Entercom seems to follow iHeart with layoffs but last week Entercom went first because of the pressure of debt and declining revenue.
But iHeart is reportedly working on yet another massive layoff – their third of the year and the second since the coronavirus.
- iHeart is hemorrhaging from ad revenue shortfalls – Even though their losses are expected to be down an estimated 35% for the current quarter year over year that is an improvement from a nearly 50% decline in the second quarter. Beyond the company rhetoric, iHeart is struggling ahead of a takeover by John Malone’s Liberty Media. While Malone got pre-approval from the DOJ to buy half of iHeart, he appears to be in no hurry to rescue his victim. That strategy perhaps makes those holding debt that Liberty can buy and convert to equity cheaper.
- iHeart’s goal is under 5,000 employees ASAP – They started the year with an estimated 12,000 employees. The laid off and furloughed an estimated 2,000 or more and that does not appear to be enough.
- iHeart’s debt is at an industry high $5+ billion – And therein is the reason for iHeart’s aggressiveness in conducting what will be their third major firing of this year. The company does not make enough money to handle both operating expenses and service debt and the only way they can address the revenue shortfall in a timely fashion is to cut expenses. The fastest way to get expenses off the book is to fire employees.
- The coming iHeart firing could affect an estimated 300+ people – Perhaps more. The company has been less than transparent about the many furloughs it has initiated. In one previous firing this year, iHeart eventually went on to extend the furloughs until the end of 2020. This does not mean they will be hired back. In fact, it is likely they will be dismissed. By furloughing employees iHeart is at least extending health benefits before any firing that would require COBRA payments.
- Programming and talent are the likely targets – While iHeart is the most vocal proponent on programming buying of radio ads, the company has moved slowly in thinning out its sales force – something Liberty is expected to be more aggressive about when they take control. For now, the most endangered group at iHeart for the next round of firings will again be programming and on-air talent. iHeart has been moving to national and regional programming as most of the big indebted companies are trying to do but are reluctant to make major changes to anything that would drive billing down.
- Major markets are killing iHeart’s revenue – Los Angeles, New York and a small handful of majors account for over 30% of iHeart’s total revenue and their situation is said to be dire. iHeart is doing well with national advertising – after all, it owns the one rep firm that can steer buys to their stations first before including competitors. But local sales seem to be iHeart’s problem.
- The next firings could come within 30-45 days – The sooner the better for iHeart’s financial situation. And what’s more is that at least one more major bloodbath is likely by the end of the year or beginning of 2021.
To get to 5,000 employees iHeart will have to continue thinning out its workforce aggressively.
They have no other options to survive.
And when Liberty takes over, they will surgically eliminate even more jobs to fit their established SiriusXM playbook.
Jerry Del Colliano is a professor at NYU Steinhardt Department of Music and Performing Arts Professions Music Business Program. His background includes Clinical Professor of Music Industry at the University of Southern California, TV, radio, program management, publishing and digital media.