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Cumulus Media Reports Q4 Revenue Dip

Radio side up a little but Westwood One is dragging

Cumulus Media could use some good news and Thursday’s fourth quarter and year-end revenue report did offer some small glimpses as to why its leaders remain optimistic about its future despite carrying $2.4 billion of debt.

The broadcaster said revenue for its radio station group edged up in the final quarter of last year 1.6% to $209.7 million compared to 2015, but its Westwood One network arm tumbled 12.3% in revenue during that same period.

Cumulus’ combined revenue numbers dipped a total of 3% in the fourth quarter 2016 with a reported $299.5 million in revenue. The year-end report showed total revenue down 2.3% to just over $1.1 billion with a net loss of $510.7 million. However, revenue for the radio station group was up for the year by just under 1%, partly attributed to political spending.

Mary Berner, president and CEO of Cumulus Media, reported significant challenges on the syndication side of the business on Thursday during a conference call but was upbeat about the radio group’s ratings noting that “PPM markets and diary markets are beginning to show some ratings vitality.”

Berner, who has been promoting her turnaround plan since she was put in place in September 2015, says she continues to focus on growing ratings, fixing “Cumulus’ toxic command and control culture” and improving day-to-day operational basics.

“In 2016 our focus on those fundamentals produced significant and measurable progress and we have begun to see some positive financial indicators,” Berner said on Thursday’s investor call.

Cumulus CFO John Abbott addressed the underperformance by Westwood One by saying its “operational struggles and share loss” concern the company even though some of the problems are attributable to industry-wide weakness.

“Westwood One has been hard at work building a new system to go live later this year to address the significant competitive disadvantage imposed by its legacy inventory and pricing systems,” Abbott says.

Abbott says Cumulus will also undertake a more comprehensive review of the network business model and considering a range of “more step function changes that can be made to derive more value out” of the syndicator’s business.

The company spent $6.3 million on capital expenditures in the fourth quarter of 2016, which brought its yearly cap-ex spending to $23 million compared to $19.2 million in 2015. The fourth quarter spending was mostly tied to the studio and transmitter move in Los Angeles as a result of selling the KABC(AM) tower property.

Cumulus plans to increase cap-ex spending in 2017 to approximately $30 million, Abbott said.

Cumulus is also selling a 75-acre tract of land near Bethesda, Md., for as much as $75 million, which is now expected to close in the second half of 2017, according to Abbott. It’s the former WMAL(AM) tower site.

The radio broadcaster has taken a series of steps to boost its stock price, which has been hovering around $0.50 per share this week, but so far the initiatives have failed. If Cumulus stock is stuck below the $1.00 minimum for a period of 30 consecutive days, NASDAQ would send it a deficiency notice. Cumulus will hit that 30-day mark next week. Once a deficiency notice is sent, the company would have 180 days to comply with the continued listing standards of a sub-$1.00 share price.

Cumulus lost a recent court battle to reduce its debt by exchanging some notes held by lenders for more favorable interest rates. Then the company told the U.S. Securities and Exchange Commission last week it was withdrawing its re-fi package all together. Abbott said Thursday the company is continuing to explore all options to improve its balance sheet.

Cumulus owns approximately 445 radio stations and operates in 90 U.S. media markets.