Employees of Westwood One, who’d already been hit with recent 5-15% salary cuts, got the news Tuesday that they’re also going to be taking some days off without pay – and some days where they simply won’t be paid. Details of the Q4 cost-cutting moves came in a letter from CEO Rod Sherwood, followed by a conference call to discuss the cuts with WW1 employees.
After describing some rough numbers, noting that WW1 is not yet seeing a turnaround in advertising, that Q3 revenue goals have been missed, and mentioning they wanted to avoid layoffs, Sherwood detailed the two-pronged plan that is mandatory for all employees with a few exceptions for operational necessities:
A five day pay furlough (consecutive or broken up — employee choice) spread over 10 weeks. This is basically a pay reduction, dropping total pay by the equivalent of five days through the quarter. The first check that will be touched will be the 10/30 check for salaried. For hourly employees it will take effect 11/13. No vacation days can be substituted for furlough days.
Said David Hillman, EVP/Business Affairs and General Counsel: “So, to keep it simple, every other week from 10/12 to 12/20, your pay will be reduced by one day’s pay.”
Element two is an unpaid furlough – five days no work, no pay. “You will not be permitted to work at all. Turn off your cell phone and Blackberry. Two of those days will be Thanksgiving and the day after,” added Hillman.
Employees are being asked to schedule the three additional furlough days with their managers.
So the total Q4 furlough is 10 unpaid days.
Metro Networks and WW1 network ad sales staff cuts will be rolling out separate cost-cutting plans and were announced separately. Part-time employees are not affected. AFTRA and Writers Guild unions are being contacted.
There is, however, some return coming to loyal employees next year.
2010 Performance bonus plan
Hillman described it:
Employees will be eligible for additional money and vacation by staying with the company in 2010. The cash bonus will be equal to five days pay plus an additional 10%. No incentive, just by being there they are eligible. There will be one additional paid vacation day. The bonus will be paid in three installments — after 2/28, 4/30 and 6/30.
If laid off, the bonus will be paid on a pro-rated basis. The vacation bonus will be four paid vacation days in 2010 — in addition to what they are already entitled to. One vacation day per quarter will be allocated.
An emotional employee Q&A session with Sherwood followed.
One asked: How much money are you guys hoping to save or earn in Q4 with these furloughs?
“We are not in a position to answer that, I think from a public disclosure basis that would be a problem. But we are planning to save enough to make a significant difference to the overall financial performance of the company during that period.”
Another asked how can they manage this news with affiliates and advertisers?
“We’ll help you manage this….we have plans to talk to key customers and affiliates. When you are talking to affiliates and customers, you should emphasize that we have some momentum going and we think we’re heading towards that turning point in 2010. The company is holding its own in a very difficult advertising and sales environment. We truly believe that there is a light at the end of the tunnel in 2010.”
Some employees were very offended by the move.
Another asked: “If I understand this correctly, I will actually be losing 10 days of pay. My husband and I both work for the company, so that’s 20 days of pay, and that’s an entire month’s pay. I think we deserve a proper explanation as to why the troubles of this company are all being laid on the back of employees.”
Said Sherwood: “You should know we have reduced every other area of cost to the maximum extent possible. We have moved mountains on the traffic re-engineering program; we have made cuts in air flights, programming…”
She added: We have already taken pay cuts and were pretty much guaranteed there were no more cuts coming. We have been providing the best service in the country for traffic reporting…and have scoured everywhere to make our lives work and make this work for you. Where are we supposed to find a month’s worth of pay by the end of the year?
Said Sherwood: “Please follow up with the HR Department and we will follow up with you.”
She concluded: “In what way? I mean nobody is saying this, but we already made a sacrifice. This is absolutely impossible for the employees to handle and AFTRA is not going to protect us….these things have to be answered for the employees. It is unfair. We have made cuts and we are still performing at the best level possible. You have amazing people working for this company, we can’t continue to make these cuts.”
Said Sherwood: “Understand. I think our primary duty is to protect the jobs of all employees to the maximum extent possible and to keep the company an ongoing entity and viable. We are doing our best to match revenues with costs. This has been a constant balancing act.”
Another question: “I have to say, what are you guys thinking here? I mean for any person on this phone call 50K or less and you’re asking for 10 days furlough without pay? Are you serious? You just asked these people to take 7.5% cuts. That is daycare, that is a car payment, That is part of a house payment for these people. Now I ask you—what are we going to do with the people that are making the 6-figure salary and up? Instead of coming to the people making $50 and less, why aren’t we going to the 6-figure salary people and saying you take a 3-week furlough…All of this [you have done] takes a lot of guts, and is very offensive. Why aren’t you cutting executive management perks? You need to start there. I really think you need to reconsider this.”
Said Sherwood: “We will consider your comments. I think the key think is we’re all participating in this, we’re all in it. I think the comment on the perks and any other areas of savings is a good one and we will definitely look at that.”
RBR-TVBR observation: Why weren’t the furloughs staggered based on executive pay too? What was Sherwood’s pay cut? Why shouldn’t C-Class executives take more of the hit? We didn’t hear any detail on that mentioned in the Q&A.
Some also wonder if football caused much of this. WW1’s football strategy may have created a financially stressful situation. They didn’t conclude negotiations with the NFL until the end of February. They guaranteed 23 NFL teams a good chunk of money. We guesstimate that the guarantee to the NFL and NFL teams is $20 million net before expenses. This includes The NFL Shield and the individual teams. They have to meet these obligations first or face losing the NFL prize. Perhaps when more NFL revenue starts coming in it will relieve cash flow there. However, unless NFL revenues increase dramatically, next year looks bleak as well. The NFL rights fees increase by 20% next year according to what we’ve heard.