It's been an ugly week for most media stocks, but Cumulus' stock price has been especially hard hit. Cumulus has been trending down since early August. The company is $2 billion behind the 8 ball, with a market cap of $705.4 million. Its debt covenants are out of whack and there's significant debt that comes due in 2015. Cumulus stock, which traded at $8 a share in January, closed Monday (10/13/14) slightly higher than $3 per share. A respected broker was asked if this was "a buying opportunity." He responded, "I would touch this stock with a ten foot (di)pole." More synergies to come. http://finance.yahoo.com/echarts?s=CMLS+Interactive#symbol=CMLS;range=1y
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Cumulus Following In The Steps Of Citadel
- Thread starter Element9
- Start date
AND this was unexpected?? Cumeless has soo much debt (not as much as iHeart does though)....I would NOT touch that stick with a 10meter dish...
iHeart is trying to put off bankruptcy by convincing holders of bonds that come due in 2016 to take new bonds that are due in 2020...good luck on that
Who does Cumulus owe the money to? The short answer is "the guys who hold the notes". They acquired Cumulus through bankruptcy. They're not about to give them up. The easy answer is to refinance at exhorbitant interest rates, sucking more profits back to the major owners, leaving less for the average stockholder. Their acquisitions didn't reduce their exposure. The "realignment", which will result in less power in the hands of the Dickeys. That seems like an indicator that the real owners aren't enamored of Lew Dickey's management. Ask Farid how that worked out.
Mmmmmmmmmmmmm-hm.
One thing Dickey has done that Farid wouldn't do is promise to hire someone big to run the radio stations. A Wall Street favorite, like Mel Karmazin. That's what he announced a few months ago. That's what Wall Street is waiting for.
Given a choice, most people would prefer holding CBS to CMLS, which is off 60% since August. CMLS is FUBAR. Spread thinly and misdirected. Nash local and net isn't the rave it was expected to be. Nash Icon? Waiting. The Cumulus-CBS Sports deal is faltering. Lew didn't even talk about it on the last quarterly call. Wall Street loves Mel, but Mel likes equity positions. Would the lenders go for that? "Yes," say some money people. Considering Mel's history, who'd be surprised if Lew winds up answering to Mel?
Mel won't take the job if he reports to Lew. No one of any value will. My prediction is that Lew will have to give up his position if he wants to save his company. He already demoted his brother and retired his other COO. Everyone can see that.
The stock price has nothing to do with programming. It has everything to do with the future of the company. I think the investors either know, and don't like it, or they're concerned about how long this is taking. I imagine a few people have already been approached for CEO and either said no, or made demands that were too high. THAT is what's going on with the stock price.
Lew ain't saving "his company". That went away when his share of the stock went down to about 6%. The "merger" was simply a means of keeping the original Cumulus from bankruptcy, hiring a management team who promised big returns for a lot less than Farid wanted, and hiring a team with some skin in the game. So far, results say it ain't working. The big guys with actual control of the company are apparently hearing from some big market people who are unimpressed with Lew's "systems and synergies". Welcome to the big leagues, Lew.
And, of course, programming has nothing to do with the value of a media company, right? I guess that ratings don't matter, either, right?
Not to investors, no. They care about results. How you get there is someone else's problem.
November 10th is the big day. That's the next investor conference call. If the "big guys with actual control of the company" have their way, it will be a very interesting call, perhaps with a big announcement. I don't expect status quo.
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What bankruptcy?? Cumulus has not been through a bankruptcy. Cumulus bought Citadel after it emerged from its own chapter 11.....
In all fairness, Cumulus owns and operates SOME great stations.
In my area, 96.1-WHNN is very successful.
WHNN was a Citadel station before the merger.
In my area, 96.1-WHNN is very successful.
WHNN was a Citadel station before the merger.
Obviously you have not been watching the news...In August 2014, Lew Dickey bought 25,000 more shares of Cumulus on the open market....which caused the stock price to rise 5%....which in this stock market's economy is not bad..
To say that revenue has nothing to do with programming denies the fact that smart programming usually leads to greater ratings, which indeed drive revenue.
To Cumulus’ credit, there are many fine stations in its national portfolio that generate substantial revenue. Unfortunately, the major market AMs in New York, Detroit and Los Angeles, and to some extent San Francisco, have been a massive headache for Cumulus.
As to Lew Dickey's purchase of 25 thousand shares of CMLS in August 2014: That was his attempt to jolt CMLS stock back to life following a bearish July, during which share price fell each day. The ploy worked to the extent that CMLS rallied to 4.96 a share in August, but the stock bagan to slide in September.
CMLS improved today (10-15-14), but it's still weak. As BigA noted, the November call will be instructive, perhaps even revealing. There may be some anticipation of a ‘medicine man’ being appointed. This could inspire Wall Street to test the water and buy, which would move the share price higher, but it’s unlikely to reach the January 2014 high water mark. Friends in the financial sector say the impending debt and frayed debt covenants are the main reasons investors and the financial community don't have much faith in Dickey and his operating plans.
To Cumulus’ credit, there are many fine stations in its national portfolio that generate substantial revenue. Unfortunately, the major market AMs in New York, Detroit and Los Angeles, and to some extent San Francisco, have been a massive headache for Cumulus.
As to Lew Dickey's purchase of 25 thousand shares of CMLS in August 2014: That was his attempt to jolt CMLS stock back to life following a bearish July, during which share price fell each day. The ploy worked to the extent that CMLS rallied to 4.96 a share in August, but the stock bagan to slide in September.
CMLS improved today (10-15-14), but it's still weak. As BigA noted, the November call will be instructive, perhaps even revealing. There may be some anticipation of a ‘medicine man’ being appointed. This could inspire Wall Street to test the water and buy, which would move the share price higher, but it’s unlikely to reach the January 2014 high water mark. Friends in the financial sector say the impending debt and frayed debt covenants are the main reasons investors and the financial community don't have much faith in Dickey and his operating plans.
I never said "revenue has nothing to do with programming." I said investors aren't interested in programming, and they don't buy stocks based on radio programming. You might as well buy stock in Chipotle because you like burritos. You don't buy stock because YOU like programming, but because there is evidence mass audiences do.
Nash actually has been a success. The problem is they've only addressed one format, and allowed the others to die on the vine. I agree with you about the AM problem, and they inherited a ton of loser AMs from Citadel. Something needs to be done to address the talk radio problem, which we've discussed here many times. It's not exclusive to Cumulus, but it really stands out with their heritage major market AMs.
They don't need a medicine man. There is no such thing. They need someone who really understands the bigger picture, and knows how to multi-task. I think that's what's missing. They need someone like Bob Pittman, who knows how to build investor confidence, build new partnerships, and build a digital platform that is worthy of a major radio owner. Personally, I'd vote for Dan Mason. But he wouldn't take the job.
Lew Dickey Jr. owns about 3.5-million shares out of about 232-million outstanding shares. I actually overstated his ownership status. Buying shares in an attempt to push up the stock price actually would benefit him. Cumulus was saved from bankruptcy when their creditors essentially folded them into Citadel during the "merger". Citadel was a MUCH bigger company. Giving them the Cumulus name simply wiped away some of the bad feeling Farid left behind when he drove Citadel into bankruptcy and stiffed millions of vendors and shareholders. Some people are fooled by that sort of nonsense. The Citadel bankruptcy did wipe away a huge chunk of debt, but the "merged" company has $2.57-Billion in debt currently. Unlike "iHeart", they're not under water thanks to the Citadel bankruptcy.
Cumulus has seen its stock range from $8.19 to $3.02 over the last year. In truth, the $8.19 peak last January was the abberation, and the drop to around $3.00 is closer to its historic value. I hope you sold at $8.00, because this looks like the long-awaited "market correction" for this stock.
Anybody who buys stock in a company without looking at how their product is performing in the marketplace deserves to have their pocket picked.
Cumulus was in absolutely no danger of bankruptcy prior to the Citadel deal. It's still in no danger of bankruptcy. Yes, it's true that a side business Cumulus managed filed bankruptcy about three years ago, but Cumulus only owned around 25% of it, and it had no danger of dragging the entire company down. Cumulus has always been good about keeping its debt at a manageable level because it rarely paid cash when making acquisitions. As you mention, the vast majority of the Citadel deal was a stock-for-stock transaction. I don't remember the exact number, but between 2/3 and 80% of the Citadel deal was paid in stock. In a less publicized deal, Cumulus bought some stations where I worked before the recession and only paid $1-1.5 million in cash out of almost $40 million total. Deals like that keep the debt manageable and the balance sheet healthy. Investors also like them because stock-for-stock transactions are tax free.
Of course, while stock transactions are a great way to keep debt down, they swap equity for cash. In layman's terms, you own less of the company with every deal you make. It's not particularly rare for businesses to make multiple stock transactions and have the management and executive teams removed by investors after they gain the majority of the company. As The Big A points out, investors want a certain return on their investments. They don't really care how they get it so long as it's legal, and they'll force their collective hand if it doesn't happen.
I doubt very much there are many casual non-professional investors buying Cumulus stock. Or buying radio stock in general. My sense is that someone with Cumulus stock is connected with one of the investment companies or the company itself in some way.
The day I saw that, the first thing I did was figure out how much he paid for them and noted what a small purchase it was relative to his total 2013 compensation. [$19,955,769 in 2013 according to Forbes.com]
The stock went up by 5% but I doubt that it was caused by his purchase. If it was, think of what that would mean for Lew Dickey. All he he would to do to pump his stock is make small purchases.
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