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back office cuts

J

JakeBoynton

Guest
This is stupid.
If it gets to this point, you might as well just turn to outsourcing operations.

"Clear Channel may have some mid-December layoffs in store.
Focused on the back office, perhaps? One TRI source says the company may be moving to a hub-and-spoke model, with a business manager at the local level feeding a beefed-up “hub.” Could there be some other year-end layoffs, as well? Possible in some markets. But the focus on this one, which has reportedly been discussed on conference calls, is on streamlining back-office systems. Apparently CC Media has watched with interest as clusters have dealt with business-office vacancies that went unfilled. Now it may even have selected which staffers will be retained, taking that decision out of local hands. If it happens this way – and that’s an “if” – Clear Channel wouldn’t be the only company looking at year-end budget cuts."
 
Really! Why is this "stupid"? Radio is a business, and like any business it needs to constantly evaluate ways to operate more efficiently. In a cluster of stations, why shouldn't there be a centralization of back-office functions? Why does one need a separate business manager, A.R, or A.P. or even traffic department for each station when these functions can easily be performed by one office? Payments can be received at a single location and bills can be paid by one as well.

It makes perfect sense.
 
Radio is not the only industry doing this. Ever wonder why you get the guy in India when you call for customer service? Or why the voice at the McDonald's drive-through isn't that of anyone inside the store making the hamburgers? Outsourcing is quite common (we use ADP for payroll), and so is centralized billing.

We focus on it in our industry because that's our frame of reference, but in fact, technology allows dramatic increase in efficiencies in numerous areas. The downside of increased efficiency is loss of jobs, and particularly in the case of the talent end of radio, loss of community involvement and listener interaction. In many industries, growth in sales and production mitigates the job loss, but in broadcasting, there is no growth to offset the job loss.

Having been in the business I love for longer than many posters have been alive, I remember the days that we actually hired someone to sit in front of an audio console to push buttons for a football game commercial break. But the nerd/geek part of me thinks it's pretty cool to run an entire sporting event with nobody in the building.
 
And can be a potential nightmare. Clear Channel has already consolidated a considerable amount of its traffic and billing operations into certain regional areas that handle a large number of their local clusters. For example, payments to our local CC cluster are directed to a Chicago lockbox. As we discovered when we bought a station that had been JSA'ed to them. Even though we got the station a year after that JSA ended, some agencies were still sending checks for flights aired on our station to that lockbox.

With one account, the local company sent the check based on directions from their agency. After their account ballooned to 120 days we started calling & found their agency never changed their paperwork to reflect our address and ownership change. We contacted the advertiser directly-- they then just deducted the overage from the next CC check to pay us ::)

Helped that CC still had a local traffic manager who helped us straighten this out--otherwise we would still be going around in circles. In the future??
 
TVradioguru said:
Really! Why is this "stupid"? Radio is a business, and like any business it needs to constantly evaluate ways to operate more efficiently. In a cluster of stations, why shouldn't there be a centralization of back-office functions? Why does one need a separate business manager, A.R, or A.P. or even traffic department for each station when these functions can easily be performed by one office? Payments can be received at a single location and bills can be paid by one as well.
Click to expand...

When I read the original post, I did not see it addressing the idea of having one billing person (or other task) for all the stations at one cluster. I read the post as saying there is a report that some of these functions will be pulled out of the cluster and moved to maybe a regional office, or even a national office.

If as a client you have a billing problem, it is one thing to call "the station" and finding a local person who is actually responsible for billing problems for all the stations in the building. It is quite another thing to call and find yourself talking to someone in Texas (and you are in Idaho) or someone eventually in India trying to get a disputed billing solved. The old "why don't just put all this paper in a box and I'll come over and we will sit down at your desk and solve this thing" doesn't work very well under those conditions.

This very issue is going on in every business you can name today. In the late 90s I went to work for a company selling computers to corporate America. We had one 800 number. Depending on which button you touched (ONE for sales, TWO for a service or repair, THREE for network consulting, etc. etc.) your phone call landed in Indianapolis IN or Pleasanton, California or Roswell GA... or one of our 55 branch offices around the country. Some days we had to invest time in figuring out who SHOULD have received the phone call and then finding a way to connect them.

Most of us are much happier when we call the power company or the parts store or the bank finding ourselves talking to someone we know from PTA, the church, the bowling league, etc. But life no longer works quite like that, does it.
 
The back office people at every radio station I have worked at are the ones that do the most work. If they hub-and-spoke, then they have to consolidate even more. Less people doing a lot more work. How much can they really do well? All I am saying is that, if it gets to this point, might as well outsource the operations instead of dumbing it down.
 
JakeBoynton said:
The back office people at every radio station I have worked at are the ones that do the most work. If they hub-and-spoke, then they have to consolidate even more. Less people doing a lot more work. How much can they really do well? All I am saying is that, if it gets to this point, might as well outsource the operations instead of dumbing it down.
Click to expand...

Outsourcing doesn't work well in the broadcast world for two reasons, insecurity about competition and knowing where the dollars are coming and going in the group.

Combining back-office functions is hardly "dumbing down". In most instances one utilizes the best and the brightest at one larger location to elevate the overall quality of work more efficiently. A large or mid-market traffic director who is good at what they do typically can replace five or six mid-to lesser quality or knowledgeable traffic directors. One good Accounts Receivable director can easily take care of multiple stations.

Combining back-office operations is hardly new. Industry and manufacturing has been doing it for years. In fact, many smaller radio groups have no choice but to combine back-office functions as a way to cut cost and increase productivity. It isn't romantic to be sure, but it is very business-savvy.
 
The traffic people at mid-to-small market radio stations typically have a much higher spot load to deal with than major market traffic people. Not only that, but out-of-market traffic people won't have the same knowledge of advertisers. Yeah, coding should help with separation of advertisers, but smaller markets have companies that may do several things under one roof. Coding doesn't always work so well in those situations.

Radio is a service industry that depends on local advertisers for approximately 80% of their revenue. This sounds like another example of where the "savings" may very well end up heavily outweighed by reduced revenue.
 
So the local traffic people go away, and everything is fed to some master computer in the consolidated traffic department in the big city...

The gold-plated traffic software in use at some of these small CC clusters will theoretically allow the sales staff to input their own orders into the system. Linked to the mother computer at the regional center, the computers then merrily churn out the next day's log, & send it back down to the small clusters for Prophet to run.

At billing time, the big computer spits out the bills, and payments come in like clockwork to the lockbox.

Theoretically.

As we all know, the best local direct sales guy in the house is probably a two-fingered typist who scrawls orders out on the back of an envelope & hands them to the local traffic gal to input into the system. She's been doing this for years, and knows that Greenbaum's Furniture is never open Saturdays, so that "S" means the spots run W, T, F and Sunday. She also knows that Bailey's Boats Spring Week Sale usually ends by Wednesday because they sell out the specials--and need to revert back to generic copy. And she's been keeping co-op straight for the local Ford dealer for years.

Disaster waiting to happen.

I love it. They're my competition! ;D
 
TomT said:
So the local traffic people go away, and everything is fed to some master computer in the consolidated traffic department in the big city...

The gold-plated traffic software in use at some of these small CC clusters will theoretically allow the sales staff to input their own orders into the system. Linked to the mother computer at the regional center, the computers then merrily churn out the next day's log, & send it back down to the small clusters for Prophet to run.

At billing time, the big computer spits out the bills, and payments come in like clockwork to the lockbox.

Theoretically.

As we all know, the best local direct sales guy in the house is probably a two-fingered typist who scrawls orders out on the back of an envelope & hands them to the local traffic gal to input into the system. She's been doing this for years, and knows that Greenbaum's Furniture is never open Saturdays, so that "S" means the spots run W, T, F and Sunday. She also knows that Bailey's Boats Spring Week Sale usually ends by Wednesday because they sell out the specials--and need to revert back to generic copy. And she's been keeping co-op straight for the local Ford dealer for years.

Disaster waiting to happen.

I love it. They're my competition! ;D
Click to expand...

How naïve!

So you'll win the business of Greebaum's and Bailey's but your other clients go away because "your competition" beat your ratecard thanks to their lower costs. And then you're out of business.

Now who's having the disaster?
 
They are already undercutting everyone in the market. Low rates ain't everything, local radio is also a business built on relationships (e.g.--keeping the client happy). Which is why you will see them eventually give up and walk away from these small market clusters (many of them were already "departing markets" before the Good Radio balloon collapsed).

We bought an FM that they JSA'ed for 7 years, then walked away from. Doubled sales since taking it over.

You can talk all you want
But it's different then it was
No it ain't, no it ain't
But you gotta know the territory...
 
Anybody who thinks it's all about rates - especially in medium and small markets - needs to get out of the office and away from the spreadsheets. That's right up there with "We don't need salespeople. We just need order-takers."
 
Rox is right. Get out of the office. Tell me who is doing well in local business. Who in your local community has money to advertise. Who can greenlight a local ad buy. And who doesn't feel they can get a better ROI with direct mail or Groupon. Local car dealers say they can't sell cars the customers can't see. The malls are all filled with chain stores. It's really bad when the biggest local advertiser is the state government, and their new governor just cut the marketing budget.
 
That's sure not what's happening in my back yard, A. And, since revenues are up at virtually all major groups, I'm not sure who's back yard you're in. Even national's rebounding, which isn't surprising. It dropped way more than local.
 
OK...so what you're saying is that radio is showing increases in revenue without making increases in staffing. In fact, they're making these revenue increases despite ongoing staff cuts. What does that say about the connection between size of a local station's staff and revenue?
 
What I'm saying is that revenue is coming back, which means that radio stations can afford to hire back some of the people cut due to economic exigency. Would revenue expand more quickly if the on-air product was better? Quite likely. Would the on-air product be better if production people had more time to do better work, with better copy from an expanded continuity department, written from information provided by a less harried sales person?

If that answer isn't obvious, then you don't know Jack about radio. And you'll make it easier for the competition to outperform you, which will eventually reduce your revenue in relation to the market.
 
SirRoxalot said:
Would revenue expand more quickly if the on-air product was better? Quite likely. Would the on-air product be better if production people had more time to do better work, with better copy from an expanded continuity department, written from information provided by a less harried sales person?

If that answer isn't obvious, then you don't know Jack about radio. And you'll make it easier for the competition to outperform you, which will eventually reduce your revenue in relation to the market.
Click to expand...

You are expressing the view that we who love radio, we who enjoy radio want to believe is the mantra of success.

But is it? Look at all the other businesses around us.... including those who have long been the revenue cows for broadcasting. Every category of business I can think of has adopted a profitability mode that says: "The heck with what the customer wants! What will make us the most money? That is what we will do and the customer can like it.... or lump it."

I wanted one simple little piece to fix the drain of a bathroom sink the other day. Should have been able to buy it for maybe $2.00 or less. No. My hardware store had a $7.00 kit with parts I didn't need. Like it or lump it.

I have a spouse with health issues. I needed a car with a highly adjustable powered passenger seat. The industry said to me: You will buy a luxury car for we do not put those seats in lesser grade cars. And you can't buy the seat as a stand alone option. You will buy "Option C" or whatever they called it, with a package full of goodies I didn't need. Like it or lump it.

The radio industry is finding out that nice guys who worry about listeners not having as much lemonade as they want are not the ones who will retire without worrying about outliving their retirement money.
 
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