Audacy Enacts Nationwide Layoffs

After revenue growth slowed in the second quarter with future expectations murky due to macroeconomic challenges, Audacy CEO David Field warned that the nation’s second-largest radio station owner would institute expense cuts — and the Philadelphia-based company has started that process by enacting layoffs.

A source told the Philadelphia Business Journal on Tuesday that job cuts are indeed underway and will impact all divisions and geographic markets, with less than 5% of the workforce affected and no more layoffs expected for the remainder of this year.

Audacy has more than 5,000 employees spread across 50 U.S. markets.

Audacy has about 300 employees assigned to its Philadelphia headquarters at 2400 Market St., which also houses its six local radio stations: adult contemporary station B101 (WBEB-FM), classic hits station 98.1 (WOGL-FM), Top 40 station 96.5 TDY, SportsRadio 94 WIP, conservative talker 1210 WPHT and KYW Newsradio (now simulcast on 1060-AM and 103.9-FM).

In a statement, an Audacy spokesman said that over the past few years the company has undergone a "transformation journey" that included growth through acquisitions, platform enhancements, and the addition of hundreds of employees.

"We remain committed to this exciting transformation which has made us a much stronger organization, but in light of current macroeconomic headwinds, like so many other companies, we have been proactively taking actions to mitigate against the impact of any downturn," the spokesman said. "These include evaluating budgets, reducing expenses, and also reducing our workforce."

David Field

During the company’s second quarter earnings call earlier this month, Field noted that Audacy was looking to cut expenses by “working to enact substantial sustainable savings through a number of measures to improve margins and profitability across the business. We believe we will be able to deliver meaningful cost reductions without hindering our strategic priorities and growth plans.”

Chief Financial Officer Rich Schmaeling told analysts on the call that expenses grew in the first quarter by 8% year over year and 6% in the second quarter. He said the company has given guidance that third quarter expenses will be up 1% to 2% — calling that “substantial progress.” He said some of that will be reached by cutting back on planned spending on marketing.

“We are working on a program to meaningfully reduce our expenses and we will provide further details about the scope and extent of those actions on our third quarter call,” Schmaeling said.

So why is the company cutting jobs? Field said Audacy began 2022 with a very strong first quarter in which it grew revenue by 14% and adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) by 152%. Field said the company was on target to close in on pre-pandemic results of 2019.

But in the second quarter, Field said Audacy encountered deteriorating macroeconomic conditions and increasing uncertainty, which caused ad spending headwinds and had a negative impact on its business. Second quarter revenue grew 5%, below what it expected though within guidance. Adjusted EBITDA declined slightly from $39.9 million to $38.5 million. The company lost $11.8 million in the first half of 2022, compared to losing $20.2 million during the same period of last year.

The top advertising category with Audacy is automotive, and spending in that category is down 40% from 2019 as the automotive industry has been hit hard by supply chain issues. Field said he hopes those supply chain issues clear up soon, but until they do Audacy’s revenue will be adversely impacted.

“The twin punches of the pandemic and now the economic slowdown over the past two plus years have definitely adversely impacted our business,” Field said. “But it’s essential to distinguish between the adverse impact of the pandemic and slowdown on our business and Audacy’s fundamental strength and earnings potential going forward.”

These are the first layoffs since 2020, when Audacy (then Entercom) instituted at least two rounds of cuts in response to the adverse effects of Covid-19 on its business. In March of that year, the company implemented a series of cost-cutting measures that included a “substantial” reduction in its workforce and temporary salary reductions impacting every full-time employee making over $50,000 per year. That fall, it enacted widespread layoffs at its country and alternative rock radio stations as part of a new strategy focused on more national and voice-tracked content.