The limited audience they have comes from the older songs. They can do what you suggest, but it means blowing the place up and starting from zero.
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April PPM Monthly
- Thread starter RoddyFreeman
- Start date
The limited audience they have comes from the older songs. They can do what you suggest, but it means blowing the place up and starting from zero.
I have noticed a pattern in Atlanta radio. Cumulus has to have a bottom dwelling (6+) station. For years they wasted the 106.7 signal. Now K-Love is beating the Cloud Company’s 100.5 (6+) with 106.7. I realize K-Love is a totally different “noncommercial” operation and that deal to sell 106.7 was strictly to raise cash because they didn’t get rid of enough debt during bankruptcy, but it still shows Cumulus’s inability to grow stations or even keep the audience they have had in the past in Atlanta.
I do not see the money demo’s and 100.5 is rumored to be making big dollars with their morning show. In the past if you do well in the AM drive, you can make enough money to be successful. 94.1 has in the past had tremendous morning shows like Gary McKee and Steve and Vickey and has been successful. Now the present morning show has yet to gain traction and Star is suffering. In all of the Cumulus clusters nationwide I am sure there is someone who can build on the 100.5 morning show. In fact just up the road in Chattanooga, Cumulus’s KZ106 does well (6+) even with an out of format syndicated (IMHO) morning show.
I could be totally wrong and maybe having an under-performing station(s) might attract a buyer for the whole Cumulus Atlanta cluster. A potential buyer looks and thinks: hey if I can “fix” Kixs 101.5 and 100.5 the revenue increase will make recovering the purchase capital easier.
I do not see the money demo’s and 100.5 is rumored to be making big dollars with their morning show. In the past if you do well in the AM drive, you can make enough money to be successful. 94.1 has in the past had tremendous morning shows like Gary McKee and Steve and Vickey and has been successful. Now the present morning show has yet to gain traction and Star is suffering. In all of the Cumulus clusters nationwide I am sure there is someone who can build on the 100.5 morning show. In fact just up the road in Chattanooga, Cumulus’s KZ106 does well (6+) even with an out of format syndicated (IMHO) morning show.
I could be totally wrong and maybe having an under-performing station(s) might attract a buyer for the whole Cumulus Atlanta cluster. A potential buyer looks and thinks: hey if I can “fix” Kixs 101.5 and 100.5 the revenue increase will make recovering the purchase capital easier.
The thing is it's their home market. And who else would buy those stations? Lew Dickey?
Isn't the CEO in New York? I believe there is a TV group whose headquarters is in Atlanta without them owning a station in Atlanta. It might be better not to have an operation in the same city as your "headquarters". I know this sounds cold but if a station has to be "blown up" and personnel fired, the headquarters folks don't "see it". Also the cluster "manager" doesn't have corporate executives second guessing him / her everyday.
As for a buyer I doubt there will be a lot of deals done for a few quarters until the virus (and its effects) and elections are over. One would hope that Cumulus would try to maximize it's large market properties cash flow by growth instead "dreaming" that someone will come along and buy the clusters at a price that they can retire a large part of their debt.
Cumulus had its HQ in Atlanta a while before buying into the market with the Susquehanna and Citadel acquisitions. They built their empire by focusing on dominating small towns with little competition at first, similar to what Walmart and Carmike Cinemas did.
Gray Television is the TV group in Atlanta you mentioned. Gray, along with Apollo/Cox, had been looking to buy Tegna (including WXIA and WATL). If Apollo/Cox had bought Tegna they would have had to divest some stations, including either WSB or WXIA, and some consideration was given to Gray being the buyer. Gray was also competing with Apollo/Cox to buy Tegna outright. That pursuit was shelved back in March.
Keep in mind they're currently owned by creditors who just want to get their money back. Cash flow doesn't matter to them.
They just received FCC permission to sell 100% of the company to a foreign buyer.
In moments like this, we see how our school system does not bother to teach how the economy works. In this case, as you say, it's about whether the creditors who are now owners can get their money back. None of them want to have a broadcast division and want to sell.
My three favorite words: No emotional attachment.
Cumulus Media (stock symbol CLMS) owns the Radio stations. Cumulus Networks is a privately held software company in California* which is a separate company with no broadcast assets.
* https://cumulusnetworks.com/lp/cumu...MIlq2Sl-Ht6QIVGsDICh1aGQHNEAAYAiAAEgKl7vD_BwE
That's the company I'm talking about. Under the terms of their bankruptcy agreement, the creditors own the operating majority of the company.
http://www.insideradio.com/free/to-...cle_23637fd6-d5af-11e7-bed5-cf681b711322.html
If you read the above article, it says the company traded $1 billion in debt for 83% equity in the company.
The owners of that 83% want to get their money. Cash flow doesn't matter to them.
And here's the article where the FCC approved 100% foreign ownership, linked again to the bankruptcy:
https://radioink.com/2020/06/01/fcc-approves-cumulus-foreign-ownership-plan/
The date on the link:
http://www.insideradio.com/free/to-r...81b711322.html
was dated Nov 2017 and you are correct about the debt holders getting stock. Cumulus had to get around the 25% rule. Cumulus is in a "Cash" mode and had $589 million cash on hand at the last filing:
https://www.google.com/search?rlz=1...A1:0,_SFjeXs3cM5Kq_QaEk62wCA1:0&wptab=COMPANY
If I was dealing with a company fresh from bankruptcy I would want to be "paid" with cash.
But this gets better:
One can only assume that Cumulus is worried about a hostile takeover by it’s debt holders who are able to exercise voting stock options granted by the bankruptcy settlement. The Virus put the whammy on Cumulus earnings so I can only guess some of the debt holders are not happy.
https://seekingalpha.com/news/3577190-cumulus-media-sets-poison-pill-plan
In a FCC filing:
https://docs.fcc.gov/public/attachments/DA-20-568A1.pdf
made before the pandemic that Cumulus had estimated 34% foreign voting rights and foreign 31% ownership. They left the door open to 100% in the future. Here is the quote from page 2 of the FCC filing:
“Cumulus explains that upon grant of the Petition, the special warrants would be automatically exchanged, and foreign ownership of Cumulus immediately following such exchanges would then be approximately 34 percent on a voting basis and 31 percent on an equity basis.10 Notwithstanding that the foreign ownership which would result from exercise of the special warrants is expected to be much less than 100 percent, Cumulus states that it is requesting a ruling that would permit non-U.S. persons or entities to hold directly and/or indirectly up to and including an aggregate of 100 percent of its voting stock and 100 percent of its capital stock. Cumulus states that no foreign individual, entity, or group of such individuals or entities holds or would hold, directly and/or indirectly, more than five percent of the equity and/or voting interests, or a controlling interest, in Cumulus, such that specific”
No one is really “buying” Cumulus. This is just a result of the bankruptcy settlement allowing the debt holders to convert debt to voting stock and or and using options.
Mary and company are still piloting the SS Cumulus toward the iceberg.
That is the same thing Entercom and several other companies have done. It has nothing to do with debt holders or bankruptcy. Understand that the debt holders have EQUITY. They don't get paid in cash.
I didn't say anyone was. What I said was that the creditors have equity that they're looking to sell. They haven't sold it yet. It's a process. It takes time.
IMHO something was wrong the lenders who loaned money so operators could leverage operations at ridiculous cash flow ratios. Those lenders are now owners who may never get their principle back much less any interest. There was an old saying that went something like “a fool and their money are soon separated”.
I get buying a well-run station / cluster in the neighborhood of 8 to 10 times EBDITA. Warren Buffet and Berkshire Halfway has made a fortune buying successful companies and keeping the management in place. Blain Capital’s financial resurrecting of Clear Channel which was legal but IMHO wrong. Citadel’s buying of the old ABC O & O radio operations managed to bankrupt Citadel* and IMHO Cumulus paid way too much for Citadel which bankrupted them too.
Somewhere, someone should wake up and think: if you buy a business make sure it can pay for itself even with a 10% or 20% decline, unless you can do a “turnaround” and grow earnings which would be difficult to do at a couple of hundred or more stations / clusters.
In my “perfect world” there would be a 2 or 3 station limit per market with a maximum of 50 stations nationwide per owner. IMHO if you can’t make a profit with 50 stations how can you with hundreds more?
*Note and disclosure: I personally had several stock put options on Citadel that I exercised June 20th 2008 .
I get buying a well-run station / cluster in the neighborhood of 8 to 10 times EBDITA. Warren Buffet and Berkshire Halfway has made a fortune buying successful companies and keeping the management in place. Blain Capital’s financial resurrecting of Clear Channel which was legal but IMHO wrong. Citadel’s buying of the old ABC O & O radio operations managed to bankrupt Citadel* and IMHO Cumulus paid way too much for Citadel which bankrupted them too.
Somewhere, someone should wake up and think: if you buy a business make sure it can pay for itself even with a 10% or 20% decline, unless you can do a “turnaround” and grow earnings which would be difficult to do at a couple of hundred or more stations / clusters.
In my “perfect world” there would be a 2 or 3 station limit per market with a maximum of 50 stations nationwide per owner. IMHO if you can’t make a profit with 50 stations how can you with hundreds more?
*Note and disclosure: I personally had several stock put options on Citadel that I exercised June 20th 2008 .
There are too many markets, from Tallahassee to Boise, where Docket 80-90 brought in as many as double the number of stations.
In some markets, 250 watt translators on a TV tower or mountain are totally viable signal-wise, adding more stations to the competitive environment.
A cluster of two or three stations is just not viable in those markets. Covering the overhead of a manager, accounting department, offices, insurance, engineering and other expenses when covered by only a couple of stations is not possible.
Remember, inflation adjusted billing for the industry has declined by over 60% in the last two decades.
That's all horse & buggy thinking. Especially now.
“Back in the Day” some stations in a small market “shared” an engineer. Garden City Kansas had one guy that did all four of the “in town stations” in the early 1990’s. The accounting and billing can farmed out. There are many medical practices that do not do their own billing. If there isn’t a firm that does media billing, someone reading this just got a business opportunity for free. I agree some markets that have too many “media outlets”. If a station can’t bill enough to cover its overhead costs is there really a need for that station? If you can't make it financially, turn the license in. The FCC should have some kind of number or limit on how may times a failed license can be reissued in a decade then the failed allocation should be "frozen" for 10 years.
There are many small operators all over America that have figured how “how to make a living” with LPFMs. In this digital age a lot of expenses are not as great as in the past. Satellite / syndicated programming VT etc. makes a 24 7 air staff a thing of the past. Studios can be waved by the FCC.
There are those who will adapt and thrive.
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Really? They're supposed to be owned by non-profits. They're not allowed to use satellite programming. Most of the ones I know are hobby stations or religious outlets. Lots of CPs are sitting unbuilt. The FCC eliminated the main studio rule in 2018, and it never applied to LPFMs.
https://www.broadcastingcable.com/news/divided-fcc-eliminates-main-studio-rule-169598
"Non profits" can and do pay salaries. My wife worked for one for 15 years (different industry). I have always wondered about K-Love's "non profit status". They have lots of cash buying some nice properties in Atlanta and NYC but I guess they pass the IRS and FCC standards.
If a CP can't be built, it should expire and not be reissued for 10 years. Just because a station can be "shoehorned in" engineering wise doesn't make it is viable.
A decent PC with the proper software is all one needs to provide audio for a radio station.
Adapt or die. The current publicly held operators could kill the whole business. There has to be something better than having hundreds of stations operating under a bankruptcy trustee.
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Who is currently operating under a bankruptcy trustee?
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