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Atlanta-based Cumulus Media emerges from bankruptcy
- Thread starter rohocop2121
- Start date
1.3 billion debt verses $1.135 billion gross. Looks good from the old school formula 2 or 3 times billing if you were buying it, but the majority of the “stock” or equity is the debt holders. Cumulus should have at least $160 Million free cash from operations*. IMHO this seems a little low because that is only 15% of billings but I am only looking at this from the radio operations and not factoring in Westwood. I feel Cumulus should use most of the free cash to pay down debt. They have a 2 billion negative retained earnings balance, **which should make this repayment tax friendly to the cloud company.
* Based on company’s first quarter’s EBITDA.
https://www.cumulus.com/wp-content/uploads/2018/05/CMLS_03312018_Earnings_Release.pdf
**
https://www.investing.com/equities/cumulus-media-inc-balance-sheet
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* Based on company’s first quarter’s EBITDA.
https://www.cumulus.com/wp-content/uploads/2018/05/CMLS_03312018_Earnings_Release.pdf
**
https://www.investing.com/equities/cumulus-media-inc-balance-sheet
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Using free cash to pay down debt wouldn't be the best use of cash. Tom Taylor pointed out today that one area where Cumulus is weak is digital. So it might be better to take the free cash to invest in areas that could be more profitable than broadcast. Especially given that they have four years to pay down the debt.
Digital improvement should be relativity inexpensive. The overseas and cookie cutter operations charge so little for design that the real challenge is content. Almost any webdesign can be "copied" legally by changing "renaming" the lines of code. Right click any site choose view source and the whole program not counting server content is there. I was a webmaster. A couple of six figure folks should get them caught up. I would question spending tons of money being a beta developer. I could easily run "cutting edge" web department (not counting content) for less than a million a year.
Ridiculous debt load got both Iheart / CC and Cumulus in Bankruptcy. There is an old saying "cash talks bullsh*t walks". Tremendous debt load takes away any freedom to be "creative". I would want to be in the position where if I took take a big risk that might or might not workout, I would not bankrupt the company.
Ridiculous debt load got both Iheart / CC and Cumulus in Bankruptcy. There is an old saying "cash talks bullsh*t walks". Tremendous debt load takes away any freedom to be "creative". I would want to be in the position where if I took take a big risk that might or might not workout, I would not bankrupt the company.
Depends. You can do it on the cheap, or you can build a platform that is unique and will drive some new revenue. If you use someone else's platform, they make the money. I'm not talking about websites. Cumulus already has websites for all its stations, and they're all Word Press sites that cost very little. The money they spend is in analytics for advertisers, and that's the area Tom Taylor suggests where they might invest more. If you study Pandora, the majority of their staffing is engineering. It's a tech company. Cumulus has to create some digital business that finds unique ways to market their content. They have lots of content that's being delivered in a traditional over-the-air way. That has to change.
All companies have debt. Entercom has over $2 billion in debt, and no one's freaking out. Debt is something you manage. For Cumulus, it became unmanageable. Now they can manage it, meet their payments, and use their cash flow to invest in new business that can grow the company.
Why would anyone take an existing company that has positive cash flow and try to turn it into a company that that has not turned an annual profit in the last 18 years: *
https://www.fool.com/investing/2017/02/28/will-pandora-media-ever-turn-a-profit.aspx
Cumulus has been lacking in the digital world, among or parts of the business, because they are a “zombie” company. After the Citadel purchase, all they have done is service debt.
BTW: most of Cumulus’s stock is owned by the former debt holders. If the cloud company can get their debt payments down to less than 20% EBITDA the stock will be attractive to some invertors and the former debt holders might get to cash out and not take a huge loss.
*I indirectly own some Pandora stock thru a mutual fund in my 401K.
https://www.fool.com/investing/2017/02/28/will-pandora-media-ever-turn-a-profit.aspx
Cumulus has been lacking in the digital world, among or parts of the business, because they are a “zombie” company. After the Citadel purchase, all they have done is service debt.
BTW: most of Cumulus’s stock is owned by the former debt holders. If the cloud company can get their debt payments down to less than 20% EBITDA the stock will be attractive to some invertors and the former debt holders might get to cash out and not take a huge loss.
*I indirectly own some Pandora stock thru a mutual fund in my 401K.
I'm not saying they would. The key thing that costs Pandora from becoming profitable is the royalties they pay for music. Pandora doesn't create or own its content. Cumulus does. That's the main difference. The problem is all of that content is primarily distributed via broadcasting. Cumulus needs to take that owned content, those contracted hosts, and their incredible archives, and find ways to turn them all into digital assets. I'm talking about non-music content.
Here's some analysis with quotes from PDs and execs:
http://www.insideradio.com/free/ban...cle_11f6b0e4-695a-11e8-9b0b-f364245d198f.html
http://www.insideradio.com/free/ban...cle_11f6b0e4-695a-11e8-9b0b-f364245d198f.html
Louie Diaz's line about ratings turnaround in key local markets is very interesting. I assume the "key local markets" are some of the ABC O & O radio properties.
IIRC Most Cumulus stations are on Iheart. I do question Cumulus putting their stations on a competitor's website / app. I assume Cumulus is getting a piece of Iheart's revenue. Is the "non music" content Westwood or their local talkers?
About a year ago, they hired a head of digital ops who has an interesting background:
https://radioinsight.com/headlines/118779/cumulus-expand-digital-operations-new-hire/
You ask about "non-music" content: Every one of their local stations has local talent who could generate non-music content.
I don't know the financial arrangement, but it seems to me this is a win/win for both Cumulus and iHeart. Cumulus needs a platform for getting its stations onto digital devices, and having the Cumulus stations makes the iHeart app more attractive to consumers.
Sure, it's a cheap and easy solution to a digital problem, but doesn't generate new revenue.
What sort of audience is there for those "incredible archives" of old talk shows? Talk isn't like music, which people love to listen to over and over. Back when people were buying albums, comedy records sold, but did people wear out the grooves on those Bob Newhart or Bill Cosby or George Carlin albums the way they did on "Sergeant Pepper" or "Tapestry" or "Frampton Comes Alive"?
Other than people who missed some talk show live one afternoon and want to catch up on it late at night, who's going to listen to an archived talk show that's more than a few hours old?
Who said anything about "old talk shows?"
What other non-music content does Cumulus own and how likely is it that it can be monetized?
They have hundreds of local talent under contract. These are not just liner readers or people who give time & temp. Some are very knowledgeable about their musical genre, some do interviews with celebrities and musicians, and they generate a lot of local content. The trick for them and the company is to repackage that in a way that translates to the online world. I read all day comments here about the need for local talent, and what they mean for radio. Here's a way that local talent can prove their value beyond what they do on the air.
How can it be monetized? That's why you hire a SVP and a team of digital people who know how to monetize it beyond spots & dots. This isn't a simple thing we're talking about. There's a reason why these companies are seeing their revenues dropping or at best holding steady. They need to see what they do from a bigger platform. There are former radio hosts making a very good living online right now. Maybe it's time for some old dogs to learn a few new tricks.
IIRC the deal was that iHeartRadio would be the exclusive streaming platform for Cumulus stations, and iHeartMedia radio stations would promote the Cumulus-owned and now-essentially-defunct SweetJack. Obviously iHeartMedia got the better end of that deal.
Cox, OTOH, has a NON-exclusive arrangement with iHeartRadio, and is also on TuneIn.
I had thought that Cumulus might turn Rdio into an iHeartRadio competitor when their streaming agreement with iHeartMedia ran out, but nope...
I'm sure Lew thought the same thing, and instead it was part of his undoing.
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