Cumulus Media on Wednesday rejected that unsolicited bid from a group of private equity investors, led by Connoisseur Media CEO Jeff Warshaw, to buy the broadcaster for $15-$17 per share, saying the offer undervalued the media company. It instead announced a $50 million stock buyback plan.
CEO Mary Berner said the broadcaster’s revenue levels are still lower than in 2019, but the media company is trending in a positive direction. Cumulus’ first quarter total revenue was up 15% led by digital growth of 18%. The results marked revenue improvement for the fifth straight quarter versus the comparable 2019 quarter.
The company recorded revenue of $232 million in the first three months of 2022. Breaking out the segments; broadcast radio totaled $103.9 million in revenue, which was up 12% from the previous year. Networks accounted for $65.2 million in revenue and represented a smaller bump of only 5% growth from Q1 of 2021. And digital recorded nearly $32 million in revenue in the most recent quarter.
“Our outstanding first quarter results once again demonstrate the positive impacts of our audio-first strategy to transform the company from a one-dimensional radio broadcaster to a multi-dimensional audio media company,” Berner said in a company press release.
The company recorded $30.1 million in what it deemed “other” revenue, part of which was a termination payment it received as the result of WynnBET ending its partnership with the broadcaster during the first quarter, Berner said.
Overall podcasting revenue grew more than 20% in Q1 year-over-year, Berner said. Additionally, Cumulus is seeing traction with the launch of its local podcasting effort. “Revenue in Q1 has doubled, and importantly, our local podcasts are now on a run rate of nearly 100 million annual downloads,” she said.
Cumulus recorded a first quarter net loss of $0.9 million compared to a net loss of $21.9 million in Q1 of 2021, according to financial statements released Wednesday.
Supply chain shortages across the auto sector continue to affect the broadcaster, according to Cumulus Chief Financial Officer Frank Lopez-Balboa. Auto advertising at Cumulus was down more than 25% in the first quarter compared to a year ago and down 50% compared to the same quarter in 2019.
Lopez-Balboa said Cumulus’ second quarter revenue is currently pacing up in the mid-single digits versus Q2 of 2021. However, the broadcaster has seen some slow down in national and network advertising early in the quarter, he said. “That could be in response to what the Fed might do and concerns about economic weakness or recession. But the whole area of national and network, as we have seen in the past, can come back quickly or slow down dramatically,” Lopez-Balboa said on the investor relations call.
Berner added: “We are still feeling the effects of the pandemic and the up and down of COVID variants, particularly in major markets that have been tentative about return to work. But we are seeing encouraging data and improvements in our weekly cume, which is pacing better especially in smaller markets. And we expect that to continue as the summer goes on and as the country continues to settle down.”
Cumulus executives on Wednesday limited their discussion about the rejections of the Jeff Warshaw-led buyout offer to buy the company. The Cumulus Media board of directors said in a regulatory filing: “After a careful and thorough review, conducted in consultation with our financial and legal advisors, the Board unanimously concluded that the indication of interest significantly undervalues the company and is not in the best interests of its shareholders.”
Cumulus generated $24.3 million of cash from operations and managed to pay down $12.5 million of debt in the first quarter of 2022, but its total debt still stands at $793.4 million as of March 31, 2022.
Randy J. Stine has spent the past 40 years working in audio production and broadcast radio news. He joined Radio World in 1997 and covers new technology and regulatory issues. He has a B.A. in journalism from Michigan State University.