Cumulus Announces Reverse Stock Split

[davideduardo]

Not to the degree there is today. But when National Life sold WSM, that was at a time when there were maybe five stations in Nashville, all AM. How many are there now, not only on AM, FM, satellite, online, etc, all competing for the same ad dollars. The competition has never been greater than it is now

In 1981, when NLT sold the WSM radio properties, there were 9 AM stations with a 1 share or more, and 9 commercial FMs with over a 1. That's 18 stations with significant numbers, and two more just under a 1 that also showed up. Again, not counting non-coms.

Today, there are 2 AMs over a 1 share, and 17 to 18 commercial FMs plus two non-coms that regularly show over a share.

Among commercial stations, there is only a one station difference in the one-share-or-above count 35 years later... even after Docket 80-90 allowed a number of move-ins and upgrades.

 

[Oscar Madison]

What radio apologists refuse to acknowledge is this: Yes, the revenue pie is getting sliced more ways. Even more important, the total pie is shrinking. Even more than radio, TV has more outlets "competing for the same dollars." Yes old-school broadcast television continues to be profitable (with the the addition of revenue from co-owned cable channels a big bonus).

Cumulus and the other mega-owners now own more stations than they'd have dreamed of owning in 1981. And still, they can't make money. Why? Bad management and incompetent programmers who have driven away major portions of the audience. Radio is killing itself. Outside influences have little to do with it.

 

[davideduardo]

What radio apologists refuse to acknowledge is this: Yes, the revenue pie is getting sliced more ways. Even more important, the total pie is shrinking.

Radio revenues are certainly not growing much, but they are not shrinking.

Cumulus and the other mega-owners now own more stations than they'd have dreamed of owning in 1981. And still, they can't make money.

Sure they can. All the top owners from iHeart, CBS and Cumulus to Entercom, COx and Univision are making money on operations.

A few, like iHeart, took on too much debt to go private. While the stations are very profitable on operations, they parent company may have principal and interest payments that are greater than the Broadcast Cash Flow the stations are throwing off.

But the local programmers and managers are doing a good job in a though economy,

Why? Bad management and incompetent programmers who have driven away major portions of the audience. Radio is killing itself. Outside influences have little to do with it.

Outside influences have everything to do with it. The two biggest are the 2008 recession, where advertisers cut back signficantly in their promotional activities. The second was the change to the PPM in 48 of the largest markets; the way cost per point is calculated had to be reset as the average market lost about 40% of its PUR, and agencies routinely began paying lower CPPs.

 

[davideduardo]

NLT sold WSM-AM and WSM-FM in 1981. There were about 35-40 stations on the air with city grade signals.

In 1981, we could define perhaps a dozen "viable signals" in the market, meaning AMs with day and night coverage of 80% or better of the market population and the same 80% at all times for FM.

Knocking out the translators and move - ins that came later with Docket 80-90, there were only about 43 stations home to the market, but just 12 met the "viable" test based on population coverage.

There are at present 18 stations in the market billing $500 thousand a year (to put that in perspective, it is about half the gross revenue of an average Pizza Hut restaurant). There are 12 billiing over $2 million, and there are five billing around $5 million or more, two of which are talk stations.

 

[TheBigA]

Bad management and incompetent programmers who have driven away major portions of the audience. Radio is killing itself. Outside influences have little to do with it.

And yet, the facts say that the actual audience numbers haven't changed at all. No one is driving away the audience. Audience isn't the problem. Lots of people listening. The problem is lack of growth caused by the inability to either increase inventory or spot rate.

 

[TheBigA]

There are at present 18 stations in the market billing $500 thousand a year (to put that in perspective, it is about half the gross revenue of an average Pizza Hut restaurant). There are 12 billiing over $2 million, and there are five billing around $5 million or more, two of which are talk stations.

My thesis was that increased competition has driven down spot rate. Perhaps compare SRDS figures between then and now adjusted for inflation.

 

[Oscar Madison]

You're wrong. "Audience numbers" are as believable as politicians' "facts."

Can't have it both ways. Can't complain about all the competition and then deny that people aren't listening.

 

[TheBigA]

You're wrong. "Audience numbers" are as believable as politicians' "facts."

The difference is that independent outside groups have verified the audience numbers while fact checkers constantly disprove politicians.

Can't have it both ways. Can't complain about all the competition and then deny that people aren't listening.

Sometimes that increased competition is from within radio itself. The former Cumulus CEO Lew Dickey complained that competition from iHeart was hurting his company's ad rates. Other CEOs have said similar things, that radio's biggest owner is hurting competition among radio companies.

 

[Oscar Madison]

The difference is that independent outside groups have verified the audience numbers while fact checkers constantly disprove politicians.

Sometimes that increased competition is from within radio itself. The former Cumulus CEO Lew Dickey complained that competition from iHeart was hurting his company's ad rates. Other CEOs have said similar things, that radio's biggest owner is hurting competition among radio companies.

What "independent outside groups" "fact check" Nielsen? None. How could they? Impossible. Nielsen considers its "data" and "methods" proprietary and does not make them available for review - unlike true social science researchers.

Let me get this straight: These mega owners have killed all spoken word radio except sports talk (extolling athletic competition) and right-wing political talk (extolling capitalism, laissez faire, free markets and no regulation) and then turn around and whine about competition in their own industry and blame "competition" for their business failures.

I wonder how many people who insists that radio is thriving have been willing to invest their own money in stock in any of the mega-owners companies or in a local station? Does anybody put their money where their mouth is.

 

[davideduardo]

What "independent outside groups" "fact check" Nielsen? None. How could they? Impossible. Nielsen considers its "data" and "methods" proprietary and does not make them available for review - unlike true social science researchers.

The ad-industry focused MRC audits each Nielsen product at the market level each year. In addition, there are validations of the methodologies via comparisons with competing products like Eastlan in markets where both services operate.

The data is relatively transparent. In diary markets, subscribers can see the actual diaries (via computerized page scans) and register any discrepancies. In the PPM world, we have an array of tools that allow us to see things like weighting, proportionality, changes in panel, etc. A new product will be even more granular showing down to the respondent level how changes from book to book are influenced by the panel and station programming.

Let me get this straight: These mega owners have killed all spoken word radio except sports talk (extolling athletic competition) and right-wing political talk (extolling capitalism, laissez faire, free markets and no regulation) and then turn around and whine about competition in their own industry and blame "competition" for their business failures.

Owners have tried many forms of talk, ranging from the 90's surge in "hot talk" a la KLSX, to liberal talk (Air America) in an effort to find additional spoken word formats that are viable. There have been no remarkable successes, and the demonstrated lack of appeal of traditional talk to Millennials and most Gen-X listeners has been demonstrated.

When a format dies because it does not cross well to the next generation, there are no hidden agendas. Look at standards, Beautuful Music, Smooth Jazz, and Oldies as music based examples of such a phenomenon.

I wonder how many people who insists that radio is thriving have been willing to invest their own money in stock in any of the mega-owners companies or in a local station? Does anybody put their money where their mouth is.

Yes, some of us "play" on that field when the fundamentals, ratios and things like Beta all look right. I am among them.

 

[TheBigA]

I wonder how many people who insists that radio is thriving have been willing to invest their own money in stock in any of the mega-owners companies or in a local station? Does anybody put their money where their mouth is.

I still own a few in my portfolio. Thanks for asking.

 

[Oscar Madison]

I still own a few in my portfolio. Thanks for asking.

And how much have those stocks gone down since you bought them? Are you able to use the losses to avoid future taxes, like The Donald?

 

[TheBigA]

And how much have those stocks gone down since you bought them? Are you able to use the losses to avoid future taxes, like The Donald?

What business is it of yours, may I ask?

 

[Oscar Madison]

What business is it of yours, may I ask?

I once owned a block of Clear Channel and lost most of what I put in. But not nearly as much as I would have lost if I sold today. I still watch radio stock prices. Just wondering you can say radio really is in great shape as your investment gets eaten up as the stocks fall. Sorry if I hit a sore spot.

 

[TheBigA]

Just wondering you can say radio really is in great shape as your investment gets eaten up as the stocks fall. Sorry if I hit a sore spot.

I've lost more money with Panasonic than I did with radio. Should I take my losses to mean that the electronics industry is in the toilet?

Just trying to understand your logic. Clear Channel went private 8 years ago. So any stock you ever held is no longer on the market.

 

[davideduardo]

And how much have those stocks gone down since you bought them? Are you able to use the losses to avoid future taxes, like The Donald?

Any individual American who loses money on investments is able to use losses as a credit against future gains. I took a lot of losses in 2008, and have applied the tax loss carry forward to future capital gains.

Any company that sustains operating losses one year (or more) and apply the losses to future profits.

A friend bought a bankrupt movie theater company in the 60's. It had considerable accumulated loss carry-forward credits. He bought a radio station and it was profitable quite soon; he paid no taxes on the corporation for nearly a decade due to the credits he had acquired. That was over 50 years ago... so this has been a legal practice for individuals and companies for half a century or more!

I did not lose money on any broadcast issue. I could retire on what I made on Hispanic Broadcasting shares. I bought a home with profits on Radio One and Emmis. As Kenny Rogers sang, you have to know when to hold 'em and know when to fold them.