Radio broadcaster iHeartMedia says it will temporarily stop matching employee contributions to their 401(k) retirement accounts as the company works to reduce expenses amid a downturn in the advertising market.
The decision to suspend matching retirement contributions was announced in a memo written by iHeartMedia CEO Bob Pittman and CFO Rich Bressler last week, a copy of which was obtained and confirmed by The Desk on Monday.
In the note, Pittman and Bressler said macroeconomic factors were “forcing [iHeartMedia] to make tough choices on costs and priorities.”
Those tougher choices include a severe reduction in non-essential spending and travel, the suspension of matching contributions to employee retirement accounts, and a temporary hiring freeze on non-essential roles across the company.
“These measures are part of our proactive plan to keep our company healthy in the economic slowdown and to be fully ready for an economic recovery,” Pittmand and Bressler wrote in the memo, adding that they were “confident we will successfully navigate through this period and be well-positioned for growth when the economic pressures subside.”
Last month, iHeartMedia’s quarterly and annual earnings report showed the company’s loss widened in 2022 to $262.7 million, up from $158.4 million reported the previous year.
Like others in the media space, iHeartMedia has struggled with a significant pullback in marketing dollars flowing to traditional broadcast outlets. According to data released by Media Monitors and reviewed by The Desk, iHeartMedia’s own promotional spots were often among the top three commercials played across monitored radio stations in the United States, often beating out spots from Progressive, Procter & Gamble, Babble, Lowe’s and the Home Depot.
While iHeartMedia does diversify its product offering with a streaming radio platform and podcasts, those haven’t been enough to draw connected ad dollars to the point where it supplements the losses from the company’s traditional broadcast stations.
Investors have stated taking notice, too, with iHeartMedia’s stock price trading around $4.50 per share as of Monday morning, down about 25 percent for the year. The stock price is down more than 76 percent compared to this time last year, when it was trading at or above $20 per share.
The low stock price is a buying opportunity for some of iHeartMedia’s executives, with Pittman, Bressler and Chief Accounting Officer Scott Hamilton recently grabbing 190,000 shares at a valuation of over $1 million, according to an article by the website Investor Place.
“With multiple iHeartRadio executives suddenly jumping in, these insiders are signaling that they know something that we don’t,” Thomas Yeung, the article’s author, wrote on March 7. iHeartRadio is the broadcast subsidiary of iHeartMedia.