Furloughs Turning into Permanent Job Losses

Furloughed PermanentlyBIA Advisory Services conducted a rather insightful webinar at the beginning of the COVID19 pandemic. While every media sector was predicting huge downturns in sales revenues, what struck me most were comments like, ‘but radio sales executives are the most pessimistic,’ or ‘23% of radio sales people don’t feel theyEeyore & rain cloud will be employed by the same company in six months.’

Why were radio people so gloomy? Is it because the radio industry attracts Eeyores or because radio people were being the most realistic?

Furloughs

Shortly after the global pandemic shut down the world, companies started talking about furloughs for employees. All types of industries were issuing press releases about how they planned to furlough “x,” “y,” or “z” number of employees.

Now by definition, a furlough is supposed to be a temporary layoff. It certainly sounds much less benign than being told you are terminated, fired, riffed or axed. Furloughs gave people hope they would soon return to work and a lifestyle of the way it was. But was that being disingenuous?

I remember when I was a manager in Clear Channel, the company’s top management would tell us to never let a good emergency go to waste. In other words, use the emergency as a cover to do things you already wanted to do, but could now do much more quickly, using the emergency as the reason.

“For a lot of those furloughed workers, a non-trivial number will have no job to go back to, because the company they worked for will have failed or will need fewer workers than they used to,” says Claudia Sahm, a former Federal Reserve economist.

An article in Forbes, quoting an Associated Press story put it this way, “Call it realism or pessimism, but more employers are coming to a reluctant conclusion: Many of the employees they’ve had to lay off in the face of the pandemic might not be returning to their old jobs anytime soon. Some large companies won’t have enough customers to justify it. And some small businesses won’t likely survive at all despite aid provided by the federal government.”

Entercom Converts Some Furloughs into Layoffs

This was the headline in late June in RadioInsight. How many furloughs were converted or how many markets were affected, is not known.

Radio Business Reports carried the first news of this occurring inside Entercom back in April. RBR quoted Entercom Communications President/CEO David Field’s memo to employees which said, “We are doing everything in our power to minimize the number of layoffs through shared sacrifice across the organization, but we will still need to eliminate or furlough a significant number of positions.”

And Entercom was not alone in having to take a serious look at its business in light of the quick and sudden changes brought on by a global pandemic with no vaccine and no treatment options.

Poynter on Newsroom Layoffs, Furloughs and Closures

In an article, Poynter has been updating regularly, sadly admitting that it’s “getting hard to keep track of the bad news about the news right now. But we have to. Here’s our attempt to collect the layoffs, furloughs, and closures caused by the coronavirus’ critical blow to the economy and journalism in the United States.”

At the end of June 2020, here’s what Poynter had for the impact on radio journalism:

You can keep up with the Poynter updates by clicking HERE

Radio’s Advertising Lifeblood

mom & pop shopYour local radio station, like your hometown newspaper, depends on local businesses and their advertising dollars. Eighty to ninety percent of their ad revenues come from local businesses, those small “mom & pops,” as we like to call them.

So, when I saw this headline in The Atlantic,The Small Business Die-Off Is Here,” my heart went into my throat.

Annie Lowrey writes, “The great small-business die-off is here, and it will change the landscape of American commerce, auguring slower growth and less innovation in the future.” What Lowrey tells us is that the small and mid-size businesses had less than two weeks’ worth of cash on hand making it impossible for them to cover rent, insurance, utilities and payroll for any sustained amount of time.

Many business owners have found help from Uncle Sam to be too little, too late. Every Closedday we see another local business decide to close down permanently rather than sink further into debt.

Lowrey writes, “The short-term effects of this disaster are clear: When businesses liquidate, they lay off workers, who spend less in their local economies, making other businesses weaker, necessitating further layoffs. Business failures thus act as an accelerant in a downturn, making temporary damage permanent. This is a central reason why many economists do not expect a sharp, V-shaped rebound to the current recession, but a long, slow, U-shaped recovery.”

AARP on What Comes Next

In the June 2020 edition of AARP Bulletin Abraham Madkour, Sports Business Journal, writes “I don’t see any timeline where athletic events have packed stands. Nobody wants to be around 75,000 people.” So, sports radio stations are going to be really content challenged, which means listener challenged, which translates into advertising challenged.

AARP goes on to say the Saturday night dinner and a movie is now on the endangered list as is your local mall, department stores, and most other retailers. It’s an “extinction event” for local media ad dollars,” says Ken Doctor, media analyst, who adds, “In a world where nobody is going out, age-old diversions are going bye, bye.”

There’s No Place Like Home

Turns out the safest place to be, is in your own home.

WFHPeople are adapting to working from home, home schooling their children and doing things like baking, learning to play a musical instrument, streaming their audio, video and print content. Our habits are changing and it’s quite likely they will become permanent.

“It’s hard to guess the depth of the downturn, but it will be the worst since the Great Depression,” says Nobel Prize-winning economist Joseph Stiglitz.

Permanent Changes

Crystal balling the future is always a risk. No one really knows what lifestyle changes will become permanent and which ones will slowly fade away.

I tried to get some sense of permanent change following the Spanish Flu Pandemic of 1918-1919 and found there was little to be gleaned because that pandemic broke out during WWI leading into a roaring twenties, followed by a Great Depression, and then WWII. It really gives us little information about the impact the pandemic ended up having because other events trumped its effects.

Broadcast media didn’t begin as a commercial entity until after the pandemic was in the rear view mirror, so there’s no way to tell what the impact might have been. The Asian Flu (1957) and Hong Kong Flu (1968) killed about 2 million and 4 million people worldwide during the 20th Century, but the disruption to our daily lives doesn’t even live in my memory.

If nothing else, COVID19 is and has been a disruption to Earth’s global village economically. Axios reports that a research report from UBS predicts that 100,000 brick-and-mortar U.S. retail stores will close by 2025, in a trend that started before the pandemic and has accelerated amid coronavirus-related shutdowns.

In 2017, as the radio industry news was filled with employees being RIF’d (Reductions In Force), I wrote an article to help people deal with being let go entitled, “Is Your Iceberg Melting?” You can read that HERE

Beyond COVID19

So, what might a media future look like?

Frederick Filloux asked his college journalism students for their thoughts and I will summarize them for you here:

  • Smaller, staff-owned outlets where employees are multi-talented and master a whole palette of tools like data-driven storytelling, video production, infographics and a deep proficiency in social media.
  • Rethinking the ownership and the revenue models. Audience centric business models, but not ad-supported ones. Frederick’s students believe that the advertising supported business model is outdated. The future will involve carefully vetted sponsorships.
  • Explanatory media, that is fact-checked and establishes itself with an expertise against misinformation. These students say, expertise is urgently needed in today’s media world.
  • Print is over. Tomorrow’s media students believe that anything printed embodies the ancient world. COVID19 is only accelerating its demise.

I think COVID19 is going to hasten a rethink about all ad-supported media. Traditional media, born of advertising, will be greatly challenged.

Based on the recent findings of Gordon Borrell, it already is.

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12 Comments

Filed under Education, Mentor, Radio, Sales

12 responses to “Furloughs Turning into Permanent Job Losses

  1. Gregg Cassidy

    Here’s an interesting rumour I heard the other day. I Heart. is looking at ways to eliminate buildings and reduce building space. Radio is not the only business that is being forced into changing its business model. Every business is adjusting to survive, some will just die. I listened to an aircheck of WLS from May 1980 this morning. What did I hear? Advertisers have been shrinking their marketing budgets from radio for years. Movie theaters, McDonald’s and other fast food places, soft drink products, those are just a few of the big ones. Now days you only here places like Home Depot because they are getting network dollar a holler commercial rates, but even they have started to disappear. Here’s an interesting fact. There is a guy on YouTube who used to do a hour car talk show on television. He did his show on television for 14 years and got paid 40k a year. In 2007 he was let go. He then moved his expertise to youtube. He just had his 1 billionth view, which translates into 7 million in Google revenue. Times are a changing.

    Liked by 1 person

  2. Steve Jay

    Dick,
    I’d been saying this since businesses were ordered closed but no one took me seriously.
    If businesses are closed, they won’t be advertising. If broadcast companies get their revenue through advertising to continue operations and pay employees, they’re going to be in trouble and have to cut expenses somehow. Radio people I knew were contacting me saying they had been furloughed for “a couple of weeks” until this was over. I said don’t you believe it! You better have something else. They all said to me their company was wonderful, they’d never do that. “I’ve been with this company 20 years, I love it!” Well, don’t ever love a company because it won’t ever love you back.
    Those furloughs turned into layoffs in the weeks that followed. And the worst part is, the jobs won’t be coming back. Broadcast companies centralized programming and added more automation and AI.
    You said it, never let a good emergency go to waste, and that’s exactly what these broadcast companies did.

    Liked by 2 people

  3. With increasing competition in all industries, cuts will continue (not just in our industry). Technology now allow tasks that was handled by a dozen people can now be handled by a few. It allows our small market station to sound much better than it would of 30 years ago. I don’t need to deal with egos, no shows, molding talent, or breaking format. Without this technology many small market stations would be DOA with the pandemic. It you want job security learn all aspects of our business sales, marketing, engineering, etc. Sales, marketing, engineering experts will continue to be in high demand. Anyone with public speaking skills can be molded in to DJ, and anyone with computer skills can use a audio editor. I get at least two dozen calls each week for production people and DJ’s. The budget and the need is not there . If you want to be a DJ, set up a home studio and promote your services to stations. Don’t get greedy when pricing. Unless you can do everything in our business, finding a path to employment is going to be tough. I saw this happening when I was a DJ in 1996, and decided to change my path if I was going to continue in radio.

    Liked by 2 people

  4. deanland

    Excellent post, Dick.

    There’s much worthy of discussion in it. Allow me, though, to pinpoint one area in which it seems dead wrong. And then some further comment.

    Re that one area, here’s the quote:

    “In the June 2020 edition of AARP Bulletin Abraham Madkour, Sports Business Journal, writes “I don’t see any timeline where athletic events have packed stands. Nobody wants to be around 75,000 people.” So, sports radio stations are going to be really content challenged, which means listener challenged, which translates into advertising challenged.”

    Nope. Sports fans love to talk sports. They love to hear sports talked about. They love the back and forth opinions and arguments. They super-love it when the talk show hosts have guests of note on the air with them. Better yet, when they tease this days in advance.

    Content challenged? No way! Content opportunities abound. Only those who are dim and short-sighted will have content issues.

    Filling the on-air ad space is indeed a challenge. Local and regional businesses are dropping like flies. This is a parallel pandemic.

    Public Radio is ahead in this regard, its support model is less reliant on spot advertising. Standard commercial radio faces an uphill battle as time sales rapidly go downhill in this extended moment of national economic collapse. Radio stations reflect Main Street, not Wall Street. The exception, of course, those groups still rebounding (maybe a poor word choice) from the idiocy of blue sky projections, expansion, debt service that could kill a herd of elephants and the one-time commission bonanza enjoyed by the greedy underwriting firms that took them public.

    We saw and yet still see how the remaining burdens destroyed so many levels of the business. Creativity, serving the local area with content, growth of entrepreneurship and job opportunity, nurturing of talent, are but some of the many casualties of what has come to be known (a term even in common vernacular), as “the ClearChannelization” of our beloved industry.

    Here’s a horribly gloomy outlook: there’s no shiny comeback on the horizon. Jobs and businesses are not coming back. Business shutdowns reflect the slim margins so many operations survived on. Think of restaurants, laundries, furniture stores, car lots, bodegas, even smaller chain stores and various other local businesses . It became impossible to keep the lights on, rent paid, insurance up to date, software subscriptions current, payroll met, maintain warehouse space, and much more when daily, weekly and monthly revenue came to a halt.

    This meant not just a pause. The longer the pause the more it became abandonment. Furloughs became layoffs. Pauses became closings.

    It is not the Pollyanna dream of a new Monday, everything reopening, jobs reinstated, all things back to normal. This period is survivable by some. But not by all. Business owners who had to shut down may (most likely) not have the wherewithal to start anew.

    Why even discuss a new Monday now? In the US we are not yet out of the first wave. Infection numbers continue to rise at hockey stick rates, the death counts mount up. There’s talk of Americans needing to “adjust to COVID-19 deaths as a way of life.” (as if that’s acceptable, especially in light of the opposite occurring in countries that met the crisis head on)

    The good news is this: creative, savvy and forward thinking radio managers, entrepreneurs, and most of all, salespeople, will develop newthink to bring in revenue. This will require time on the job not selling spots, but brainstorming and careening ideas off of whiteboards, etc. Then for the good of the industry, sharing them.

    There’s hope despite the immediate future being so very dim. Hope because radio has always attracted creative talent, both on and off the air.

    Liked by 1 person

  5. Walter Luffman

    I find it interesting that radio stations/groups are cutting news positions at a time when almost everyone is looking for more information about how the pandemic is affecting their lives. Networks, wire services and cable channels can cover the big national picture; but how about the latest local information?

    News departments (and small stations with no current news people) can supplement their local coverage by recruiting or repurposing employees to just gather information over the telephone. I’m laid off — when is my business reopening? I can’t find toilet paper — who has it for sale? How busy are ERs, and just how many hospital patients are there for COVID-19? Which restaurants, retail stores and repair shops are open, and just how are they handling customers? You get the idea.

    And in some cities, add the disruptions in traffic and services that accompany protests, riots and looting. What part of town do I need to avoid today? Are we under curfew? Are highways safe and traffic moving quickly? Where, and how bad, are the fires? Are the police doing anything, or have they been ordered to stand down?

    Give me the news I’m looking for, and keep it coming; you’ll keep me tuned to your station.

    Liked by 2 people

    • Sadly, the revenue to support the on-air positions has dried up. Local radio is a good barometer of how main street USA is doing. It’s devastated by the way this global pandemic has been handled in America. Look elsewhere around the globe and you see a different picture. Things are still getting worse here in the States. I wish it weren’t so, but that’s our reality.
      -DT

      Like

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