iHeartMedia and its predecessor companies have always envisioned themselves as being more than just a broadcasting company with its continuous investment in tech and data platforms. Every move the company made this week comes as the company tries to figure out how to better utilize all of that technology and data. What does that mean for the future of the stations as they moved to what they coin as “AI Powered” song rotations and content. And while many of the changes are part of their long history of consolidation, some can seemingly only be explained by a need for cost-cutting.
Early cuts made by Clear Channel in the 2000s came following the 1998 purchase of Prophet Systems by CapStar allowing for the beginning of easily performed voicetracking as continuous dealmaking rolled Capstar, Chancellor, Jacor and other companies into Clear Channel. Over the years, the company would gain control of Mediabase, RCS (and with it Media Monitors), Katz Media, Jelli, and RadioJar, while building out their own products like the iHeartRadio app.
This technology gives iHeartMedia access to more information than any broadcaster has ever had. The difficulty comes in how to implement. In their internal memo announcing the restructuring CEO Bob Pittman and COO Rich Bressler wrote:
As we move to more fully utilizing our investments in technology there will be some employee dislocation – some by geography and some by function – which is the unfortunate price we pay to modernize the company. We have had to make some tough decisions, and in the process some employees have been affected. Please know we were thoughtful in this process and have provided enhanced severance benefits as well as outplacement assistance for any impacted employees, and we want to thank them for the valuable contributions they have made.
Taken together, our transformation and modernization initiatives are essential to being competitive in 2020. They are intended to improve the way we operate and build new products while enabling us to better serve our partners and communities now and in the future.
The accompanying press release touted those “significant investments it has made in technology and artificial intelligence (AI)” But what exactly does that mean and why did iHeartMedia make the moves they made this week?
That’s a little more complicated and confusing. Many of the cuts on the programming side have come from the elimination of regional and market Senior Vice Presidents of Programming. Many markets have relied on what the company used to call “Premium Choice” music logs and voicetrackers to fill non-locally originating parts of their schedule. That will take on a new form.
From talking to many people on the programming end as well as those in the record industry, the remaining local Program Directors will no longer directly schedule music at their stations. They will still have the ability to suggest additions or removals of songs for their stations but the actual playlists will be done on the corporate level. The “AI” powering is meant to include the usage of Media Monitors, Mediabase and other licensed data streams to go into RCS’s G-Selector to weigh the amount of spins songs should get and determining playlist order.
Additionally, RCS’ Zetta and Zetta Cloud is meant to assist the workflow of the remaining on-air talent to voicetrack additional dayparts and stations with integrations to allow programmers to easily denote what should be mentioned in each break. Some will be customized for each local station, others such as promos for whatever corporate initiative like the iHeartRadio Music Festival will go out to all stations using PromoSuite.
Those technological advancements and desire to have teams dedicated to overseeing the usage helps explain why the company eliminated many of the programming and on-air jobs. Similar technological integrations will be made to allow cuts to be made on the sales and engineering ends. Multiple engineers have stated to us they have been required to diagram all of their wiring configurations at studios and transmitters and turn over all passwords to corporate in order for their monitoring systems to be integrated. The company is also moving all IT work to the national level, which saw the exit of a few engineers this week. The national Katz rep firm and Jelli’s programmatic buying software on top of the revenue brought in through the iHeartRadio app and the podcast network already have shrunk the reliance on local market sales people making some of them expendable at some point. Plus do you really need every midday jock making similar rewrites of a TMZ article when you can just have the staff at the upcoming Digital “Center of Excellence” in Nashville write original stories for all the station sites?
But iHeartMedia is still in the predicament of trying to be both a national media platform and one reliant on local revenues. That prevents the company from fully launching national format brands and jock lineups like EMF’s “K-Love“. Instead most stations outside the biggest markets will rely on regional or national personalties with a few locals remaining for local endorsements and promotional events.
But that does not even explain all of the cuts. How does removing all or half of a successful morning show make a difference for technological powered backend improvements? They don’t. And this comes back to the exit of iHeartMedia from bankruptcy last year.
While iHeartMedia cut its debt from $16.1 billion to $5.75 billion, it gave the majority of the company’s equity to the debt holders and they want their money. That is also why Liberty Media’s SiriusXM Group has already submitted to the Department of Justice a proposal to increase their current 4.8 percent stake in iHeartMedia. While a deal may require the companies to divest assets on both sides, there is concern that their ad revenue concentration will be too high for the DOJ to allow the deal to go through. But the purging of staff and operating costs associated will increase iHeart’s bottom line to put more money in the hands of the debtholders and make the company more attractive to an outside buyer. And a deal, particularly one that combines iHeartMedia with SiriusXM, would lead to further cuts through the elimination of redundant positions.
Furthermore the effects of this weeks cuts will only begin to be felt across the radio industry and other industries reliant on radio broadcast operations. The hundreds of people looking for work will unfortunately lead to some of them replacing those at other radio stations or worse other companies will purchase the software sold by RCS and other vendors to attempt to replicate some of the initiatives put in place this week by iHeart. Other potential cuts could come as record label reps may no longer need to pitch as many iHeart stations for adds leading to shrinking of their ranks. Companies that provide equipment or services to stations will see their options dry up as more is done internally. Right now a number of radio personnel are at St. Jude Children’s Research Hospital in Memphis for planning their radiothons in support of the cancer research hospital for next year. And while many local iHeart employees are there, they may not even have a local event to plan next year as some sources have indicated that the company will instead host one national programming event utilizing their star-power.
Much like previous cuts made by iHeartMedia and Clear Channel in past years, or even those done over the past few months at Entercom and elsewhere, these moves may have short term benefit to the bottom line. But at what cost?
There’s been a lot of talk this week that the company framed the cuts as being how they would structure the company if they were a startup that was handed 800+ local stations across the country. If so, wouldn’t they had just built a number of national brands and staffed accordingly? Have one team that programs one Country brand with star talent and down the line for each format and so-on down the road as done by EMF and group operators in many nations around the world.
Bob Pittman has overseen the evolution of iHeartMedia into a national audio and events behemoth, but rather than that be his legacy it may now clearly be putting the final nail into the coffin of many strong local media brands. The results of this week’s actions over the next few months and years will tell that story.
iHeart in the long run is doomed to failure by trying to have it both ways: trying to have nationalized programming while keeping the fraud of local branding afloat.
This actually brings to mind Sears-Kmart and their endless downsizing and closures. Like Eddie Lampert, iHeart is trying to downsize en masse their way out of a financial quagmire. When has that actually achieved such a goal?
And all this is doing is telling the youngest generations not to bother with radio at all.
I remember ABC’s ill-fated attempt to introduce “Superradio” in the early 80s. It would be a superstar format with Dan Ingram and Ron Lundy anchoring middays, other well-known talent in evenings and overnights, and the likes of Larry Lujack and Dick Purtan on weekends. Mornings and afternoons were going to stilll be done locally. Because of projections of massive losses for years, plans were scrapped at the last minute. Other operators like Satellite Music Network and Transtar introduced the “national pretending to be local” concept we still use today. You would think, if they’re getting out of the local radio business, iHeart would introduce national formats with star power and make them huge.
Technology, (audience) tastes and economic models change over time. While instructive, past is not always determinative. Pointing to what didn’t work decades ago may or may not have any bearing on the here and now.
Different times, different people, different t world.
The whole point of Clear Channel taking the iHeartMedia name was intentional, they didn’t want to be thought of as a conglomerate named after a long-obsolete classification for AM stations. At the same time, what they are trying to do here is having one foot in the past (with the tattered remains of local brands and operations shredded by these moves) and one foot in the future (a unified network of stations per format with next to no local output).
How is this logically going to work? iHeartMedia needs to take a stand and go with it. Obviously the local branding is now a liability because cost and expenses, so why even continue with those? Just go with the “iHeart Country”, “KISS FM”, “MIX”, “Fox Sports” and “NewsRadio” brands with no sense of individualism. The Main Studio Rule was repealed, so why abide by it? Just have everything originate from regional hubs that are beamed out to the stations. Have the only output be spot loads produced by those hubs and timed to match with Ad Council PSAs or an additional song as backfill like the SMN/Transtar/WW1 setups.
Trying to have it both ways like this – with the majority of stations having “air talent” consisting of nothing but a series of generic MP3 files, run by a series of executives who now barely have any control over the content offered – is going to come off even more awkwardly than what it would be if they automatically did all of the above. I’d hate a total networking of stations as much as anyone else who loves the medium, but at least I’d respect the decision.
Does this affect third party stations using the iheart radio platform?
And if so what about international radio stations using it like the wireless 90.4 out of new zeland?
I’m all but certain that there’s no impact on the iHeartRadio platform itself. If there is, however, a group like Mexico’s Grupo ACIR would really be harmed: Not only does it promote the platform a lot, it even just had its recently launched Match brand/format do a contest tied in with this weekend’s “ALTer EGO” concert in L.A.
This is likely the first direct mention about the issue, although I’ve seen the basic idea crop up at least once before: A fundraising official with St. Jude has admitted that these cuts will probably have a negative effect on “Country Cares” and related fundraising efforts…
https://www.allaccess.com/net-news/archive/story/193002/st-jude-executive-responds-to-iheart-layoffs-it-s-
For my part, I am coining the term iHeartless™ to describe Bob Pittman.