Stations Dial Down Staff As Parent Cuts Expenses

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Clear Channel Communications Inc. recently switched its L.A. soft-rock station KOST-FM (103.5) to a Christmas music format, but the holiday cheer isn’t spreading to employees at the company’s local stations.

The San Antonio broadcasting company, which operates eight radio stations in the L.A. market, laid off a number of local employees earlier this month, including high-profile names at KOST, My-FM (104.3) and KYSR-FM (98.7). Especially hard hit were local programming departments, which oversee everything that goes on the air, from commercials to music.

The moves are part of a larger strategy by the debt-ridden company to trim expenses without making major cuts to programming. The company hopes listeners won’t notice any decrease in the quality of content.

“The major criterion is whether this is the best entertainment we can possibly deliver for the least amount of money,” said MaryBeth Garber, executive vice president of radio analysis and insights at Katz Radio Group on the Miracle Mile, which is owned by Clear Channel. “(Clear Channel) looked around and tried stuff in a few markets and discovered that this could work.”

The recent staff cuts are merely the latest in a series of personnel reductions for Clear Channel, which has sharply reduced employee counts in small-market radio stations in recent years. The company reportedly laid off about 600 people nationally this month.

It is unclear how many local workers were let go, and Clear Channel declined to provide numbers. But the cuts have claimed veterans at some of L.A.’s higher-performing stations, such as KOST and My-FM.

Among those let go this month were Stella Prado, the longtime program director at KOST; Trever Trent, an on-air KYSR host; Christine Martindale, an on-air KOST host; and Robert Lyles, marketing director at KOST and My-FM.

With the sluggish economy putting pressure on advertising revenue and new technology allowing for smaller staff sizes, many radio stations have been downsizing. Last year, for instance, about two dozen employees at L.A. stations owned by Atlanta’s Cumulus Media Inc. were laid off, including Bob Buchmann, KLOS-FM (95.5) program director.

Clear Channel, which also has a large outdoor advertising business, is trying to reduce its debt load by using resources more efficiently. Employees said the company has been spreading more responsibilities to the remaining staff, often putting workers at one station in charge of the same duties at multiple stations.

“They’re laying off a lot of people and that burden of work is falling on the rest of the employees,” said one Clear Channel worker in Los Angeles who is still employed by the company and asked not to be identified. “(Employees) are simply terrified for their jobs and don’t want to speak up for fear that they’re (in) the next round.”


Debt woes

The radio industry has been undergoing big changes for years, particularly beginning with the Telecommunications Act of 1996. That eased regulations on station ownership and paved the way for consolidation.

Part of the idea was to make the industry more financially viable by allowing national radio networks to form. They could operate more efficiently and compete with television networks and other media for national advertising dollars. As a result, Clear Channel and Cumulus Media built vast nationwide networks of radio stations.

The model attracted private-equity firms such as Bain Capital Partners and Thomas H. Lee Partners, both of Boston. In 2008, the firms purchased Clear Channel in a $24 billion leveraged buyout that took the company private. But the deal left Clear Channel saddled with debt just as the economy collapsed and advertisers slashed their budgets. The company has a $10 billion payment due in 2016.

To meet its obligations without restructuring, Clear Channel will likely need substantial revenue growth. A recent Moody’s report said the company will need to achieve growth of 1 percent this year, 2 percent next year, 4 percent in 2014 and 4 percent in 2015.

Jerry Del Colliano, publisher of industry newsletter Inside Music Media, said staff cuts won’t be nearly big enough to pay off Clear Channel’s debt, but the steps can demonstrate to creditors that the company is trying to get its financial situation under control.

But he said the effect of the layoffs could be far more pronounced in programming, which will likely trend toward more general content rather than local. The company already nationally syndicates several high-profile, expensive L.A. talents, including Ryan Seacrest and Rick Dees, whose shows need to be generic enough to air in numerous cities.

“(Radio) is all about entertaining on a local platform,” Del Colliano said. “Instead, what you have is the degradation of radio programming in Los Angeles.”

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