CUMULUS MEDIA FILES FOR BANKRUPTCY

[Deleted member 108832]

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?

You may be "second choice" as a screen name, but that take on the current situation is first class. Nothing to argue or offer. Well said.

 

[davideduardo]

Now that Cumulus has almost no debt

No, they reduced debt. I believe another poster showed that they will still have several hundred million in debt to pay.

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.

That is what they have always done. The problem is that the "cash" you mention has not been enough to pay the debt.

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, who is going to pour money into a business that is in decline?

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?

And, if you take into account inflation and the value of the dollar, radio revenue is down about 60% since 2005. Not coincidentally, the Persons Using Mass Media (formerly PUR, or Persons Using Radio) is off by around 70% since Y2K.

 

[Deleted member 108832]

No, they reduced debt. I believe another poster showed that they will still have several hundred million in debt to pay.

Hey, now! That's the Dickey family's legacy that you're talking about.

That is what they have always done. The problem is that the "cash" you mention has not been enough to pay the debt.

Likely never will be.

Even then, who is going to pour money into a business that is in decline?

Well, George Soros sure didn't mind dropping a ridiculous amount of his "hard-earned" money on a rag-tag batch of crap AMs and a couple of equally crap FM rimshots.

And, if you take into account inflation and the value of the dollar, radio revenue is down about 60% since 2005. Not coincidentally, the Persons Using Mass Media (formerly PUR, or Persons Using Radio) is off by around 70% since Y2K.

Yep, this is true. Of course, that's the result of deregulation. Would we all be sitting here, with the industry swirling the drain as it is now, had this piece of legislation never seen the light of day?

Quick, Doc! Fire up the De Lorean and set the time circuits to 1981, so we can stop the foundation from being laid for the Telecommunications Act to have ever come to fruition.

Oh, no! We can't do that, so we're just stuck with what we've got. 🤷

 

[Kent]

Well, George Soros sure didn't mind dropping a ridiculous amount of his "hard-earned" money on a rag-tag batch of crap AMs and a couple of equally crap FM rimshots.

He also dropped almost $1/2 billion into Audacy. I realize he probably didn't pay full price for that debt, but he seems to see a return potential in radio.

Yep, this is true. Of course, that's the result of deregulation. Would we all be sitting here, with the industry swirling the drain as it is now, had this piece of legislation never seen the light of day?

Quick, Doc! Fire up the De Lorean and set the time circuits to 1981, so we can stop the foundation from being laid for the Telecommunications Act to have ever come to fruition.

Oh, no! We can't do that, so we're just stuck with what we've got. 🤷

I don't know that we'd have tons of radio listeners today had Docket 80-90 never happened. Are greater percentages of people using mass media in countries that didn't saturate the dial? I haven't seen much data on that throughout the world, but that certainly wouldn't seem to be the case in Canada.

People loved the extra choices they got as a result of 80-90. They didn't view the impact on the existing local operators as being their problem. I don't think their opinions would change that much knowing what they know now because they've largely moved on to different methods of consuming that content. You can't stop progress.

 

[davideduardo]

Well, George Soros sure didn't mind dropping a ridiculous amount of his "hard-earned" money on a rag-tag batch of crap AMs and a couple of equally crap FM rimshots.

I think this is where politics gets in the way of shrewd business practices. The Soros entities that bought the junk from UVN were, I believe, totally driven by keeping Salem from acquiring those stations.

Yep, this is true. Of course, that's the result of deregulation. Would we all be sitting here, with the industry swirling the drain as it is now, had this piece of legislation never seen the light of day?

At the time of the mid-90's deregulation, about half of all U.S. radios stations were not profitable. The results of Docket 80-90 affected smaller markets by allowing new stations. It affected big markets by allowing easy upgrades and the moving of stations into "better" markets. Plug in a recession and the introduction of the "smart" phone in 2008, the pandemic and the growth of online retailing vs. local stores and you have a disaster for radio, which has always been predominantly a locally based medium.

 

[davideduardo]

Hey, now! That's the Dickey family's legacy that you're talking about.

This is a separate response to your interesting points: there should be a book in business school case study style about the Dickey episode in radio. While it shows how the wrong strategies were employed by "non-visionary" people in broadcasting, the story translates into any area of business.

 

[TheBigA]

Would we all be sitting here, with the industry swirling the drain as it is now, had this piece of legislation never seen the light of day?

So the creation of the internet and personal computers had nothing to do with it? Once people had a choice, they took it. It started in 1988.

The main purpose of the telecom act was to deregulate the phone companies. After that we went from over a dozen local phone companies to Verizon and AT&T. That's why it's called the Telecommunications Act of 1996. Radio was a very small part of it.

 

[K.M. Richards]

People loved the extra choices they got as a result of 80-90. They didn't view the impact on the existing local operators as being their problem. I don't think their opinions would change that much knowing what they know now because they've largely moved on to different methods of consuming that content. You can't stop progress.

It's a given that the listeners had no idea that more choices meant smaller slices of ad revenue for the increased number of stations. And I agree that they wouldn't have cared if they had known. "That's the station's problem, not mine."

The unfortunate effect of 80-90 was a lot of new FMs -- the vast majority, locally owned -- who didn't think it through. By the time deregulation came, they were in trouble and ordering red ink by the gallon.

I don't think I would define 80-90 as "progress", but the choices opened up as the Internet became ubiquitous certainly was.

 

[johndavis]

The unfortunate effect of 80-90 was a lot of new FMs -- the vast majority, locally owned -- who didn't think it through. By the time deregulation came, they were in trouble and ordering red ink by the gallon.

I don't think I would define 80-90 as "progress", but the choices opened up as the Internet became ubiquitous certainly was.

The stated purpose of Docket 80-90 was a noble one. The problem was that the reason those communities didn't have a radio station was it could never be commercially viable. So you ended up moving them as far as you could into a metro where you could turn a hopeless situation into a... less hopeless one.

Radio people thought that having more competition would mean more money. Then they thought that consolidation would mean more money. Now we're here. I don't profess to have all the answers, but I know that pretending that it's 1983 all over again isn't a viable plan.

 

[TheBigA]

Radio people thought that having more competition would mean more money.

I really don't think any radio people thought more competition would mean more money. More competition meant smaller station shares and lower revenues. Combine 80-90 with the FM explosion, and you get the start of the death of AM.

 

[Kent]

I don't think I would define 80-90 as "progress", but the choices opened up as the Internet became ubiquitous certainly was.

Docket 80-90 was progress in the sense that it further enabled listeners to jettison a roughly 70 year old technology that no longer served them well by giving them additional choices they liked better. I was, however, more trying to make the point that you got. Whether or not Docket 80-90 had happened, people were certain to use radio less with today's technologies.

 

[davideduardo]

The stated purpose of Docket 80-90 was a noble one. The problem was that the reason those communities didn't have a radio station was it could never be commercially viable. So you ended up moving them as far as you could into a metro where you could turn a hopeless situation into a... less hopeless one.

The reason for Docket 80-90 was based in the case of Dick Friedman's station in Bonita Springs. It was a Class A, and wanted to move "up" in class to better cover the Naples / Ft. Myers market. However, back then a "major upgrade" like that opened the license to challenge, and something like nine applicants cross-filed. Dick lost the license, and the result was a total review in the way upgrades, new allocations and even station moves are handled.

Docket 80-90 say a profusion of new stations as well as lots of large markets getting multiple move-ins. In most of the small market cases, there was no new revenue and sometimes more than double the station count. So the heritage stations had to cut staff, news budgets and the like.

Radio people thought that having more competition would mean more money.

I was in two Florida markets when that happened, and nobody I met, whether at state broadcaster meetings or when we ran into each other on sales calls and the like, thought that there would be more money. We thought there would be less money for each of us.

Then they thought that consolidation would mean more money.

No, we thought consolidation would result in reduced cost and easier sales with fewer competitors. Nobody thought ad budgets would increase.

 

[K.M. Richards]

Radio people thought that having more competition would mean more money.

I really don't think any radio people thought more competition would mean more money. More competition meant smaller station shares and lower revenues. Combine 80-90 with the FM explosion, and you get the start of the death of AM.

I don't think most of the 80-90 drop-ins were started by "radio people" in the first place. Certainly some were, especially AMs who managed to get a sister FM in their same community, but the ownership limits in place at the time excluded those companies with more significant experience.

Then, as deregulation lowered the ownership caps, a lot of those 80-90s got consolidated, and that is when you started to see them being moved as close as possible to a larger market while keeping the protected contour within the COL.

While there were some larger market 80-90 drop-ins, the vast majority were in smaller markets.

 

[davideduardo]

While there were some larger market 80-90 drop-ins, the vast majority were in smaller markets.

What 80-90 did do is allow changes in City of License, so many stations could move in to bigger markets. And many Class A FMs got to convert to a B or a C. All of those required, previously, a major improvement application which had opened the doors to a cross filing.