Cumulus Faces NASDAQ De-listing

[TheBigA]

As we end 2024, Cumulus gets notice of possible delisting from NASDAQ over its declining stock price:

Cumulus Faces NASDAQ Delisting

Cumulus Media is the most recent broadcast operator to receive a delisting warning from the NASDAQ stock market. Like others

radioinsight.com

Cumulus Media Faces Nasdaq Delisting Risk Over Stock Price - Radio Ink

Cumulus Media is the latest major radio broadcaster to run afoul of Nasdaq listing qualifications and be at risk of being delisted.

radioink.com

This comes after numerous layoffs at stations due to budget cuts

 

[txchipk]

Not the first time for them...usual remedy is a reverse stock split to buy time.

 

[PTBoardOp93]

Not the first time for them...usual remedy is a reverse stock split to buy time.

They probably can't. NASDAQ requires a $50 million market cap to maintain a listing, and CMLS does not meet that requirement either. At the moment, the company's equity is valued at only 12.7 million.

It would appear traders are pricing in another bankruptcy. The only difference is that this time I won't be one of the shareholders out in the cold.

 

[exdjted]

Well, if the couple from Peach Orchard up their offer for Mom's curio cabinet, that, plus the other profits from the estate sale should net me enough to buy Cumulus. Looks like I'm moving the corporate headquarters to the spare bedroom!

 

[Mark Roberts]

A good friend of mine sold his stations to Cumulus more than 15 years ago. The first time Cumulus nestled in the pink sheets, the stock price went so low that I told my friend he could buy the entire company for about the same amount of money that he got for his small-market stations. He asked me why he would ever want to do that. Now that market cap makes it appear about 60-70% cheaper.

 

[TheBigA]

Well, if the couple from Peach Orchard up their offer for Mom's curio cabinet, that, plus the other profits from the estate sale should net me enough to buy Cumulus. Looks like I'm moving the corporate headquarters to the spare bedroom!

The $12 million is just the market cap. You would also have to assume the rest of the company's debt, which is about $700 million.

But yes, I know you're just kidding.

As I recall they sold WABC to Red Apple for the price of the current market cap.

 

[exdjted]

The $12 million is just the market cap. You would also have to assume the rest of the company's debt, which is about $700 million.

But yes, I know you're just kidding.

As I recall they sold WABC to Red Apple for the price of the current market cap.

Just doing my part to bring a little levity to an issue we all saw coming...

 

[TheBigA]

Just doing my part to bring a little levity to an issue we all saw coming...

By my calculations, total asset value, including real estate and contracts, is still much less than the debt.

 

[Mark Roberts]

The $12 million is just the market cap. You would also have to assume the rest of the company's debt, which is about $700 million.

Fair point, but if that debt were sold on the market today, would it fetch $700 million? Probably not, as you'd have to price in the likelihood of either default or another haircut.

Cumulus seems to be stuck in the cycle of refinancing → can't make it → get the bondholders to take another discount → repeat. Say what you will about iHeart, it at least appears to have a strategy for doing business; Audacy, less so but there's still something there; Alpha rather brutally implemented actions this year that also have a business vision in mind; but Cumulus seems to have no aim beyond basic survival.

 

[TheBigA]

Fair point, but if that debt were sold on the market today, would it fetch $700 million?

The debt is the debt until it gets revalued in a bankruptcy. Ask George Soros. He bought $400 million of debt from Audacy.

Say what you will about iHeart, it at least appears to have a strategy for doing business; Audacy, less so but there's still something there; Alpha rather brutally implemented actions this year that also have a business vision in mind; but Cumulus seems to have no aim beyond basic survival.

iHeart is a much more diversified company. They have revenue streams from several other businesses besides broadcast. That's what you need when the ad-supported business collapses. Cumulus is building its own podcasting business, but the revenue there is a fraction of broadcast. We really don't know the Audacy operational plan yet.

 

[Kent]

Fair point, but if that debt were sold on the market today, would it fetch $700 million? Probably not, as you'd have to price in the likelihood of either default or another haircut.

Keep in mind that the private equity firms that own Cumulus could save it if they want. Much of that debt is money they owe to themselves. That was what happened to them previously, but one of the big equity firms wanted out and still wanted to get paid. That was the major factor that forced the first bankruptcy.

Cumulus seems to be stuck in the cycle of refinancing → can't make it → get the bondholders to take another discount → repeat. Say what you will about iHeart, it at least appears to have a strategy for doing business; Audacy, less so but there's still something there; Alpha rather brutally implemented actions this year that also have a business vision in mind; but Cumulus seems to have no aim beyond basic survival.

The interesting factoid here is that the debt hasn’t changed much since Cumulus exited bankruptcy. Debt is down substantially from where it was when it filed. It had north of $2 billion then. If I were guessing, I would suspect most of the major investors are hoping for a deal. Manoj Bhargava seems not to hide that he would like to force a shotgun marriage with Audacy. Whether or not he'll be successful remains to be seen, but Cumulus would seem to have opportunity for a deal at some point.

 

[Theater of My Mind]

Shouldn't these big corporate behemoths get out of the radio business? They're all collapsing under their crushing debt, private equity has stripped the best assets and there's no growth for Wall Street. They're still pretending they can squeeze billions from something that increasingly looks like a small business opportunity.

 

[TheBigA]

Shouldn't these big corporate behemoths get out of the radio business?

Huh? Are you putting it up for a vote, like this is a reality TV show?

Somebody has to own these radio stations. That's how the system works. You're welcome to make them an offer. If you did, and they accepted, then they'd leave the radio business. But they're licensed to operate these stations, and so they have to carry out that obligation until someone else buys the licenses.

 

[inari]

Shouldn't these big corporate behemoths get out of the radio business? They're all collapsing under their crushing debt, private equity has stripped the best assets and there's no growth for Wall Street. They're still pretending they can squeeze billions from something that increasingly looks like a small business opportunity.

Who's going to buy them? 90% of the local operators left the business 15 to 30 years ago. The local newspaper, the local family that owns half the town, the prominent business person, the owner of some car dealerships, etc.. mostly left the business and have no interest in coming back in or (as new operators) buying into the radio business.

Even if they wanted to, banks are not going to lend them money and if they did it will be at high rates that make any chance of making reasonable money difficult. Almost all of them can see with their own eyes even from the outside that the radio business that isn't a growing one.

Then when you take into account age, the majority of the people that would even consider buying a station are going to be 60+. Most 60+ are trying to lessen their stress, debt, and risk, not add new ones. I bet if I went to 50 people between the ages of 20 and 40 and said, "if I gave you $2 million for a business, what would be your top 5 choices?" that not one would have a radio station in their top 5.

 

[Tibbs4]

Even my fuzzy math says you are being positive on your "projections," BigA. Let's do a little math. How many stations are "involved" and what's owed?
There's only one formula that will POSSIBLY save these user-friendly dinosaurs. My guess is they will NOT take the route to "fix it." Anyone have a list of the top 5, their station quantity and amount "owed?"

 

[davideduardo]

Shouldn't these big corporate behemoths get out of the radio business? They're all collapsing under their crushing debt, private equity has stripped the best assets and there's no growth for Wall Street. They're still pretending they can squeeze billions from something that increasingly looks like a small business opportunity.

What is your point?

When the rules changed in the mid-90's, radio companies did what they had always wanted to do: expand into more markets with more stations. While McDonalds or Walmart or Walgreens can add more locations and offer new services, radio was made to be a small business by regulations from the 30's that limited owners to very few stations.

And in that mid-90's period, the invention of the smartphone was over a decade away and the internet was just appearing. Things looked good, despite the FCC's disastrous overpopulation of FM through Docket 80-90. Margins were high at the stations in bigger markets with good signals.

Then, around 2008 we got a huge recession, the smart phone and the PPM, all of which hurt radio particularly badly.

Over the air radio has a declining future, and the ad industry is moving its focus to new media.

So, please note, the problem with radio is not with those who run stations. Some blame lies with investment bankers that miscalculated the market. But most lies with a change in consumer habits that has moved a huge portion of the "audio" market away from real-time ad-supported media and into new media.

 

[TheBigA]

Anyone have a list of the top 5, their station quantity and amount "owed?"

They own 400 stations, with at least 4 stations each in Chicago, Dallas, and San Francisco, and the debt is $700 million. The thing that weighs them down is all the small markets.

 

[DOGDOG]

As we end 2024, Cumulus gets notice of possible delisting from NASDAQ over its declining stock price:

Cumulus Faces NASDAQ Delisting

Cumulus Media is the most recent broadcast operator to receive a delisting warning from the NASDAQ stock market. Like others

radioinsight.com

Cumulus Media Faces Nasdaq Delisting Risk Over Stock Price - Radio Ink

Cumulus Media is the latest major radio broadcaster to run afoul of Nasdaq listing qualifications and be at risk of being delisted.

radioink.com

This comes after numerous layoffs at stations due to budget cuts

"Budget cuts"? How many members of The Executive Club have taken cuts? How many of the Executive Club members with their already obscene salaries have been laid off? While stockholder equity has dropped, The Executive Club continues in their oppulent life style, obscene compensation plans, trips and junkets as well as their benefit gravy train.

 

[TheBigA]

"Budget cuts"? How many members of The Executive Club have taken cuts? How many of the Executive Club members with their already obscene salaries have been laid off?

Keep in mind executives get some of their pay in stock, and as you say, that stock is now worth pennies.

The executives work for the lenders, who aren't happy campers. They gave up money for equity, and now the equity has dropped.

Keep in mind that the exec who created the debt was fired a long time ago. These folks are just the cleanup crew.

 

[Kent]

Shouldn't these big corporate behemoths get out of the radio business? They're all collapsing under their crushing debt, private equity has stripped the best assets and there's no growth for Wall Street. They're still pretending they can squeeze billions from something that increasingly looks like a small business opportunity.

Despite the medium's obvious decline, radio still makes good money. Who knows for how long, but radio stations, especially in large markets, are quite profitable.

As others have mentioned, if the big corporations were to get out of radio, who would replace them? I don’t necessarily like what they’re doing either, but we have to be realistic. Would those new unnamed people do any better? The economics of the business are what they are, and people can only find so many ways to make the numbers work.