The Next Radio Firings

On the eve of the next round of "layoffs" at Clear Channel, information is beginning to emerge of who may be let go.

There is no way to know for sure, but lately the way Clear Channel works is to follow a well thought out plan.

I'm hearing that some program directors may be in line for unemployment soon -- especially off-air PDs.

That, as one reader told me, "the smaller markets are about to lose their engineers although disguised as an emergency operations center in the event of an emergency it will be an engineering national operations center dispatching contract engineers when needed".

There is some thinking from within the Clear Channel talent pool that Chief Execution Officer John Slogan Hogan may be looking to eliminate at least one more live on-air talent from every station that hasn't been completely decimated so far.

That means many Clear Channel stations will have only one live local show -- probably the morning show on a budget -- and the rest repeater radio from corporate.

Far from the localism that Clear Channel touts (see "Clear Channel's Fake Localism" from yesterday), the next round of firings -- maybe as many as 1,000 people -- will be designed to accomplish just the opposite by making each station less local.

It's getting hard to work at Clear Channel stations.

Even the survivors must be wondering if it is better to get fired than be subjected to impossible workloads. One Clear Channel programmer told me he is working so many hours to make up for short staffing that it is adversely affecting him. Yet he feels lucky to have a job.

I'm also hearing that some Clear Channel employees have decided to take the fake localism issue to their Congressman. This is a shrewd move because you know the NAB is going to be on Clear Channel's side if and when there is a showdown in front of the Obama Administration over local radio.

Congressmen have a great interest in keeping radio stations local. They want to buy cheap time to run election ads. Want to have a free conduit over which they can send messages to their constituents and there are local economic repercussions by allowing large consolidators to outsource jobs to San Antonio.

In this country, there is a big stink over outsourcing to India and of late some of the airlines have recalled their reservations tasks to the United States. That backlash will come in handy in this case where Minot, for example, will see its radio jobs disappear under the cover of slick PR from Clear Channel.

Beyond Clear Channel, there is more trouble ahead as a result of this localism suicide attack that the Evil Empire is hell bent to pull off.

Emmis is in trouble -- big trouble.

You know that, perhaps -- but yesterday they were downgraded into deeper, darker junk bond territory. Officially Moody's downgraded Emmis Communications' CFR to Caa2; changes PDR to Caa3/LD.

Translated into English -- Emmis is on borrowed time.

There may not be reliable data until its next earnings report in July to know how difficult a hurdle this is. Keep an eye on regulatory filings and company releases for any sign of a possible new arrangement with its creditors, or the failure to achieve one.

Regent is going south -- big time.

You may know this but yesterday Standard & Poor's cut Regent's rating to 'CCC' from 'CCC+'.

Translated into English -- death watch.

According to Standard & Poor's:

"Regent's auditors had raised doubt whether the company could continue as a going concern in its 10-K, based on their lack of certainty whether Regent could remain within financial covenant compliance in 2009. The going concern opinion triggered an event of default under the credit agreement".

The options don't look all that good either:

"'Developing' implications suggest that ratings could be either raised or lowered, depending on whether Regent can obtain an amendment and on what terms...if the company is unable to obtain an amendment, we could further lower the rating".

We've dealt with the other major radio chains vis-a-vis the economy and what turned out to be their unfortunate decision to take on debt the way the Titanic took on sea water.

The point is that while the recession clearly hasn't helped these operators generate cash to pay debt and operate their stations, most radio companies were experiencing declining revenue several years ago when the general economy was still healthy.

That is -- radio's recession started when operators began to nickel and dime their stations in order to generate more free cash flow to pay debt. And much of that debt was refinanced by these consolidators at higher interest rates to keep the wolf away from the door.

Every major radio group has cut expenses and fired employees. Not every group, however, bailed out on local radio. The smaller groups may use a syndicated show or two but they are still doing local radio.

That's why Clear Channel is so dangerous.

Trying to operate under the radar so they can cut more employees, they are paving the way for Citadel, Cumulus, Regent and almost everyone else to follow suit.

If a baseball team agreed to play with eight players, your team would probably lick your lips at getting a leg up on that foolish decision.

Not in radio.

When an operator cuts local sales, the competitors start to reduce their local sales presence.

When more syndicated programming replaces local fare, competitors look around for the best syndicated answer to match them.

They never raise them.

And soon, they will have to see them.

The next radio firings are assumed to be the 1,000 or so that are likely to be sacrificed sometime this week by "Less" Hogan.

The unspoken significance is that many people at Clear Channel's competitors will now become expendable to desperate operators.

We have a name for the companies that do not fire personnel when their competitors do.

We call them operators.

We have a name for companies like Clear Channel who reduce their presence in local markets while singing the opposite tune.

We call them liquidators.

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