Foreign Money Invades Local Radio

I have to laugh every time I see the NAB beg for a government bailout of radio by overemphasizing the critical importance of local radio.

Radio is the least local it has ever been and the NAB is ironically the chief enabler of consolidators and their private equity backers who have ruined the industry.

Late last week, the FCC gave the greenlight to a Cumulus petition to allow virtual monopoly control of “local radio” by foreign interests.

This changes everything – obviously the failing consolidators would not go begging for money overseas unless it was their absolute last option.

We’ve discussed the deleterious effects of private equity owners on local radio, Main Street advertisers and declining radio jobs but the greenlighting of foreign financial interest in radio is an entire other aspect to reckon with.

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Entercom Cutting Live Jocks – And Winning

This doesn’t bode well for the talent fighting to keep their jobs in the radio industry right now.

Entercom has found a way to drastically reduce or eliminate live talent and get ratings to go up at the same time.

Armed with this, Entercom has the template for a massive systemwide reduction in work force at a time when they are burning through cash and getting hit hard by advertising losses due to COVID-19.

Looking at the ratings increases, Entercom is finding ways to confound traditional wisdom that live and local attracts the largest audiences as you’ll see when you consider that listeners seem to like Entercom stations without live talent.

This is empowering to owners that are dedicated to cutting salary expenses in the next 90 days – and the cume vs. quarter hour numbers are mysteriously non-intuitive even as drivetime has been adversely affected by working at home.

This is eerily the look of Entercom’s future downsizing plan that other groups most certainly will follow.

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iHeart Prepping Radical Pay Cuts

Anything iHeart does is important because the rest of the radio industry tends to follow their lead.

It looks like May is down 50%, June could be as bad causing concern about lagging revenue.

iHeart did a major firing in January well before COVID, another at the time of the virus and more nips and tucks – and 2020 is not even half over yet.

Under a plan being tested now, iHeart is going to force existing employees to take less while they continue to evaluate whose job will be on the chopping block next.

An area most vulnerable is sales where iHeart is testing radical new plans to cut compensation and at the same time set up some sellers for the next round of cutbacks.

All of this is likely to be rolled out systemwide in June with some unique exceptions in a handful of markets that would be tantamount to driving their best salespeople into the arms of competitors.

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Entercom’s Ransacked Station Model

This company is in the worst pickle of its post-CBS life.

With an admitted 40% revenue loss in the coronavirus infected second quarter, they are trying to make continued losses look like growth.

They can’t cut expenses fast enough to make up the difference.

Entercom is going to eliminate unnecessary jobs, consolidate where they can and regionalize to save money.

The markets that will be affected the most will be ransacked – there’s really no other word for it.

We get a real look at what Entercom will be like after drastic and desperate cost cuts to stay afloat – in fact, they have already created the model ransacked version in one of its major markets.

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Cumulus, iHeart & Entercom Takeover Interest

Just before Memorial Day, Cumulus became the third radio group in a month to swallow a so-called “poison pill” to protect them against a hostile takeover.

Entercom and iHeart preceded them as underperforming radio groups are suddenly in vogue with speculators.

What’s going on here – why the sudden interest? 

Out of the three, one would be like taking candy from a baby.

And it already may be too late for a second radio group fighting a takeover.

People familiar with such financial maneuvers tell us that all it would take in one case is a relatively small amount of cash and a very manageable loan -- better than they now have in place.

Worse yet, there are disruptive ramifications for employees if the company they are working for is stolen through a hostile takeover especially for those who have survived many rounds of layoffs and furloughs.

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Spotify’s $100 Million Joe Rogan Podcasting Gamble

Yes, Spotify is paying Joe Rogan $100 million to offer his popular podcast exclusively on Spotify.

Does this mean that iHeart, Entercom and Cumulus are going to have to start paying podcasters to be exclusive to their platforms?

It turns out that what made Spotify open its wallet so wide has more to do with music than it does with the spoken word.

And that this could start a brutal war with Apple that could, believe it or not, have a negative impact on the radio industry’s rush into podcasting as the answer to their revenue problems.

Then there is the paid platform vs. free access that could change everything because if there is one thing experts are predicting for the post-COVID world is a diminished advertising industry and growing paid subscription model.

Is Joe Rogan to Spotify what Howard Stern was to Sirius Satellite Radio when it spent $500 million to sign him in 2004?

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COVID’s Impact on Sports Radio

Every sport heard on radio went silent due to COVID-19.

Anyone who thinks that when the teams return to empty stadiums and eventually fewer paying fans that radio will recover is living in an alternate reality.

Sports radio accounts for a lot of money and it is now in jeopardy.  There are going to be many changes in how radio broadcasts and markets sports.

Teams are preparing now to make new demands of their broadcast partners.

Listeners are learning new habits that don’t bode well for radio stations.

Competitors are popping up that didn’t previously exist.

And companies like iHeart, Beasley and Entercom have a lot at stake in a segment that they are struggling to understand -- companies.

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Advertiser Complaints Against iHeart, Entercom & Beasley

I get that radio lives in an alternate reality that it so laced in happy talk that they have ignored the signs of a declining industry long before COVID-19.

But a major market advertiser is so irked, they have complained to iHeart, Entercom & Beasley for sitting on their hands and helping themselves before helping their clients.

They’re outing a lazy radio industry that assumes that when all of this over, these must-have advertisers will simply return.

This will open some eyes because it gets specific about what radio stations need to do to win back essential advertisers.

And it’s the opposite of what most radio stations are doing.

Local advertisers are madder than hell and they’re now vocally threatening to take their ad money elsewhere – consider this a wakeup call.

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Cumulus Hiding Extent of Their Financial Woes

According to Mary Berner the cancellation of “March Madness” killed Cumulus last quarter.

But that’s only part of it – she left something really, really important out.

And something is not quite right about their layoffs – publicly you hear one story, privately a totally different one.

Their stock has gone from $4.60 to the $3.40 range meaning investors are not buying what they are hearing from Cumulus management.

What could be so bad that Cumulus feels it has to conceal the truth?

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Entercom Eyeing 500 More Layoffs

David Field was forced to show his cards late last week when he conducted the second quarter earnings call for financial analysts.

Anyone who subscribes to this publication knows the tricks used by radio CEOs to cover up lack of performance and attempts to inspire confidence in their lagging companies.

Although this time Entercom covered a lot of shortcomings but couldn’t hide the need for more massive layoffs.

Threadbare markets just lost key employees and now we are able to do the math to get a reasonable idea of how many and who will be next. 

Field promised stakeholders upwards of $110 million in cost synergies when he closed the CBS Radio deal – Entercom is way beyond that now and still climbing.

Now that we know Entercom’s previous cost savings from RIFs and plugging in radio revenue projections for the rest of this year, we get a clear picture of how the next round will look.

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Nielsen Accused of Extortion by Non-Subscribers

Things are tough for the radio industry right now but if you listen to non-subscribers, they are doing more to hurt stations right now than help.

It’s a monopoly of audience estimates some say based on outdated methodology and technology.

What’s worse is that Nielsen is being propped up by consolidated groups – the bankrupt type – who somehow find the millions to renew even as they are firing people.

Now their tactics are becoming public.

How they try to force non-subscribers into paying up and their flexible rate card that objectors say bends only in their direction.

With local radio facing a year or more of battling back to even, financially-troubled owners are beginning to rethink Nielsen.

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iHeart Not Planning to Rehire Furloughed Employees

77% of laid off workers think they will get their jobs back post-coronavirus.

That optimism does not apply to the radio industry where COVID-19 has been used as an excuse to “right-size” companies even as iHeart morphed from “dislocations” to furloughs.

Furloughs are temporary by definition but under a plan being developed by the “Evil Empire”, these interruptions in getting a paycheck will not see 77% of the workforce returning any time soon.

The question is just how many furloughed iHeart employees will be called back – they can’t let them all go, can they?

Employees look at COVID as a crisis, but iHeart and other radio groups see it as an opportunity and they have carefully thought out plans to proceed. 

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Advertisers Social Distancing from Radio

1010 WINS is reportedly down 60% this quarter and that was a $50 million a year radio station for Entercom.

The coronavirus is turning out to be a trigger for what was already in motion.

Radio ad revenue was declining because of digital prior to corona and now it is declining in spite of digital.

The revenue estimates for the third and fourth quarter are in and they are not what was expected.

Bob Pittman has been saying the reopening of America is an opportunity for radio to cash in on all that “welcome back” advertising – is this true?

There is new evidence about the impact of political advertising this fall – can radio take it to the bank?

And there are disturbing trends in listening habits from home – does that mean an earlier demise for in-car listening or a windfall when the country starts commuting again?

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iHeart, Entercom Fear Hostile Takeovers

This is the oddest thing when the #1 and #2 radio groups are struggling to survive but have to now worry about hostile takeovers.

It’s not speculation, it’s public with both having swallowed so-called “poison pills” to thwart interested private equity groups – iHeart as recently as late last week, Entercom a month earlier.

What’s worse is that other publicly-traded radio groups may have to take the same protective measures.

The stock price makes the value of radio companies so low even you and I could come up with the money.

Maybe that’s an exaggeration but it is surprising how little out of pocket cash would be necessary to steal radio’s biggest consolidators while they’re down and out.

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Bain Losing Control of iHeart

Liberty now reportedly owns 30-35% of iHeart debt and counting that can be turned into equity.

Even the poison pill iHeart swallowed after hours on Friday can’t kill John Malone’s ambitions.

This means it is just a matter of time before Bain, Pittman, Bressler and company lose the company to a shrewd media tycoon.

There will be a new strategy on layoffs and furloughs when Liberty gets control.

The markets that are most vulnerable to this takeover by a satellite radio company have no idea what is coming their way.

As iHeart top management protects itself, we get a preview of what iHeart will look like for the unprotected.

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Oliviero is the First of Many Entercom Shakeups

The much-maligned employees of CBS must be snickering to themselves as the panicked Entercom CEO David Field who made it clear he thought CBS people were overrated and overpaid, hired one back this week.

Chris Oliviero quit Entercom after only about six months into the new regime. 

He gave a long, more than 6-month notice but he and his CBS salary left.

Now Weezie Kramer gets pushed out (more about that in a moment), her replacement Susan Larkin somehow got her CBS-phobic boss to rehire one of the expendables begging the question – what’s up with that?

Turns out another surprise big management casualty is coming, a fear of losing the sports franchise that is critical to David Field’s plan and an indication that Entercom has to strike quickly before a declining economy kicks them into bankruptcy.

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Cox Media After Kim Guthrie

Kim Guthrie has been one of the outstanding top executives in the radio industry.

So, it came as no surprise that when Apollo Global Management bought Cox TV stations and eventually their sister radio stations, Guthrie was part of the deal.

Corporate headquarters remained in Atlanta and Guthrie’s team largely stayed in place.

Then, the first cutbacks – this was before Coronavirus. 

Guthrie doesn’t do cutbacks so this was a bad omen as we pointed out at the time.

Now, no Guthrie – no stability, no shared vision – just a bunch of private equity people who are out $3.1 billion for the Cox TV stations and subsequently $500 million for radio.

You better believe previously unimaginable changes are coming to Cox Media.

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The Post-Virus Future of the Music & Media Business

Almost everything in the media business is based on the advertising model remaining strong after COVID – but the most concerning change ahead is that advertising as we know it will not return to previous levels.

Streaming music services have seen declining listenership during self-isolation but did radio take advantage of this pause?  What has eaten into streaming music services threatens to further erode radio time spent listening.

You would think satellite radio would be dead as lockdowns have almost eliminate time in the car – and while it is true satellite has no significant alternative to in-car listening, it now has something else that terrestrial radio wishes it could possess.

There is no new normal – it’s all abnormal and the companies that can see around the coronavirus corner will enter a new period of prosperity.

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Massive Radio Salary Dumps Coming

The layoffs, firings and furloughs continue, but now the salary givebacks are ready to be deployed.

Salem implemented crushing salary cuts yesterday – a major blow to survivors.

Previously iHeart and Entercom either requested volunteers to work for less or forced them into giving back salary – especially those making $50,000 or more.

And Entercom of course has been dickering with employees since the CBS merger to nickel and dime them down to what David Field felt they should really be paid.

This time, the survivors will need to get ready for life support as we preview the pain iHeart, Entercom, Cumulus and other companies are ready to inflict on their “luck to have a job” survivors.

And, a bright note about the radio company that gave everyone a raise – that’s right, a small company yes, but a raise not a firing or cutback in the same coronavirus economy in which everyone else is punishing employees for their mistakes.

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Cumulus Fears a Seller Rebellion

One of radio’s most financially troubled companies is afraid that they will take significant losses of salespeople due to the downturn in advertising revenue.

Cumulus has taken some action to build a safety net for their better sellers to keep them from leaving out of financial necessity but they also are looking to jettison the dead weight.

Cumulus has been failing to generate adequate revenue to contribute to both operating expenses and pay down debt which is approximately $1 billion.

Westwood One has been hit by the loss of sports dollars with March Madness and the Olympics being cancelled while stations have seen double digit erosion of local ad dollars and more of a reliance on cheap remnant ads.

Tuesday April 28th Bob Walker, Dave Milner and an HR rep got on the phone with market managers for a confidential conference call about their future plans.

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