iHeart Media (NASDAQ: IHRT) made headlines last Wednesday with a nationwide cull of radio personalities that left a yet unknown number of radio talent out of work. The move is shocking but unsurprising, given the companies dismal past few years and its bankruptcy declaration.
iHeart's purge has affected an indeterminate number of staffers at the company. iHeart has refused to comment on the layoffs, however, this has not stopped speculation as to the amount of personnel cut from iHeart's staff. According to comments by former employees and members of the press, the number of culled staffs may be as low as 110 or as high as over 800.
There were, however, signs present indicating that iHeart was potentially looking to downsize before the Wednesday cull. Speaking anonymously to Rolling Stone magazine, a source said that signs began to appear over the last week. "There was a very urgent, emergency meeting called in New York City for market presidents and higher-level local management," the source said, "We heard a lot of different rumors, including talk about automating certain markets depending on the revenue [they generated]." The company also sent an ominous email to workers the previous day, indicating that a "new organizational structure" was forthcoming. The email used euphemisms to hint at the layoffs, stating "There will be some employee dislocation - some by geography and some by function - which is the unfortunate price we pay to modernize the company." Perhaps the most glaring and ominous of the signs sent by iHeart media was the purging of its websites, where countless blogs and bios were wiped for countless stations.
iHeart Media has been long suffering, largely due to rapidly changing media trends that place a weaker emphasis on radio. iHeart Media, originally called Clear Channel, gambled on leaner operating costs to increase revenue from advertising. In the 1990's when Clear Channel began to take the market by storm, the company gambled that advertisers had limited options and would rely on radio to reach consumers. For the 1990's at least, Clear Channel was correct. As the digital age wore on and the internet gained prevalence, cheaper alternatives began to put pressure on iHeart, whose advertising revenues began to dwindle rapidly. The pressure became so much that in 2018 the company nearly shut down due to bankruptcy, but survived thanks to a last-minute deal with its creditors.
The accomplice to the culprit of a lost gamble is deregulation. In 2017, the Federal Communications Commission ended a rule requiring that stations maintain and operate studios near the location of their broadcast license. This allowed iHeart to deepen its practices of cutting local DJs and increasing its syndicated content and has allowed iHeart to essentially get away with shedding a fraction of its manpower.