Classic RIFs

[JustPastBuffalo]

No, this isn't about the opening notes of Layla, Satisfaction or A Hard Day's Night, but the Reduction In Force announced Thursday (12-6) by Clear Channel. Today, it's all about (to use the title of a Classic Rolling Stones LP) the Aftermath. Plenty of people in and outside the business are wondering if there's another round of copycat layoffs to be announced by other broadcast entities that face budgetary challenges. Rocco Pendola, one time WGR sports talk host and wunderkind, now writes for The Street and offers his take:

http://www.thestreet.com/story/11786543/1/the-worst-company-to-work-for-in-america.html

Let's roll... and hey! Let's be careful out there!

 

[SirRoxalot]

Rocco sums it up nicely, "$20 billion in debt, $6 billion in revenue, $1 billion in cash and tens of millions in quarterly losses". So, they cut more talent. Reduced the quality of their local programming (unless you're TheBigA, who'll argue that they'll bring in "better" talent via VT or syndication). Made themselves less competitive. If they cut more sales talent, or cut commissions so that sales talent will move on without any severance, they'll put themselves even deeper into the hole.

Clear Channel is headed for bankruptcy. That's the only way that they can shed that much debt. The big squabble will be over who gets hurt by it. I don't think that they can sell off their properties for enough to get them on a more tenable footing. What bank will lend money to a prospective buyer for a losing cluster? And you can't sell stations piecemeal if you want to remain competitive.

What a business.

 

[TheBigA]

Reduced the quality of their local programming (unless you're TheBigA, who'll argue that they'll bring in "better" talent via VT or syndication).

Not necessarily "better." Doesn't have to be better when the audience prefers NO talent. Or minimal talent.

From what I've seen, there were less than 100 people cut nationwide, and most of them were PDs.

Made themselves less competitive.

All you have to do is read quotations from Bain's former leader Mitt Romney. He says less people makes a company MORE competitive. He was almost POTUS. Obviously 49% of the country agree. Their view is that size of government staffs doesn't equate to quality of service.

One look at the markets affected, and CC is the ratings leader in most major markets, like NYC, LA, and Chicago. So much for making them less competitive.

The fact is that advertisers are spending less on radio. It has nothing to do with staff. It has to do with a shifting media marketplace. It's happened many times before. When you have less advertising, you have less money for staff.

This isn't big news. Everyone in radio knows it. I knew it when I was in college. It's one of the reasons I've never worked for CC. Anyone who works there knows the deal. But tell me a safe line of work today. I know lots of steel workers, coal miners, and car makers who thought they had jobs for life. Today, even banking isn't a secure job.

 

[radioray]

In my local radio stations when things go down I invest in more sales training. CC cuts it.

I invest in more local marketing. CC cuts it.

I try to find more local angles that the morning show can dominate. CC does the opposite, goes more national.

I hire, train, invest, innovate, create, motivate all to dominate.

CC does none of the above and their firings of long-timers DE-motivate staffers.

The myths of downsizing.

http://www.allaccess.com/talent-pool/archive/15133/the-myths-of-downsizing?ref=mail_recap

 

[TheBigA]

I hire, train, invest, innovate, create, motivate all to dominate.

The reality is that on air radio isn't going to grow no matter how much money you invest in it. That's why few new companies have come into the industry despite the 80% drop in station prices. What radio companies are doing is diversifying. They're investing in new media sales, marketing, and training, rather than on air. It's very basic investment strategy. I hope all your money isn't in one business.

 

[radioray]

The stations I buy do grow. I invest in them. I hire and train. I market.

Talk to Jerry Lee at B101 Philadelphia. My mentor.

It can be done.

I am not pessimistic about our medium at all.

I am discouraged by the fools who do not understand that you have to spend money to make money.

I spend money. I make money.

I send a crew to the radio show in Dallas this past fall. How many of those clusters now cutting did so? But if just one idea they had taken with them had sold worked, it's paid for. Every year I find that convention (formerly the RAB) to be one of my best investments. "You make money period" or something like that was their slogan. It was accurate. It still is.

But heaven forbid the big companies should invest in this stuff.

 

[TheBigA]

The stations I buy do grow. I invest in them. I hire and train. I market.

CC invests in lots of things. None of it gets reported. Just when they make cuts.

 

[SirRoxalot]

CC invests in a "lot of things". Unfortunately, their core product isn't included in their "lot of things".

The effectiveness of their practices continues to haunt them. That's why they're staring bankruptcy in the face.

More cuts - particularly in programming - won't mean more revenue for CC. You can't cut your way to prosperity.

"radioray" gets it.

 

[TheBigA]

CC invests in a "lot of things". Unfortunately, their core product isn't included in their "lot of things".

Huh? Sure it is! However, the RETURN on that investment hasn't panned out. Thus these cuts.

More cuts - particularly in programming - won't mean more revenue for CC.

Cuts are typically the "effect," not the cause of less revenue. Radio companies have all been hurt by less advertising this whole year. It's affecting lots of companies, not just CC.

 

[SirRoxalot]

That's what you said after the last round of cuts. And after the round before that. And after the round before that. And after the round before that. Yet, you insist that cuts in personnel don't decrease revenue.

CC's headed for bankruptcy. The only good news is that most of the shareholders already took a buyout, so it's some of the corporate raiders who jumped on the Bain bandwagon who'll take it in the shorts. A lot more CC employees will suffer more consequences than the well-insulated execs at the top, who'll get BONUSES for taking the company through bankruptcy. So much for honor among thieves.

 

[TheBigA]

Yet, you insist that cuts in personnel don't decrease revenue.

There is no connection between size of staff and revenue.

Maybe you didn't pay attention during the election, but both candidates said over and over that we've been through the greatest financial disaster since the Great Depression. They're not kidding. We're still going through it. And it's killing all content companies, including radio, TV, newspapers, books, music, and even the internet. Many online companies have reported drops in online advertising this year. None of that has anything to do with station staff, but economic cicumstances.

Couple that with a sociological and technological revolution that has completely saturated the media marketplace. The content creation process has become quicker and cheaper thanks to technology, and the demands of the audience are a lot different than they were 10 years ago. CC is slowly adapting to the changing needs of the audience.

CC's headed for bankruptcy.

They have four years to get the company back on track. To take it from an old technology company to a new one. The content they create is adaptable to any platform, not just transmitters. They have invested in digital platforms and people who know how to create digital content. The digital platform adds value to their traditional business. That will make the difference when it's time to refinance. The new platform is far more marketable than the old one.

As I've often said, the future won't look like the past. CC is a great example of that. Everyone knows that these changes are happening. It's no secret. CC staffers who have adapted to new technologies will find their skills and talents translate to lots of other jobs if they're laid off.

 

[Element9]

Owner-operators like radioray understand that radio is a locally driven medium with programming and local sales driving cash flow and profits. And ray makes a good point bringing Jerry Lee into this conversation. Lee operates B-101 Philadelphia. The station is one of the most successful AC's in the United States of America. B-101 doesn't stream. Lee says streaming adversely affects his core business, which is local radio. He says streaming siphons time, technology and money that's better allocated to programming and sales. Jerry Lee spends lots of money and he makes lots of money in the face of competition from corporate operators like Greater Media, CBS and Clear Channel.

With the economy growing at a slower rate, now more than ever, well-trained, successful local sales people on the street make the difference between success or failure. But rather than appreciate established, legacy sellers who know how to bring in revenue and positively influence other reps on the station's/cluster's sales floor, most of the larger radio companies today hire newbies; 23 year old men and women with little if any outside sales experience. The companies say it's cheaper because the fresh new hires can be properly trained. More like indoctrinated. In fact, hiring sales reps who are unfamiliar with radio sales and radio in general has proved to be more expensive than maintaining the successful legacies. Companies like Clear Channel and Cumulus are penny wise and pound foolish.

 

[TheBigA]

most of the larger radio companies today hire newbies; 23 year old men and women with little if any outside sales experience.

I compete against CC sales people, and they're not 23 year old newbies. That may be true about Cumulus, but not CC.

I don't know any sales people at Cumulus. But all the Cumulus programming people I know are anything BUT newbies.

Let me add that older salespeople know the ropes, and have established contacts. But they're less interested in going out and calling on new clients and building new relationships. Then again, they don't have to. They have the clients everyone else wants.

 

[Bob1370]

If downsizing and outsourcing programming is supppsed to be the way to profit, how come companies that don't do it, iike CBS, are the ones making the money? And the companies that do it are either dead (like Citadel) or struggling to avoid the abyss like CC?

CBS realized long ago that you don't let your company bloat--you don't gobble more stations than you can effectively operate. Clear Channel never got it.

 

[SirRoxalot]

Oh, now TheBigA is competing against CC sales people every day. Selling what, community radio? On-line? What's your story this week?

CC hasn't cut any sales talent, right? Or, programming talent that makes a difference, right? After all, content has nothing to do with revenue.

Keep defending the indefensible, A. People actually in the business know the truth. CC's cuts are all about extending the reign of the current management, not saving the company. They can't cut enough to escape the hole that they've dug, and iHeart Radio ain't gonna replace the revenue that they're losing because of those cuts.

 

[TheBigA]

Oh, now TheBigA is competing against CC sales people every day. Selling what, community radio?

As I told you last time you brought this up, I left non-com radio for the dark side a long time ago.

CC hasn't cut any sales talent, right?

I don't know. I didn't say they did or didn't. I'm just saying in my market, they're not kids.

After all, content has nothing to do with revenue.

I said the size of the local staff has nothing to do with revenue. Content is another issue. Content attracts ratings, and CC is doing very well ratings-wise in the major markets, regardless of the talent. I'm sure you'll dig up a dog market or two, but it won't be NY or LA. They're also leaders in revenue in both of those markets.

 

[TheBigA]

They can't cut enough to escape the hole that they've dug, and iHeart Radio ain't gonna replace the revenue that they're losing because of those cuts.

Can you put a dollar figure on the "revenue they're losing because of those cuts?" I bet you can't. They were losing that revenue BEFORE the cuts. The fact is that radio as an industry is losing revenue, not because they're cutting DJs, but because the main source for that revenue, advertising, is being spread out over more platforms. They can hire live and local DJs all day, and unless those DJs pay for their airtime, it won't result in more revenue.

Yes, you're correct that internet advertising is less than on-air advertising. But it's growing, as opposed to what's happening on air. Newspapers and other content companies are seeing the same thing. However, iheartradio isn't strictly about replacing revenue. It's about adding new value to the company. We all know that broadcast properties have lost a lot of their value in the last five years. At the same time, internet properties have increased. The IPO for Pandora broght in $2.7 billion. If iheartradio is worth two-thirds of Pandora in value, then an IPO on just that part of the company could do a lot to solve their impending 2016 debt payment. It certainly has a better shot of succeeding in the stock market than an on-air group. We already know that.

My advice to anyone who loses their on-air job is this: learn digital. Take some of that severence check and take a course at a local college in digital production, web design, or IT. You'll find your current skills are transferable, and you will be increasing your own personal value to potential employers. Either learn new skills, or become a greeter at WalMart. The choice is yours. But it's not the 1970s any more. Doing cool segues and "talking up the post" are not bankable skills. Reading liner notes and playing the same songs over & over is not going to get you hired by a new employer. Those of you currently employed should start preparing now while you can. It's not "if," but "when." And it's not just "big corporate radio." Lots of small locally owned stations and even non-commercial stations are going through the exact same thing. Just look around Buffalo and the rest of the region. Am I wrong?

 

[SirRoxalot]

CC has been cutting talent for so long that it's difficult to quantify how each bloodbath has affected radio. One thing's for sure - radio has not done as well in the current recession as it has historically in other recessions.

The biggest reason that the industry is in trouble is because CC and other major consolidators created a bubble in station values. It's very similar to the real estate bubble created by unscrupulous lenders that got us into the current recession. Or the tech bubble that burst at the end of the Clinton administration. A handful of large players have learned how to manipulate the markets, rake off massive profits, and screw average shareholders.

Station values are "correcting" because they were NEVER worth what CC (and others) paid. Those players manipulated the FCC into allowing them to create de facto monopolies in some demos in some markets. When they tried to "push rates", a lot of advertisers decided to put their money into other media. "New media" was getting a lot of attention, and is still cheap. Its effectiveness is shakey, but it's affordable. Add massively long commercial sets, and radio has devalued its own inventory.

But, go ahead and keep defending those practices. Apparently, you're benefitting personally. Many others are not - including listeners.

 

[TheBigA]

The biggest reason that the industry is in trouble is because CC and other major consolidators created a bubble in station values.

Then why is public radio, which wasn't affected by the "bubble in station values," in the exact same boat? They're letting people go, and consolidating. Obviously the problem is far bigger than a bubble in station values. And that bubble is only an issue if companies decide to sell.

The real reason isn't consolidation, but the increase in other forms of media that are far more personalized than radio. Lots of folks compare radio today to when TV became popular in the 50s. But TV was the only new media competition introduced at the time. In the last ten years, we've had several. And all of those new platforms operate with advertising. That's diluted the money pool and the listener base. People are going to try those new platforms regardless of what radio does. The reason advertisers went to other media was because they were new and hot. Now the advertising pool is so diluted that it's even starting to drive down digital ad rates. Radio didn't devalue its own inventory, new forms of media did it. The fact that you're spending time on a message board is proof that radio isn't the only form of communication any more.

 

[Element9]

Oh, now TheBigA is competing against CC sales people every day. Selling what, community radio? On-line? What's your story this week?

Commercial radio, public radio, start-ups, FM-AM-TV-LP, turnarounds, community radio, major market, small market, fish market; on-air, sales, production, management, liquid propane sales, nuclear disarmament talks, the Hague and posting at all hours of the day, the man does it all.

The Big A http://www.youtube.com/watch?v=Lzyd91NFx-Y