What iHeartMedia's Layoffs This Week Mean for Listeners & the Industry

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iHeartRadio music radio, part of the iHeartMedia company, at the company's local headquarters in the South of Market (SoMa) neighborhood of San Francisco on Oct. 13, 2017. 

(Updated at 2 p.m. ET:  iHeartMedia issued a statement to Billboard saying, "Our goal is to provide our listeners with the best listening experience they can find anywhere -- including improved locally-focused programming. The changes we made are designed to do that; we are using our resources and technology to better serve our listeners, including providing even more content and programming to our local communities.”)

iHeartMedia's layoffs of hundreds of employees this week in a self-described move to modernize the company most likely means two things: A shift in emphasis from AM-FM airwaves to apps, streaming and podcasts; and an increase in centralized, syndicated programming rather than live, local DJs. 
"You're simply taking content that someone has already produced and pushing it out someplace else on another channel -- there's a lot more money in that," says Gordon Borrell, CEO of broadcast-analyst firm Borrell Associates. "Say what you want about iHeart, but they're making some pretty smart and strategic decisions to stay afloat and morph in what's becoming a difficult media environment."
This week's layoffs, part of what former employees have called a "a bloodbath" cut deeply into iHeart radio stations around the U.S., particularly those in "mid-major" markets such as Pittsburgh and Asheville, North Carolina, The deep and unexpected cuts have shocked record labels’ radio-promotions departments, who have lost many of their long-standing relationships. "When you're talking to the market guy, he's saying, 'They let go of all these people and I'm running an automated system right now,'" says a label source who frequently works with iHeart. "Which is a shame because there is a huge need for something more local."

came into my office and closed the door and said, 'Hey,' and gave me the talk of, 'This is your last day.'" Billboard could not confirm the exact number of layoffs and iHeartMedia would comment on that." image="9270478"]

The label source suggests iHeart is trying to move into the "Spotify and Pandora side," by structuring its business more like a digital or streaming service than a traditional radio station. In turn, it is drastically cutting smaller stations while feeding content from the bigger markets into iHeartRadio, which has 128 million users, and other digital apps. "It just doesn't take a lot of money to do that" the source says.

“The remaining local programmers will no longer have a direct hand in deciding what music their stations will play,” says Tony Gray, a veteran urban radio consultant and president and CEO of Gray Communications. "They’ll still be able to suggest songs. But the actual playlists will be handled on a corporate level.”

This centralized, digital-focused approach is in contrast with iHeart's broadcast competitors, including Townsquare Media, whose 320-plus stations emphasize regional personalities and shows about, for example, the best local pizza in Rockford, Illinois. Sean Ross, a longtime industry analyst who edits the Ross on Radio newsletter, says it's unlikely that other large broadcast companies, including Entercom and Cumulus, will follow iHeart's lead right away in restructuring this aggressively away from traditional radio and towards the digital business. "Consolidation has been ongoing throughout the industry," he says, "but I don't think people [at other radio companies] see this as an excuse to push the button."

Spokespeople for iHeart and Townsquare wouldn't comment, but Borrell believes iHeart is expanding its focus to sell advertising nationally, while Townsquare remains locked in on local advertisers in each of its markets. "I suspect they will both win, one way or another," he says.

To illustrate iHeart's new approach, Borrell says he was earlier streaming a Philadelphia rock station on an Amazon device while working in Virginia. "I'm listening to my favorite station and they didn't need to put a DJ down here in Williamsburg," he says. "They're getting a lot of mileage out of their existing content. Why would they need to produce more?"

Laid-off iHeartMedia DJs and programmers aren't exactly sympathetic to that point of view. One employee who lost a job Tuesday said the station cut just about all the on-air talent except for the morning show. "I don't know how sustainable that is," this source says. "I just don't think you can have a market of this size without any local talent other than a morning show."

The label source is just as gloomy about what iHeart's cuts say about consolidation in the radio business, noting fewer acts will get airplay as a result. "Most artists want to hear their song on the radio. Sure, you can market digitally, you can market online, you can run an ad and it shows up on Facebook. But the bottom line is when you wrote that song, your dream was to hear it on a full-fledged radio station. That's the saddest part."

Additional reporting by Gail Mitchell