Cumulus CEO Mary Berner is a year into her turnaround plan and is now asking for more time to fix the core weaknesses facing the struggling broadcaster.
Third quarter revenue for Cumulus was off about 1.1% to $286.1 million compared to $289.4 million for the same period in 2015. Radio revenue was actually up a bit compared to last year at $206.2 million for the quarter ending Sept. 30, 2016. However, Westwood One continues to be a drag on turnaround efforts. The Cumulus-owned syndication service was off about 5.5% for the third quarter with just $79.4 million in revenue.
Berner pointed to headwinds that continue to blow and knock her turnaround efforts sideways during a conference call Tuesday to discuss the broadcaster’s third quarter performance, which included a $14.4 million settlement with CBS Radio to end a long standing contract dispute.
Expenses crept up about 4% in the quarter — excluding the CBS Radio settlement — mostly due to music licensing fees and sports broadcasting rights. However, ratings have increased, she says, specifically in the company’s 17 Nielsen PPM rated markets, which account for about half of the Cumulus radio group’s revenue.
Berner says the broadcaster’s “toxic culture,” which resulted in high employee turnover and low morale, is getting turned around. “We have been able to draw new talent and we have seen significant declines in employee turnover,” she says.
Capital expenditures for the quarter totaled $5.2 million mainly and were mostly tied to studio moves in Los Angeles and Chicago.
The broadcaster’s cash position was helped in Q3 with the closing of the land sale of the former KABC(AM) tower site in Los Angeles. The 10-acre site fetched a final sale price of $111 million. Cumulus continues to move forward with 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. That’s the former WMAL(AM) tower site.
Cumulus, with 450 radio stations in 90 U.S. media markets, carried out a reverse stock split in October. The move was made to boost the trading price of the company’s Class A common stock to permit the company to regain compliance with NASDAQ listing requirements, which it has done. Cumulus Media Inc.’s stock price — CMLS on the NASDAQ stock market — had faltered below the NASDAQ minimum listing price of $1.00 per share since last year. Cumulus began the day trading at $1.10 per share but was pacing downward throughout the day on Wednesday to around $1.05 at midday.
During the conference call Tuesday Cumulus CFO John Abbot was blunt when referring to the hurdles facing the broadcaster; it’s mostly the $2.4 billion in debt it carries.
“To put it simply we have too much debt. The negative impact on the business of our overleveraged balance sheet is real and must be addressed,” Abbot said. “We continue to review all available options, including the strategies we would need to give up the time needed to turnaround the business.”
Berner said the company is in touch with key stakeholders and is exploring ways to reduce that debt.
The outlook for Q4, she says, is pacing down overall. “Specifically the radio station group is pacing up low single digits thanks to political, even though political has been weaker than expected. However, WW1 revenue in 4Q is pacing down mid to high single digits.”