someone local might be the perfect fit and you can save that money. And what happens if two other people suddenly quit? You'll have even more expense for this category.

-The "override" factor: Here's one you probably never heard of. Many News Directors will get some sort of bonus if they come in under budget for the year, which is known as an "override." They might receive five percent of whatever they saved. So let's say our ND with the million dollar budget spent 950k. He'll get a Christmas bonus of 5 percent of the 50k he saved, or $2,500. Yet another reason to pinch pennies during the year.

But for the most part your ND is trying to figure out how to make it to the end of the year with the money he's been given. Remember, this isn't Congress where you can just print more money and figure out how to pay for it later. And bear in mind that NDs are under tremendous pressure from the beancounters to remain under budget.

So that cheap boss you have? Well, he might just be planning for the future.

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