Cumulus Media is getting out of the tower ownership biz. It plans to sell “substantially all” of its broadcast communication tower sites to Vertical Bridge and to lease access to them instead.
The company also announced that its net revenue in the most recent quarter was down almost 48% from a year ago.
The sale of its towers is a move to raise cash to pay down debt. President/CEO Mary Berner described it as “an agreement to monetize our tower portfolio for more than $210 million, proceeds which will further add to our liquidity and contribute to significant incremental debt pay down.”
The company reported the agreement in a filing with the Securities and Exchange Commission and in its latest quarterly financial announcement.
The first closing of the transaction is expected to occur in the fourth quarter.
The initial term of each tower site lease would be 10 years, followed by five option periods of five years each. If all the sites are sold, Cumulus expects to have lease obligations of approximately $13.5 million each year; while it will lose some annual tenant revenues, it will also save money in operating expenses.
“The transaction will not have any effect on the company’s current broadcast operations,” the company told the SEC.
In reporting its latest financials, Berner said that despite the pandemic, Cumulus generated $90 million of cash in the quarter “through quick and decisive expense actions, strong working capital management and the completion of the sale of land in Bethesda, Md.,” referring to the former tower site of WMAL. The completion of that sale netted it an additional $66 million in cash.
The company told shareholders that it had “meaningfully mitigated” the pandemic’s impact in the second quarter through “significant fixed cost expense reductions,” and that it expects total reductions of more than $85 million in 2020.
Still, the numbers were filled with minus signs as Cumulus struggled, like other media companies, to cope with the pandemic. In the latest quarter, Cumulus reported net revenue of $146 million, down almost 48% from the same period a year ago. It had a net loss of $36.3 million. For its entire first fiscal half, net revenue was $373.9 million, down about 32%, with a net loss of $43.7 million.
Cumulus owns 424 radio stations in 87 markets and is a major syndicator through its Westwood One arm.