Cumulus Media has a lot on its hands right now. It’s balancing a weak national advertising climate while trying to tamp down expenses and fend off a potential hostile takeover.
Newly released financial numbers for fiscal 2023 reflect its challenges. The company posted a net loss of $117.9 million in 2023, compared to net income of $16.2 million a year earlier. Total revenue in 2023 was $844.5 million, a decline of 11.4%, according to a report filed with the U.S. Securities and Exchange Commission.
Broadcast revenue continues to shrink, though the category is still by far the largest reporting business segment for the company. Spot revenue was off 14% for the year at $412 million.
Even worse was the performance of the company’s Westwood One Radio network, which reported total revenue for last year of $182.5 million, down 20.6% from the year before, according to the filing.
The company said during an earnings call that it generated digital revenue of $146.4 million in the 12 months ending Dec. 31, an increase of 2.9% YoY. Digital represents 17% of total revenue. Cumulus increased streaming revenue by 16% thanks to audience growth from NFL streaming, but podcast revenue was off 8%.
In the fourth quarter specifically, the company reported net revenue of $221.3 million, a decrease of 11.9% from the same period in 2022, and it had a net loss of $98 million in Q4. Its broadcast revenue for the quarter was $153.5 million, down a whopping 18.2%.
Some of that loss was attributable to a reduction in political advertising from the year prior, it says. Cumulus booked $1.6 million of political revenue in Q4 compared to $8.3 million in the same quarter in 2022.
Digital growth in Q4 2023 was up 5% led by streaming. Total digital revenue for the quarter was $39 million.
Nevertheless President/CEO Mary Berner says the company is making some progress. “While 2023 was a tough year across the media landscape, we were able to offset some of the effects of the weak national advertising climate through strong execution in our key focus areas. Specifically, we grew our digital businesses, meaningfully reduced fixed costs, and improved our balance sheet.”
The company reported $14.8 million in cash proceeds from selling its share in BMI. It also trimmed its expenses by $33 million in 2023 through what it called efficiency measures and “rationalizing” its real estate footprint. In all, Cumulus has found about $120 million of annualized fixed-cost reductions since 2019, Berner says, about 26% of its annual fixed costs.
Looking ahead, the company is seeing revenue pacing down in the low single digits in the first quarter “despite some encouraging signs from national advertisers,” Berner said on the call.
Chief Financial Officer Frank Lopez-Balboa said the company’s cap-ex spending in 2023 was $24.8 million and that he expects it to be around $30 million in 2024.
Cumulus, with about 400 owned-and-operated stations in 85 markets, retired $43.6 million face value of debt last year. It reported $675.8 million in total debt as of Dec. 31. Lopez-Balboa said the company expects to prioritize debt reduction efforts in the near term.
The earnings report comes a week after Cumulus launched a limited-duration shareholder rights plan in an attempt to hold off a possible hostile takeover by Renew Group, led by Indian American businessman Manoj Bhargava, the founder of 5-Hour Energy.
Several analysts asked about this “poison pill” plan during Tuesday’s investor call, but Berner and Lopez-Balboa for the most part referred to an earlier press release last week outlining the effort.
As of January of last year, Renew Group held a 10% stake in Cumulus. Renew Group has told Cumulus that it hopes to eventually acquire a 20% stake in the company but Cumulus hopes to throttle its investment strategy by limiting the investment to no more than 15%, the point at which measures take effect to make Cumulus less attractive to activist investors and prevent them from grabbing a controlling interest.
