Might be old news for you all, but I just read this.
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CUMULUS MEDIA FILES FOR BANKRUPTCY
- Thread starter Mrtejano
- Start date
Might be old news for you all, but I just read this.
Being discussed on the national board:
radiodiscussions.com
I still expect KRBE to be acquired by one of the existing group owners in Houston, most likely through asset swaps. All except Radio One currently have cap space here, and those rules will likely be relaxed.
Cumulus files for bankruptcy again
They filed chapter 11 bankruptcy in Houston Texas. https://www.veritaglobal.net/cumulusmedia
radiodiscussions.com
I still expect KRBE to be acquired by one of the existing group owners in Houston, most likely through asset swaps. All except Radio One currently have cap space here, and those rules will likely be relaxed.
D
Deleted member 108832
Guest
Yep, and didn't it cost them both 103.7 and 97.5 when all was said and done with those proceedings?
KRBE is the golden calf for Cumulus. I'd keel over dead if Mary Berner were foolish enough to hand it over to Audacy or iHeart. Radio One is at the max, so they are not a player. iHeart would be the only real option in a horse trade, and are y'all really ready for the heritage 104 KRBE to get a "Kiss"? I assure you, you're not. Take a listen to KHKS up here. That's what the future of KRBE sounds like with iHeart at the helm.
That was a separate company that Cumulus controlled, but, if you count that, this is the third bankruptcy at Cumulus. Cumulus ultimately bought the Kansas City and Topeka stations it contributed to that group while letting the two Houston properties go.
She won't hand it over for anything less than the price she wants. I had heard from several people Cumulus was ready to swap KRBE to Audacy about three years ago for stations in multiple markets, but the deal involved a third party, which was to get Cumulus's excess in another market only to back out before signing the letter of intent.
Again, I think that KRBE would be in play if ownership caps are raised. Then they can trade KRBE for an additional station in a market they have a strong position i already, and thus avoid the majority of asset sale tax implications.
This analyst says the debt problem that led to the Cumulus bankruptcy also exists at other companies. iHeart is still $5 billion in debt. Audacy still has $360 million. So it's not like anyone wants to add more debt to their load. That's why trades are more likely:
www.insideradio.com
Also remember that Houston is also one of the corporate offices for Cumulus.
Cumulus Restructuring Seen As Predictable.
Cumulus Media has begun what could be a months-long restructuring after filing Chapter 11, a move analysts say investors largely expected as debt levels climbed. Kagan analyst Justin Nielson says
Also remember that Houston is also one of the corporate offices for Cumulus.
D
Deleted member 108832
Guest
There lies the problem, Kent. A net worth evaluation of KRBE, even as a standalone, should be north of $20 million. A significantly upgraded standalone KROI just sold to SBS for, what, $7.5?? That's darn low for what 92.1 is now. Just what would KRBE command in today's environment? Who, other than iHeart, would have the financial means to be able to close such a deal?
I think it's in Cumulus' best interest to just stay the course. It's certainly not like KRBE is hemorrhaging money or causing them any heartache.
Maybe I'm just antiquated and out of touch with today's corporate mindset, but I'm never one for putting a slug in the golden goose's head.
There have been many rumored swaps over the years as both Audacy and iHeart are under the cap in Houston and there are clusters of theirs in other markets that could be combined with Cumulus' such as Audacy Minneapolis, which has been rumored for years to be part of a swap.
For what? Having their head of CHR programming based there doesn't make it a corporate office.
Not in 2026. Bonneville's San Francisco cluster just went for $10 million as a whole.
If there is a relaxation of ownership caps, the clusters with multiple stations will get the major buys because they sell packages of several stations that reach a client's target audience. It's more likely that an agency will pick two or three multi-station cluster packages rather than buying single stations, no matter how good they look alone.
Even on local direct, I'd rather go in and say "I can give you three stations that together reach all the different tastes and ages you are looking for" than just having one card to play.
One of the issues in a swap is that the valuations may be below book value today, even after impairment adjustments for declining asset value. While this does not affect the P&L, it does affect the balance sheet.
D
Deleted member 108832
Guest
I believe that's what's occuring, now, with KRBE. My understanding is that it is being packaged, to national and regional accounts, with the Metroplex cluster. A case of "You buy time in Dallas, we'll throw in Houston for you."
Is this no longer the case?
I doubt this is the case -- a majority of the ads I hear on KRBE are for Houston area businesses.
While this may be an occasional bargaining point, this does not work in today's automated computer buys which look at each market individually. And then, even where buys are determined by actual people, buys are done market by market unless it's a network buy. So I doubt they are giving away Houston to get a Dallas buy very often... if ever.
Having KRBE, KHMX and KKHH all part of an Audacy Houston cluster could set up a nice “wall of women” situation. Might have to adjust each format so the three fit together properly, but that scenario would seem to be very attractive to advertisers.
D
Deleted member 108832
Guest
iHeart could pull it off, no question. I mean, they bought KXYZ without so much as a bat of an eye. They've got the room to fit another FM, and after sacrificing both 96.5 and 101, I would imagine 104 under their tutelage would be considered a favorable acquisition.
I mean, like you, I just don't see a lot of options for a buyer. iHeart would look to be the best fit and best bet.
Now that Cumulus has almost no debt and isn't a publicly traded company catering to short term minded Walk Street traders, they are in a position to run their stations to generate cash. The debt holders / owners can only hope for cash from the Cloud company. It will be impossible to get a fraction of their initial funds back any other way unless some billionaire wants to play radio.
IMHO unless someone offers them more than 8 times the annual positive cash flow for a property or a deal that increases their cash flow for that property why take it. I seriously doubt any major deals happens anywhere until market caps are relaxed. Even then debt will have to go to the ownership side of the books of the other big operators. Who in their right mind would finance a deal involving assets with have not increased in value or profit for the last decade?
IMHO unless someone offers them more than 8 times the annual positive cash flow for a property or a deal that increases their cash flow for that property why take it. I seriously doubt any major deals happens anywhere until market caps are relaxed. Even then debt will have to go to the ownership side of the books of the other big operators. Who in their right mind would finance a deal involving assets with have not increased in value or profit for the last decade?