Cumulus to Furlough Salespeople Next Week

Company-wide cutbacks.

One way to cut costs is to sell radio stations which Cumulus announced yesterday when it offloaded its Albany, GA cluster to a local operator for $450,000 (4 FMs, 1 AM, 1 translator.)

Starting next week, there will be another go-round of furloughs in sales on unsuspecting victims.

We now know which sellers are in harm’s way.

And reportedly there is a buyer looking to cherry-pick the Cumulus portfolio and one other radio group.

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iHeart’s Salary Savings Revealed

As it turns out, iHeart’s no-paycations announced Tuesday are not what the company said they were.

Their bait and switch mentality is at work even in this layoff.

You might be surprised to learn that even sending Bob Pittman home penniless will not solve iHeart’s dire financial problems exacerbated by the coronavirus’ effect on the economy.

Employees have been misled on their forced unpaid vacations.

This begs the question is there any amount of savings that can save iHeart from itself?

The numbers iHeart is pouring over has the answer.

We did the math.

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iHeart Unpaid Vacations Pave the Way for Mass Firings

iHeart is forcing employees who make $50,000 or more to take two weeks of “unpaid vacation”. 

No pay is no vacation and as it turns out iHeart’s promise to make this their last action impacting employee compensation is a red herring for what they really mean.

The lost wages are approximately 4% of their annual pay and most employees would rather take that than be out of a job at a time like this.

And we now know the average pay of an iHeart employee based on yesterday’s no-paycation decision although the ratio of Bob Pittman’s compensation to the average employee is telling. 

The unpaid iHeart vacationers are not just going without pay for two weeks.

Many are next in line to be fired.  

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The Return of Live Events

Live events are being held prisoner by COVID-19.

This is a big business, popular with fans and critical to the health of music-related industries but held hostage by something unforeseeable less than two months ago.

  • There is a timeline for more normalcy in live events – notice I didn’t say return to complete normalcy.
  • And there are alternatives to live events that are so alluring that we already have anecdotal information that they could be a big business born of this pandemic.
  • When you see some of the potential startups from virus-proof concert “spacesuits” to compelling virtual concerts, you’ll see that the music business is never down and out but always disrupted and innovating.

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Entercom Heading Toward Restructuring or Bankruptcy

Entercom may be in worse trouble than iHeart and yes, Cumulus.

It is now a “Zombie company” that exists to pay its debt.

  • In a pandemic-triggered recession, this unbelievable set of circumstances is acting like an accelerant.
  • Entercom was a mess before this happened back to the botched CBS Radio merger and any sound company doesn’t have a $1 stock price.
  • Bad balance sheet, no workable strategy.
  • They could cut more employees but because of its rapid decline that will not be enough.

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