A recession always hits advertising and promotion first and foremost, and if your particular media is already on the decline, it can happen there fast. That seems to be what Clear Channel is finding out, after years of writing down radio assets, until the point where it finally took private equity money to get itself out of public ownership. It has now cut 1,850 jobs.
Let no-one doubt it, US radio in particular has changed forever – as much changed by the attraction of the internet for advertising as it has been by rival audio experiences such as satellite radio ‘ taking its local territory.
Clear Channel is the largest owner of radio stations in the US, with some 1,200 radio stations and the cuts represent around 9% of its work force, across its radio stations, its outdoor advertising wing and in its corporate offices. Many of the cuts are sales people. What’s the point in having a big sales team, when the number of clients still spending can be serviced by far fewer executives.
If it is fairly predictable for radio to cut its workforce, content businesses like Warner Brothers would appear to be immune from recessionary forces, but the studio has laid off 800 jobs, amounting to 10% of its work force and admits that may not be the only cuts it will make.
The studio part of Time Warner, put out the blockbuster success ‘The Dark Knight’ last year but still could not sustain revenues. The parent revised its business outlook two weeks ago to say that 2008 growth would be 1% not 5% as it had originally hoped, due to some business being deferred, and some customer bankruptcies. Time Warner has said that it plans to take a $25 billion charge when it reports on February 4th on assets in cable, magazines and the Internet, which are suffering advertising reductions among other difficulties and this means that it will make a loss.
Most of the Warner Brothers studio jobs will go from headquarters staff in California, in a mix of layoffs, the elimination of open positions and outsourcing. Some 300 jobs in IT and accounting are being outsourced. All Warner would say is that cost savings will be substantial.