Westwood One says the reengineering of Metro Networks and other restructuring moves will save the company $25-30 million annually. To get there, the company will take a $20-24 million charge in Q3. About 15% of the Metro Networks staff will be eliminated as operations at 60 locations are consolidated in 13 regional hubs.
More details of the reorganization will be spelled out this week in a conference call. Westwood One says the streamlining of its traffic business will “fully leverage new digital technologies,” enhance 24/7 traffic coverage and “more efficiently align resources” at the operation.
Westwood One explained that it recently expanded its US roadway coverage with the integration of cellular probe technology into its traffic reports, as part of a transition to a digital platform. The company says the shift to a digital technology platform will enable Westwood One to consolidate traffic resources from 60 operations centers into 13 regional hubs, “improve service to small, medium and large markets, and alleviate demands on aerial reporting units.” WWI insists that comprehensive localized traffic updates will continue to be delivered to all of its current markets by a team of highly-qualified broadcast professionals. “Westwood One remains committed to the traffic business and will continue to implement additional leading edge technologies into the platform,” the company said.
“The modifications to the traffic business are part of a series of reengineering initiatives identified by management to improve the operating and financial performance of Westwood One in the near-term, while setting the foundation for profitable long-term growth,” the WW1 announcement said. The company said the changes will result in a staff reduction of a net 15% and the relocations of some operation centers during the fourth quarter of 2008, with the remaining markets moving into the 13 hubs by the end of the second quarter of 2009.
“The enhanced digital platform, overall changes in communications technology, and scale benefits of larger, 24/7 hub centers better position Westwood One as the go-to source in the traffic business. As a result, the business is better aligned to create cost efficiencies that improve the Company’s overall profitability. We can now provide to our customers a superior offering of customized, real-time, 24-hour localized traffic reports and best choice route alternatives for over 350,000 miles of roadway,” said Tom Beusse, Westwood One’s President and CEO.
Concurrently Westwood One said it is also taking actions to address underperforming programming, top-grade the sales force and reduce other corporate expenses. In all, the reengineering of Metro Networks and the other actions are expected to result in an annualized cost savings of $25-30 million. WW1 anticipates taking a restructuring charge in the range of $20-24 million in the third quarter.
“Though we regret the need to reduce staff, these initiatives will help ensure that Westwood One retains its industry leadership position. In order to do so, we must continue to evolve and differentiate our products to best serve the end user. We remain committed to our strategy of becoming a leading, integrated cross-platform company, delivering premium content and services and will continue to review every aspect of our business for opportunities that improve Westwood One’s operations,” Beusse said.
RBR/TVBR observation: By this theory, you could really streamline things and outsource the whole thing to Bangalore. We wait to see whether local audiences are going to be satisfied with traffic reports delivered by people who have never driven their highways and are totally dependent on a computer to tell them what is and is not important.
There’s been little mention yet of the other part of Metro Networks, the local news reports that the company has been creating for lots of stations who long ago jettisoned their own news departments. A company spokesman denies a rumor from inside that all local news operations are being shut down, so we will see which markets continue. It sounds like the 13 hubs will be producing whatever news remains, something like the faux local news produced by Clear Channel from regional hubs.
Here’s a tip for cluster owners in such markets – hire three or four people to actually find out what’s happening locally and broadcast it on your stations. That’s the way it is still being done in small market radio. You remember small market radio? That’s the part of radio where revenues are still growing.