Cumulus Goes Chapter 11; How Long for iHeart?

Bloated with more than $2 billion dollars in debt racked up in the wake of the late 90s-early 00s radio station consolidation orgy, Cumulus Media has finally taken the plunge into Chapter 11 bankruptcy reorganization. The path from there to here began when Cumulus hired Mary Berner as the CEO in 2015 – primarily for her prowess in shepherding Reader’s Digest through the Chapter 11 process back in 2009, when that company carried a nearly identical amount of debt.

Things got real back in September, when the Wall Street Journal reported that the company had begun negotiations with creditors who hold “big chunks” of the company’s debt. This was prompted in part by the company’s pending delisting from the NASDAQ stock exchange after CMLS shares trended below $1 and stayed there; the company’s net equity had previously fallen below the NASDAQ minimum, which is also a delistable event.

Then Cumulus intentionally skipped a $23 million interest-payment on its debt that was due November 1. It told the Securities and Exchange Commission it did this “in support of the Company’s efforts to develop and implement a restructuring that will allow the Company to continue its operational and financial momentum,” and noted that the missed payment would trigger a default after 30 days.

In a memo to staff, CEO Berner was frank about the fact that “we can’t fully turn the company around until we reduce our excessive debt-load,” and that skipping the payment would incentivize creditors to compromise to avoid default. Read More

Cumulus Meltdown Continues; is iHeartMedia Next?

Things continue to spiral downward over at Cumulus Media, whose stock closed at 29 cents at the end of trading last week. That put the company’s total market capitalization at just $67.8 million dollars, or just 39% of what the HD Radio system sold for two months ago. NASDAQ has threatened to delist CLMS stock next spring unless it can resume consistent trading above $1.

Perhaps a better comparison might be to a direct competitor: see Townsquare Media, one of the second generation of radio consolidators formed in the last half-decade and now the third-largest owner of radio stations in the country (right behind Cumulus). Townsquare owns about 100-150 fewer stations than Cumulus does, has no holdings in network syndication or distribution companies, but it is making acquisitory forays into online platforms/apps and just three months ago purchased a traveling carinval company. Sound familiar? Only on the surface, because Wall Street valued Townsquare at 106 million dollars last Friday ($10.70/share on 9.94 million shares). Read More

Cumulus Meltdown: Consolidation Karma

The thud heard ’round the industry: Cumulus Media, the second-largest radio station conglomerate in the country, ousted its founders in late September. CEO Lew Dickey has been demoted to a vice chairman, while brother John (an executive vice president) has already cleared out his office.

The move was orchestrated by private equity firms who hold a significant portion of Cumulus’ stock and have not been pleased by the company’s meltdown this year, which has seen its stock price tank by more than 80%, from north of $4 at the beginning of 2015 to 75 cents at the close of trading last week. As I write this, Cumulus’ market capitalization in total is $169.5 million. That’s a valuation more than $1 million less than what DTS bought the HD Radio system for. Think about that: hundreds of stations, a passel of networks, and online properties worth less than a mostly-ignored technology. Read More