Emmis Communications confirms that it has let go 46 staffers at radio stations in five markets, but says that is the end of payroll reductions for its US radio group.
“Yesterday [Tuesday], a total of 46 positions were eliminated in our Los Angeles, New York, St. Louis, Austin and Chicago (1 position) radio markets. An additional dozen employees will have reduced hours or changed positions. Very few positions were in sales; many were part-time employees. Like many of our industry peers, Emmis took these steps as an expense reduction effort and to better position the company. Emmis provided a generous severance package and extended benefits to all the affected employees. No further eliminations are planned,” the company said in a statement sent to RBR/TVBR.
Wall Street analysts say the cost cuts will help to counter a revenue decline from the relaunch of WQCD-FM NYC as Adult Rock WRXP-FM.
“We believe that near term, the format change will have an impact to revenues of approximately 2.5 million for fiscal year 2009, reflecting some changeover in the advertising base. Assuming no change to station expenses, we are assuming a 2.5 million cash flow decline,” said Bear Stearns analyst Vic Miller in a note to clients. But, he added, “The revenue reduction is expected to be offset by lower expense related to headcount reduction. Emmis eliminated approximately 46 positions (or roughly 4.6% of its domestic radio workforce) throughout the company. As a result, we are making no change to full year EBITDA.”
According the analyst Marci Ryvicker at Wachovia, the reformatting should be taken as a sign that there is no imminent sale of the New York station. “We believe that this change in formats is a direct result of the station’s significant share declines and Emmis’ inability to sell the station in a stagnant M&A market,” she said in a research note.
“The two announcements today led to an overall reduction to our F’09 domestic radio operating expense growth assumption – to flat from +3%. We think that the staff cuts across the company’s domestic radio portfolio will have a greater impact than the incremental promotional costs that are likely to result from the NYC format change. Our sense from talking to management is that there will not be the same level of spending in NY as there was in LA when KZLA flipped to KMVN in August’06. Furthermore, we think Emmis will make expense cuts in other markets to offset increases in NY,” Ryvicker added. With revenues down, but costs down more, the analyst is looking for EBITDA to increase 6.9% in 2008 at Emmis.
