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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Major Cumulus, Westwood One Furloughs Start Next Week

It goes from bad to worse at Cumulus as ad revenue dries up.

They have made cuts prior but don’t have the regional capability to create “excellence centers” like iHeart to automate local markets.

Instead, they are forced to stay local with almost no employees at their medium and smaller market stations that make up the majority of the group.

Cumulus will move early next week to eliminate and consolidate what is left of their operations in the station group and Westwood One.

Their goal is to stay on the air with the minimal number of people.

By the end of next week, you won’t recognize Cumulus and Westwood One.

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Attempt to Block iHeart Takeover

With radio groups like iHeart rushing to fire people to qualify for a federal bailout, the big question is – where is John Malone?

He owns a lot of iHeart stock.

Says he wants to take over control of the company.

Mysteriously, he stands by doing nothing even as a consumer group attempts to block his merger attempt.

It’s not what you may think.  On Malone’s dumbest day, he outsmarts Bob Pittman.

What iHeart employees want to know is …

What is Malone’s strategy for taking over iHeart – now when they are against the wall seems like a good time.

And will Malone kill radio jobs as much as Pittman seems willing to do.

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Round 3 of iHeart “Dislocations” Starts Today

This one will be different but just as painful.

iHeart isn’t wasting time.

$200 million in savings by the end of 2020 on top of $50 million from the February “dislocations”.

That means a devastating reduction in workforce indicating the worst is yet to come.

They have a plan for who will get whacked and the timing of future layoffs.

We’re getting the first look at how significantly “dislocation #3”  will affect stations and careers at iHeart.

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Entercom to Slash Another $75-100 Million

Radio is on track to taking a 65% decline in revenue due to the coronavirus.

Entercom is in survival mode and that’s not being overly dramatic.

Stock closed at $1 yesterday.

Can’t repay their debt and won’t be able to when it comes due.

Entercom is now a Zombie company – one  that earns just enough to keep operating and service debt but unable to substantially pay it down or off. 

Entercom is now working for its lenders.

Their big question is how do their planned cutbacks save $75-100 million more without irreparably damaging the company?

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iHeart to Stretch Massive Layoffs

Before there was coronavirus in the U.S., iHeart fired over 1,000 employees and set the stage for more by building so-called “excellence centers”.

Then the virus came and iHeart – not one to waste a good virus – lopped off hundreds of more jobs under the misnomer of “furloughs” – temporary layoffs by definition but firing in iHeart lingo.

Almost all other radio groups are following iHeart’s walk off the local radio plank as they, too, got caught with their debt too high to pay.

iHeart is expected to lead the way toward more layoffs having done two in three months, but they are not going to stop there.

Now they have a plan to stretch their “dislocations” even further – an insidious plan with harmful effects that they are going to try to sneak under the radar.

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The Actual Cumulus Layoffs Are Worse

It would be helpful to study what Mary Berner did when she was CEO of the failing magazine Reader’s Digest.

Two bankruptcies and a massive firing of personnel before she was eventually fired or agreed to leave.

Google it.

Berner is not a radio executive or innovator. 

She takes companies and bankrupts them.  That’s what she does.

This is my way of saying – remember those furloughs, firings, pay cuts, and 3 weeks of non-paid vacation over the 15 that Berner was selling 24 hours ago?

It’s actually about to get worse for the poor souls at Cumulus.

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Immediate Cumulus Furloughs, More Coming

The other shoe has dropped.

Cumulus follows iHeart, Entercom and Townsquare in cutting expenses.

The Cumulus cutbacks are different especially in the scope of who will be affected.

With some radio groups seeing as high as a 90% drop in business for April, panic is setting in.

There are more groups waiting to reduce their work forces and some preparing second and third rounds.

But these start now -- hopefully, competitors won’t get any new ideas from Cumulus because today’s layoffs are really that draconian.

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iHeart Racing to Make More Cuts

The worst round of iHeart firings has yet to happen.

Even though there have been two massive layoffs in just the last three months affecting thousands, they need to do more.

Now the coronavirus is giving them cover to fire with impunity.

iHeart competitors are making it easy for them to make successive large layoffs and once they do, these same competitors do the same – a vicious cycle.

The question is what do further cuts in personnel jammed into a short timeframe look like for a company like iHeart running low on operating cash?

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Which Radio Furloughs Will Get Recalled

By definition a furlough is temporary – not meant to be permanent.

But during “Furlough Week in Radio” last week iHeart, Townsquare and Entercom offloaded employees using this tactic.

Cumulus is moments away from jumping in.

Not all furloughs are equal.

Some radio groups will actually recall a number of those furloughed and others have no intention of doing so.

Knowing which furloughs are real is the key to understanding future cuts.

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Full Disclosure About Entercom “Furloughs”

David Field let the door hit him in the butt on the way to taking a minor pay cut as all the other major CEOs went first.

Then yesterday he circulated a memo to employees telling them many will lose their jobs while arguing how bad things are and how good they are – at the same time.

And that lots of them will be temporarily “furloughed” and others will have their pay cut just like their CEO.

Except for one thing.

The “Furloughs” are phony.

Perhaps the most important disclosure about the Entercom firings is in the fine print.

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Saga Guarantees Sales Commissions

iHeart, Cumulus, Beasley and Entercom are panic firing in the name of furloughing.

Saga has decided to go down the road not taken.

Old school CEO Ed Christian is making the long bet and he can afford to because Saga has virtually no debt.

It’s not that Saga’s business isn’t being adversely affected by the coronavirus and economic uncertainty.

It’s just that panic firing is so blatantly a tactic of companies that are going out of business or filing bankruptcy.

Once iHeart started furloughing, every other lemming followed but will any group follow Saga’s lead once they see how this innovative plan works.

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