The radio industry has been cutting back its work force for years.
Technically, you can go back fourteen years to the beginning of consolidation when a handful of acquirers bought their local competitors and put the newly-merged operations in the same building.
Maybe that was tidying up on expenses back then when each station had a receptionist but suddenly only needed one. But over the years consolidators have cut into the bone in their attempt to lose financial weight.
The scene is set.
The time is right.
The sad reality is that the only thing that radio stations can eliminate to further reduce costs is people.
Most groups have gotten wise about how to fire after the uproars that were caused by mass “layoffs”. Even the term “layoff” is a joke since few if any of the dismissed employees have been rehired.
When Clear Channel made firing its staff a major promotional event on Barack Obama’s Inauguration Day in 2009, they got a public relations black eye. Other groups noted the blowback as well. Since then, every major group has continued to thin its ranks – but quietly -- from market to market.
With nothing else but people to sacrifice, you’d think the groups would eventually run out of people to let go.
Not the case.
In fact, with advertising recovering in the sector, radio groups can see profitability from all the downsizing they previously did and their foot is on the accelerator which is why I foresee these deep cuts.
I like “deep tracks” better. But radio has become a cheap operation with no real focus on content or the local listener. I don’t like it. You don’t like it. But that’s the way it is.
Obviously, with the economy coming back, radio groups could start hiring again.
Personalities. News people. Promotional staff. More sales execs.
They could stop having one manager run all stations or in the case of some groups that one manager may not even reside in the local cluster. It’s maddening.
So I want to be wrong about this. I really do. But my best sense is that the following will happen in the year ahead precisely because now the radio recovery is about profit for the failed and sometimes bankrupt consolidators.
For that reason, expect the following:
1. Deep cuts – one PD running as many as seven to ten stations would not surprise me.
2. More absentee PDs like the mistake Citadel is pulling in Washington where Paul Duckworth was let go and WLS PD Drew Hayes got to do double duty from Chicago. We’re talking about big markets here. But never mind. Economies of scale are coming no matter what the market size.
3. With staff vanishing what better time to sit down and squeeze concessions out of surviving employees – talent, managers, directors. Renegotiating employment contracts. Count on it because Clear Channel is getting ready to do it and once Clear Channel does it, you know what the others do.
4. Severance packages offered to employees except the radio version will be a take it or leave it proposition. Say no, you’re out. Say yes, you get to work for less. Whatever happened to severance buyouts? Not in radio.
5. Sit down for this one – pay cuts may be as high as almost 50% of the current base pay. Probably a bit less but basically working more for less – half less. If you are losing me on my math, remember what I said earlier that the groups are smelling a profit and you are it.
6. Sales commissions will get mutilated. It never made sense to cut sales staffs but that never stopped consolidators from doing it. Now, the trend is already established – reduce commissions, take away accounts, make salespeople work harder to make less. Consolidate good existing accounts with one or two people who will earn less commissions.
When?
It will become evident within the next six to eight weeks and continue for the entire year.
Already, companies like Cumulus are being held together with spit from a technical point of view. Not an adequately staffed engineering department. Stories of Cumulus stations getting knocked off the air again and again until a tech can get them back on. Get used to it.
You can’t find many promotional people in radio anymore. If you do, they are spread thin.
And, forget the Internet and mobile Internet. This is a luxury to radio operators who live in their own bubble and insist on operating this wonderful entertainment business like Public Service Electric and Gas.
That’s it.
Radio has become a utility.
And for a moment I want to say what a tragedy it is that many thousands of talented professionals who love this business so much they will even work for incompetent managers are in for another round of pain.
Thousands of you have written to me over the past year to ask, how can these owners do this to local radio?
Your answer is as close as the light switch.
The public utility of radio is a profitable business in spite of the Internet as long as the price is right.
To them the right price is – minimal staff, shared expenses.
The coming cutbacks will not just be by one radio group, but by virtually all.
Deep cuts may threaten radio’s future in a world of so many other listener options, but to consolidators it is the clear – and only – path to profitability.
Would you expect any less from executives who live for the moment because tomorrow means more debt to repay or refinance.
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