MSNBC announced in October that it would close its production facility in Secaucus and move the bulk of its operations and personnel to NBC's Rockefeller Center studios in midtown Manhattan as part of a cost-cutting move by parent company NBC Universal.
The complete company cuts, expected to take place by the end of 2008, are estimated to eventually create a projected savings of approximately $750 million for NBC Universal.
But while MSNBC will survive, the concept of using state incentives to keep corporations in place may be wounded.
MSNBC received bi-state tax breaks
When it was announced in June 1996 that Secaucus had triumphed over close to 200 potential location sites for MSNBC, it was noted that the then brand new state Business Employment Incentive Program (BEIP) had helped the "Jewel of the Meadowlands" win its shiniest economic bauble to date. As part of the BEIP initiative, MSNBC would receive 10 years of grants, and the company was then obligated to remain in New Jersey for 15 years.
Due to the recent decision by MSNBC to cut costs and change states, 421 out of approximately 459 New Jersey-based jobs will be moving to New York when the Secaucus studios shut down by December according to plans. This move will come after $7.8 million in New Jersey state grants were provided, and after the state sold close to $167 million in bonds to purchase equipment that was then leased to the channel.
All told, New Jersey gave up close to $8 million in sales tax revenue by offering these incentives.
To add insult to the Garden State's injury, NBC Universal announced on March 13 that it would be moving the 400-plus jobs to Manhattan after receiving $1.5 million in property tax abatements from New York City. In return, NBC Universal is expected to invest in at least $57 million in renovations at its Rockefeller Center headquarters.
New Jersey policy expert decries MSNBC's apparent double-tapping of two states
Jon Shure is the president of New Jersey Policy Perspective, a public policy think tank based in Trenton. He did not mince words in his criticism of the kind of tax breaks that MSNBC has received.
"This is looking like a classic case of how companies game the system and play cities and states off each other," he said. "These companies get tax breaks not because they need them, but because they can get them. Here you've got a situation where New Jersey over a period of 10 years subsidized these jobs, and now the exact same jobs are moving to New York, and New York is going to subsidize them. So basically the taxpayers of both places are paying for the same jobs."
Shure was also certain that MSNBC's incipient move across the Hudson had nothing to do with tax breaks.
"The move was announced by MSNBC before they even asked for the tax breaks," he said. "This really exposes what's going on in these situations. The corporations get the tax breaks because they can, and states and cities give them because they are afraid of what might happen if they don't. It's not so much an incentive to businesses as it is a reward."
Shure further wants the public to realize that when companies skip back and forth across the Hudson, there is a ripple effect.
"Officials on both sides of the river who make these deals have to realize that there's a price to pay for this," he said. "Sometimes, these deals don't work out well at all for the taxpayers. This is questionable public policy." Some suggestions Shure made regarding more sound policy options looked at some of the nuts and bolts of economic development.
"The bottom line is it's already cheaper for companies to be New Jersey rather than New York," he said. "State resources should go towards more long-term old-fashioned economic development tools, like building roads and schools and training workers, instead of writing checks to businesses. I understand that businesses have to make business decisions. The question is whether taxpayers should pay them to make business decisions. In the case of MSNBC, the taxpayers of New York and New Jersey are paying twice for the same jobs, which is kind of mind-boggling when you think about it."
What the future holds
No matter under what circumstances MSNBC's move to Manhattan is taking place, many media observers have noted the benefits of the company's shift from Secaucus. Brian Stelter, editor of TV Newser, a blog about TV news that is featured on the popular website Mediabistro, looked at some of the potential perks the move could bring for MSNBC.
"I'm impressed they're actually doing it," he said. "There seems to be more support for MSNBC from NBC Universal now that wasn't there before, which has translated to this move. They certainly want to increase the ratings, while being more efficient and saving money."
Stelter pointed out how the move to New York will save MSNBC money.
"They can streamline their operations with the rest of NBC news operations in Manhattan now," he said. "MSNBC is not the news network it was when it premiered, but this move is not the death of MSNBC either. The original vision of an interactive news space that would be a merger of television and the Internet never really happened. The changes that they may want to make are just easier to do in New York than it is in Secaucus. It makes sense for NBC to have all of its news operations in one building. The fact that [MSNBC personality] Keith Olbermann is going to be contributing to the NBC nightly news a few times a year is another example of how MSNBC is trying to become more connected to NBC."
In the end, Stelter still sees MSNBC's move from Secaucus to Manhattan in terms of the bottom line.
"I think mostly we're going to see ruthless efficiency," he said. "That's not necessarily a bad thing, but it's definitely going to be a change."
Porter Bibb, managing partner of Mediatech Capital Partners in New York, has decades of experience as an investment banker specializing in media, technology and entertainment ventures. He was also a journalist. Bibb is a former White House correspondent for Newsweek magazine, and was the first publisher of Rolling Stone magazine, where he worked with his lifelong friend, American literary idol Hunter S. Thompson. With the unique perspective of both a journalist and a businessman, Bibb had a cleared-eyed view of MSNBC's retreat from the banks of the Hackensack River.
"NBC Universal is on a rampant cost cutting binge that is supposed to amount to $750 million," he said. "They are not going to be spending any more money than they have to in Secaucus."
Mark J. Bonamo can be reached at mbonamo@hudsonreporter.com.
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