Clear Channel To Cut $400M From Budget

[Bill Wolfenbarger]

"What I don't get is, how does laying off salespeople who work on commission help your bottom line?  Whatever savings there might be in health care costs would be more than offset by the revenue lost from having fewer reps on the street.  Are they going to put the remaining people on salary?"


That's the part that puzzles me also.  Sure, fewer salespeople means lower L & I, medical, etc.,  but the primary cost is the sales commission.  Perhaps they'll LOWER commissions at the same time, and due to the lower commissions, the sales crews won't be able to make their car payment unless their account lists increase...

   

[Mack Daddy]

"What I don't get is, how does laying off salespeople who work on commission help your bottom line?  Whatever savings there might be in health care costs would be more than offset by the revenue lost from having fewer reps on the street.  Are they going to put the remaining people on salary?"


That's the part that puzzles me also.  Sure, fewer salespeople means lower L & I, medical, etc.,  but the primary cost is the sales commission.  Perhaps they'll LOWER commissions at the same time, and due to the lower commissions, the sales crews won't be able to make their car payment unless their account lists increase...

   

Another whiney corporation making layoffs while their CEO's are making billions.  I guess that's the American way eh!  Clear Channel and Entercom can both go belly up as far as I'm concerned.  They aren't nothin' but 3-time losers as far as I'm concerned!

[LITTLEBOYBLUE]

On one hand it's nice when people try new things so I don't want to come off as bashing "change" ... but if EITHER model of (a) nationally syndicated programming or (b) centralized sales (making local sales people less relevant) is on the "hey look what we are doing now" radar, all I can flash on is "hey these are the same brains that told us 'LESS IS MORE' is the wave of the future".  Ooops.

[CorporateSuit]

The WSJ is chiming in...

"Clear Channel Communications Inc. plans to lay off about 7% of its U.S. staff and replace more local shows with syndicated content, moves that could affect the broader radio and outdoor-advertising businesses for years to come.

Tuesday, Clear Channel will lay off about 1,500 employees, mostly in ad sales, and implement other cuts aimed at saving close to $400 million"

[the brakes]

Did anyone else see the Net News story on allaccess.com regarding the impending blowouts at CC tomorrow?  Right next to the story is a huge ad for the syndicated services for Kidd Kraddick.  It's comforting to know that perhaps 1000 people will be shown the door...and to immediately know who's taking your old show.  I trust all CC jocks were air-checking and here's hoping you can somehow get some shut-eye tonight.

[Mack Daddy]

The WSJ is chiming in...

"Clear Channel Communications Inc. plans to lay off about 7% of its U.S. staff and replace more local shows with syndicated content, moves that could affect the broader radio and outdoor-advertising businesses for years to come.

Tuesday, Clear Channel will lay off about 1,500 employees, mostly in ad sales, and implement other cuts aimed at saving close to $400 million"

What are they saving it for?  Poor little whiney CEO's can't live on $500,000 per year?

[Bongwater]

When a monster super earthquake rips apart Seattle, you would rather not hear Ryan Seacrest blabbering about Britney's latest meltdown

There is a procedure for handling local disasters.  And I think most people don't know what it is.  There really is only ONE station in Seattle authorized for emergency notification: KIRO

Read this: http://www.emd.wa.gov/telcom/telcom_emergency_alerting_systems.shtml

Glad to hear it. So radio DOES got a one up against the iPods. Funny thing is, I receive KIRO-AM WEAKER than KOMO. And in the worst scenario for Skagit County, where KOMO comes in BETTER than KIRO's AM signal (I don't live there anymore, just work there a LOT these days), and since KBRC/KAPS will likely go straight to perfectly automated EBS feeds - i.e. assuming everything will work out FINE. As long as you don't pay top dollar for it. And since KIRO news has gone FM by this time, and DON'T EVEN get me started on what 97.3 FM reception is like - ESPECIALLY up in the Mount Vernon lowlands. Even in an absolute emergency, i will still not want to hear Jim Rome talk about the Celitcs last night. And if the Internet is down too, which it likely WILL be.

BUT.... KRKO, on their very own website, says:

http://www.krko.com/engineering/disaster/

Where it mentions "In Skagit County, pyroclastic flows from a volcanic eruption of Glacier Peak" could hit us down either from the Skagit River or elsewhere. I'm no geology expert, but I'll definitely believe sooner what the experts in THIS field when they say "You got some REAL s--t on your hands coming" than the so-called "experts" in radio say when they dismiss me as some stoner dude in Mount Vernon with a grudge against everything (which I'll admit, I DO have.) But I'm STILL RIGHT. Regardless.

(Meanwhile, the EAS on KBRC blips out and goes straight back to "Born To Be Wild" Steppenwolf, already in progress. As the Division Street bridge and most of downtown Mount Vernon is  being wiped out..........)

A frightening dream I know, but one that still worries me.....Call me old fashioned. But in the end, I'm just KICK-ASS old school....

And the WORST CAN happen. Just ask the long time folks STILL in New Orleans......It doesn't matter if you're ten feet underwater or ten feet of mud - which is a LOT worse. IT CAN HAPPEN.

And where the KBRC/KAPS studios sit now, I shudder to think.......

[Bill Wolfenbarger]

EAS is not designed to do anything more than provide initial notificaton of emergencies.  Beyond that, it is up to individual stations to proceed (or not) with information.  Some do, some don't.   The weekly EAS test (data only) and the monthly EAS test (with audio) are desigined only to test the system.  Stations that are on autopilot at night (most of them) will retransmit real alerts immediately, although they may opt out of non-federal notifications.

The statewide network is just that... a network.  Seattle stations monitor KIRO, and they'll get exactly the same alert message for retransmission as KIRO gets and sends.  If they choose to, they will then go to extended coverage.  One would hope that the Seattle clusters have a plan in place to do that.  We do.

[WKomm]

About CC saving that cash ...

Of course I'm not supporting their actions today nor at any time during the history of the company. And I'm really a financial dunce. But as it was explained to me once:

Let's say a station is worth a multiple of 10. That is, a station bills a million a year and would sell for 10 million. That makes everything in that station - from  a pencil to a PD to a GM - worth 10x its current value. So if a jock making $50k a year is cut loose, it's really a savings of $500k - and that's not including benefits, etc.

In the crazy world of finance we're worth a lot more dead than we are alive.

[Bill Wolfenbarger]

You're on the right track, but...

I'm not aware of any developed stations that have sold at 10x revenues (and if anyone wants to pay me 10x revenues, please give me a call; I have a deal for you  ).  More common would be a multiple of 'cash flow', or net income disregarding non-cash items.

A station billing 1 million might have a 100k cash flow.  If it were to sell at 10x cash flow, that would work out to $1million sell price.

One of the problems with CC and the others is that they weren't paying the more common 7-8x cash flow.  They were paying 10x, 15x, 20x, etc.  Bizarre but true.

Now back to that station with 100k cash flow selling at 10x that cash flow...

If they can pull 50k out of operating expenses, that makes cash flow 150k instead of 100k, and if selling at 10x cash flow, would change the value from $1million to $1.5 million.

And given that the equity firms are not "operators", that's what you can expect, that they will basically remove pieces of the engine until it stops running, and then put back one piece to get it running again, and hopefully sell it fast.