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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Venture Vultures Eying Entercom Takeover

The Field family has a lot to worry about.

Entercom has become the target of takeover thinking.

Weakened, unable to deliver shareholder value before the coronavirus and economic uncertainty, Entercom took the unnerving step of swallowing a so-called “poison pill” to buy them some degree of protection for the next year.

As it turns out, the “poison pill” dressed up as a “shareholders rights plan” isn’t going to be enough protection against the Fields losing control of the company.

There is a more disruptive way the Fields will lose control of Entercom even after they digested the “poison pill”.

And stopping it is getting to be near impossible.

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Saga’s Startling Layoff Count

We know that Bob Pittman was laying thousands off at iHeart before he had the coronavirus to blame.

And David Field has been canning people from the moment he bought CBS Radio – remember the $110 million cost synergy pledge he made to lenders.

And that Cumulus has been nuking their staff before, during and after bankruptcy – they didn’t need a virus to blame it on.

Beasley did it, Univision flush with half a billion in cash is doing it.

But what about Saga, the company with the least debt and the highest stock price?

All this becomes more critical to look at to see what a profitable radio company is planning to do.

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Deeper Radio Layoffs Within 30-60 Days

I have a candidate for Radio Ink’s “Executive of the Year”.

Univision CEO Vince Sadusky who is flush with cash and firing like a fool.

It’s hard to beat last year’s “executive of the year” stinker for chutzpah -- Bob Pittman who in the first quarter killed well over 1,000 jobs – and that’s before the Coronavirus.   He laid off, fired or furloughed hundreds more beyond that. 

Radio groups are crying pour mouth because their debt is too high and ad revenue has dried up.  Whose fault is that?

Their employees, of course.

The virus firings that every group except two are getting in on are a gift from heaven for them but if you think the worst is over, you haven’t heard about the next deep cuts at iHeart, Entercom and Cumulus under the cover of a recession.

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A New Cumulus CEO May Already Be in the House

I’ve learned about what is going on in the bowels of Cumulus – their inner workings, their odd board of directors representing lenders who were burned.

This we know.

Mary Berner just got a two-year contract extension – but the details are revealing.

There is something else more telling because of the soap opera known as Cumulus Media.

Her replacement may already be waiting in the wings already working in the company and the insiders know who it is.

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Radio Revenue Trending Down as Much as 65%

Some radio groups will not survive.

Even though radio ad revenue had been eroding gradually for the past few years, no one could see this precipitous drop coming.

Some groups will do better, but not that much better because the coronavirus and ensuing economic recession has ripped into the fundamentals of the radio industry.

Layoffs, firings and furloughs will be as commonplace as social distancing.

This tsunami is not temporary and the changes it will trigger will upend the radio industry’s biggest groups.

Radio has been running with lean staffs pointing out the challenges debt-heavy groups like iHeart, Entercom and Cumulus now face.

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