The Prospect of Even More Radio Cutbacks

I have long suspected that this week's latest round of "layoffs" formerly known as firings would not end with the 590 victims Clear Channel claimed.

Now, I'm sure of it.

I'm told Chief Execution Officer John Hogan in a Clear Channel webinar said this is the end of the firings. The good company man that he is -- Hogan said they did their due diligence and this should take care of the personnel cutbacks.

That's why I am convinced there will be more -- because Hogan says there won't be.

But no matter what, the cutbacks and firings are proving to be not enough to save consolidated radio companies.

Clear Channel -- the big daddy -- could be bankrupt by the end of August according to an article in MSN Money.

Citadel is hanging on by its fingernails.

And Cumulus can't cut expenses fast enough to avoid the fate that is awaiting it.

In fact, yesterday Cumulus CEO Lew Dickey came up with a new twist on layoffs.

It's called "Stayoffs".

During a conference call yesterday (but not a webinar like that high tech John Hogan does), Dickey told the beleaguered Cumulus troops that they would all be staying off the job for five days without pay before the end of the current second quarter.

That means now.

No warning. Forget the mortgage payment this month.

This includes contract employees as well. (I'm not a lawyer but isn't a contract a contract?). Anyway, Tricky Dickey mentioned the economy as the reason for their no pay holidays not the fact that he and his family ran up too much debt that Cumulus can't afford the payments.

Of course, one of my readers outdid Dickey.

He suggested that the Dickey boys, John Pinch and "the rest of the corporate micromanagers" take 4 weeks off themselves, without pay.

That way they will "save more money and the company might actually perform better without these corporate empty suits breathing down everyone's neck".

Clear Channel is so desperate to fire people that they never stop doing it.

They have been trimming expenses from the very beginning of consolidation -- you know, a little nip here and tuck there to make the shareholders a few pennies more.

What has changed now is that radio consolidators have no choice -- they've got to cut more employees even if it decimates their operations because there is virtually nothing else left to cutback.

Clear Channel doesn't want any trouble on the way out the door. It just offers its employees nine months of severance if they have at least three years experience and to give them credit, that's not bad. It would be better not to fire their assets, but nine months is at least something.

Fagreed Suleman, the bean counter from Citadel, isn't going to be as generous.

Citadel ABC employees with 20 years of service will likely get only two weeks of severance if they get fired after June 12 -- and that's at Fagreed's discretion. Management gets four weeks.

Fagreed could offer to give up some of his compensation to keep people working for the company, but don't hold your breath.

Here's the outlook for the rest of the year:

1. Some major radio groups are headed for bankruptcy and when they do, it means nothing unless of course you are being paid severance, get a pension or you're a vendor and they owe you money. A bankruptcy judge will make these decisions and they often rule on the side of severe cutbacks with little sympathy for people.

2. Cutbacks will continue except now instead of these major events staged by John Hogan, you'll see smaller cutbacks pruning people where possible. No headlines, just unemployment lines.

3. Cockamamie cutbacks are also in the works. Take a look at what Clear Channel is doing in Cincinnati. They are building a call center which will be used in part to give local police, fire and disaster officials at under staffed Repeater Radio stations across their chain for reporting local emergencies. Rather than pay for people to stick their nose out the door or actually be a part of the markets in which they broadcast, this emergency call center will monitor most stations and will eliminate the part-timers recently hired when that infamous memo went out that all stations will be attended 24/7. I'm told that when the call center is complete, the stations will go back to unattended operation overnights, holidays, and weekends. When there is an emergency, calls will go to the Cincinnati call center even if the emergency is in Minot. As one of my repeater reporters said, "No one was in the cluster here, for example, Wednesday at 5 pm until Monday morning at 4 over the Thanksgiving weekend. Everything voice tracked in advance. Local gotta be kidding me". On the bright side, at least the Cincinnati Call Center was not built in Bangalore.

4. The reason CEOs are still making unconscionable compensation while they are conducting mass firings is because the radio industry is digging in for contraction. These companies are not going to lose their licenses -- they are going to go into bankruptcy and lose their debt and the financial obligations that they no longer can afford. One reader emailed me a rumor that John Hogan and other company brass were at the NBA playoffs in a luxury suite. It wouldn't surprise anyone if true because RIF (Reductions in Force) don't mean reductions in perks.

5. All radio groups will likely follow the cutbacks although not all will file for Chapter 11. Therefore, radio jobs will be even harder to come by because the industry is going to shrink further.

6. Localism is a sham. One CC employee told me he's getting "Premium Choice" (their name for Repeater Radio) crammed down their cluster. As he so eloquently put it "why would I want to air a 7-midnight shift that isn’t my clock, not my music or rotations, doesn’t use my jingles, and only has generic sweepers I have to manually tag with my call letters in the automation log? I’d rather run jockless format, which costs me nothing".

7. Citadel is waiting for the ABC contractual window to pass (two years from its takeover) to rewrite the rules and apply Citadel draconian policies to the ABC stations and networks it inherited.

8. Regent may not make it -- and it probably doesn't matter. Creditors don't want it back but a bankruptcy judge could eliminate a lot of expenses with which the company is now saddled.

9. Clear Channel is saying it may not use Arbitron ratings in some markets to save money. In the past, John Hogan has used this as a public ploy to win rate concessions. This time I believe him. Who needs ratings on Ryan Seacrest when 100 stations are going to air Ryan Seacrest with or without ratings? The ratings don't matter -- savings do.

So, if you think the cutbacks are over, you may want to think again.

It's no longer about what is right for the radio industry, their audiences and advertisers.

It's about time.

A convict on death row exhausts every option he has to win a new trial or get a temporary stay of execution.

Borrowing this imagery, radio CEOs are the convicts.

And they'll do the things outlined here and more to buy just a little more time. It's like waiting for the governor to call and tell the warden that the execution has been stayed.

But in radio's case, the banks are the wardens and they, too, are broke.

The only certainty is that this radio industry will die needlessly while the perpetrators of the crime (arrogant CEOs and investment banks) are willing to do anything at the eleventh hour to live another day.

For those of you who would prefer to get Jerry's daily posts by email for free, please click here. IMPORTANT: First you must check your mail or spam filter to verify your subscription immediately after signing up before daily service can begin.

Thanks for forwarding my pieces to your friends and linking to your websites and boards.