Cumulus Announces Reverse Stock Split

http://news.radio-online.com/cgi-bin/rol.exe/headline_id=n33405

Cumulus Media Inc. announced today that its stockholders voted to approve a 1-for-8 reverse stock split of each class of the Company's issued and outstanding common stock. The vote was held at a special meeting of the Company's stockholders today (Oct. 12). As of 5:00PM today, every 8 shares of each class of Cumulus common stock will be converted into 1 share of the same class of such common stock. No fractional shares will be issued in connection with the reverse stock split. A stockholder who otherwise would have been entitled to receive a fractional share of stock as a result of the reverse stock split will instead be entitled to receive one whole share of the applicable class of common stock. The reverse stock split will also result in a corresponding reduction in the number of authorized shares of the Company's common stock.

The reverse stock split is being implemented primarily to increase the trading price of the Company's Class A common stock to permit the Company to regain compliance with NASDAQ listing requirements and to enhance the liquidity of the Class A common stock. There will be no change in the Company's NASDAQ ticker symbol (CMLS) as a result of the reverse stock split. The new CUSIP number that will be applicable to the Class A common stock after the reverse stock split is 231082603.

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It will be incredible how Cumulus will survive this one though.

They'll survive, but shareholders will be wiped out or will see their equity position severely diluted at some point. Bondholders will take a cut too, in exchange for equity. There is simply too much debt to service with the cashflow that the assets can generate. Since there is no market for most of the assets, a financial restructuring through bankruptcy is the most likely outcome.

umfan said:

There is simply too much debt to service with the cashflow that the assets can generate.

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Actually that's not true. The payment plan was devised in such a way that would work with the cash flow. The only real issue would be if the cash flow situation takes a huge hit, as it did for Citadel in 2008 during the crash. Otherwise there's no reason why they can't meet their payments. It's not as though the debt is growing. In fact, they have several assets (tower properties in LA and DC) that could take care of a large chunk of the debt. They will close on the LA sale next month. What they're not doing is creating new revenue streams. That's something most other large broadcasters like iHeart, CBS, and Townsquare are doing.

It's also important to note that the private equity firms that own Cumulus owe most of that debt to themselves. Lew Dickey's expansion strategy was to buy with stock instead of cash. He traded equity for debt, and the private equity firms that put up the cash ended up owning most of the company and becoming unhappy with the money coming back. That those firms actually had the cash on hand to pay for the company's expansion means a crash is a lot less likely.

Of course, Citadel was also owned by a large PE firm and still crashed, but, as the Big A has previously noted, Forstmann Little had long since made its money back. It could afford to walk away from its shares in Citadel and could've saved it if it felt it could make better money off of Citadel in the future.

Kent said:

It could afford to walk away from its shares in Citadel and could've saved it if it felt it could make better money off of Citadel in the future.

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It's an amazing statement, though, to walk away from a company and allow it to go bankrupt.

On the other hand, the company backing Cumulus had the guts to replace the founder of the company, and pour more money into it. Very different situation.

Tom Taylor NOW:
"A disappointing post-split debut for Cumulus.
What should’ve been about a $2.40 share-price following the Wednesday evening 8-for-1 reverse split dribbled to $1.92 at one point yesterday – not reflecting much confidence in the immediate future. Of course you normally don’t do a reverse split unless you have to. (For reasons like keeping your NASDAQ listing, which is why Cumulus chose that route.) Wednesday’s close was at 30 cents and the split should’ve converted the price to $2.40. (Eight times 30 cents = $2.40.) But yesterday’s sentiment was negative. Some of the lowest prices of the day, below $2, came in the last two hours of trading. The Closing Bell price was barely above that at $2.01, down 15% for the day. Not what Cumulus and backer Crestview Partners had hoped for."

Lot's of "great" press last few daze.

What did they expect? New management hasn't really done anything. They're still losing money. They admit it. They say it's going to be a long term fix. That's not what investors want to hear.

To put it in context, most other radio stocks were down last week, and most media stocks, such as Viacom, have been down all year. Even Disney is down 25%! It's why some companies have delayed their IPOs. They know they're walking into a mine field.

This was done for one reason: To keep the stock listed on NASDAQ. The stock closed Friday at $1.95.

I don't think anyone expects anything, anymore, BigA. That's the problem. I don't expect anything other than cookie-cutter non-performance. We all debate radio on here to the point of insanity. Radio sucks.... Radio used to be.... Radio will never.... Well, I don't buy it. Someone with a different vision needs to take over. NONE of these big corporations that are in control of our airwaves have a snowballs chance in hell of digging themselves out by playing the same tired games. Just last week, you and I discussed one radio stations lack of specific performance, WKDF in Nashville. You said they would do nothing. (I didn't disagree, btw.) I know. PROBLEM. Not acceptable. Bad for the stock. Look at the ratings that we are allowed to quote and you will see that Cumulus is underperforming in most of the top 25 markets. Well, that is millions of dollars NOT being collected and stations are not being maximized. Stocks tank why? $$$ and lack of belief that things will change. IT'S CHEAPER TO REALLY FIX STATIONS AND INCREASE REVENUES than continue on scratching their heads and making lame excuses. Even if they increased those sales, as well as online marketing, etc., by 5 or 10 percent, look at what you get. A hope of something improving. So, I expect BETTER. Fire the damn idiots for not doing anything new or different. Don't accept losing money. Admit radio iteself screwed this up by admitting that the copy cat accounting, formatting, de-lifeing (sp?) and boring down has been a failure and bring back radio dammit. Ask any cluster manager how great their life is. It's tough. They are expected to be miracle workers. With no help. Friggin actually talk to all of them and LISTEN. That is a start to the long term fix.

Investors are obviously NOT happy. They may not know what each underperforming radio station is (like you said - investors don't care about WKDF, etc.) Well, that again is correct in many ways, but maybe they should. Or at least they should hold those "in charge" - those who took on the task to improve things - with looking at every option to be tops in every market. Corporate radio has done this to itself. Yes, the world has and is drastically changing. Still, as bad as all this is, 9/10 people still listen. The people are there. They wanna buy something. They want to be engaged. They have not completely left. It's like any other retail business. You fight for market share. People want to eat at your restaurant or buy your groceries. If you have horrible food (or worse - boring and bland) you may keep the doors open, but barely. Get a better chef. Clean the place up and market it. What could happen? Nothing. Or worse yet, make millions and dominate the market? Look at Kroger. Had issues with being mid-level. People just tolerated their stores. Whole Foods whittled away their top end, healthier lifestyle customers. Publix beat them in service, but not price. The majority of their stores were boring and medicinal. They looked at various markets and market shares in them and picked their battles. They brightened and refreshed stores and product mix. They refocused on service and selection and now they are doing very well in those markets and the other stores are having to keep up and improve. They could have chosen to just accept it. They did not.

Yes, I see your context, BigA. Radio and media are, in general, in trouble. Ok. I see that, like you. Great. That doesn't mean sit there and cry in your beer. Be the one shining corporate star that decides not to just get taken down because every one else is. What's the worst thing that can happen? Stock goes up to $2.95? Stations go up enough to pay the light bill? There is a better way. Step ONE. Stop accepting the FAILED and FAILING corporate mantras being preached and please stop regurgitating them like they are written on stone tablets. Break the tablets and get motivated. Break the cycle. STEP TWO. Change and evolve every time things don't work. REPEAT until they do. Or just sit their and wait for the whole thing to implode. I will buy those stations...

Oh wait....but I don't understand. You are right. I don't. Thankfully. I do not have too. Where the hell are the real solutions?

Tibbs4 said:

I don't think anyone expects anything, anymore, BigA. That's the problem. I don't expect anything other than cookie-cutter non-performance. We all debate radio on here to the point of insanity. Radio sucks.... Radio used to be.... Radio will never.... Well, I don't buy it. Someone with a different vision needs to take over.

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You're confusing programming and business. Two different things. As I said, the new management at Cumulus has improved their programming. 95 FM is getting the best ratings its ever had. The problem is that better programming won't solve their debt problem. Same with iHeart. Same with a lot of companies.

You want a small company that's nice to work for? Mix and Jack. Mix is still #1 and they're not overly corporate in their management style. The problem is the family sold the company, and Midwest is starting to get bigger. And they own Jack. Not exactly the kind of programming that appeals to the hipsters. But it's making tons of money. Someone has to handle the business, because we know that programming people don't want to sell. They just want to grow beards, wear t-shirts, and have fun.

Investors will never be happy with radio. Investors want radio to fire everyone, and run programming like Pandora and Spotify. No air talent. No local managers. No expense, just income. That's what investors want. That won't work for radio. However, that would follow your suggestions of changing and evolving. Radio is still basically what it's done for 60 years. Just playing different music. But everything else is the same. You want change? That's what they did at Pandora. Give folks the music they want without those annoying DJs. Look how successful it is. The dirty secret is they're also hundreds of millions of dollars in debt, and they haven't turned a profit since they started. But you never hear anyone say that.

You want real solutions? Or do you want things to go back to the way they were? It was so much better when insurance companies owned radio stations, wasn't it?

In the case of CumUlLess, they pushed out all the talented people, On the Air, OM, PDs, MDs, Promotions, Management, Engineering and sales.

I was in the Twin Cities Citadel cluster who has before the crash at 51% profit with one station alone billing $20-25 million.

Can't tell how it is working now, left in '13, but I'd bet heavily they aren't hitting 30% these days, the main station KQRS is not the leader in ratings any more. Plus nearly all the really strong sales staff left.

I my view, the only way Cumuless can turn it around would be to sell actual stations and that market is down as well.

They may make it, they may not.

But in the long run the worst thing to happen to radio and TV was to get Wall Street involved.

If radio ever goes back to smaller number of stations owned per group and keep the ownership locally driven, it may have a chance to recover.
Every so slightly.

Lester_the_NightFly said:

In the case of CumUlLess, they pushed out all the talented people, On the Air, OM, PDs, MDs, Promotions, Management, Engineering and sales.

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That was under the Dickeys. Then THEY got pushed out. This past year, Cumulus went on a hiring spree and hired some of the best people, and returned control of the stations to local management. But as I said, it didn't help the debt, and because of all the new expenses, the company is still losing money.

BTW, Wall Street has been involved in radio since it was invented.

I get where you are coming from. Trust me, I really do. But programming is THE business, BigA. Formats are designed to get sales and sales are what drives business. Bad or complacent programming equals smaller revenues and possibly failure. Yes, WSM-FM has had a few good books. So what? Congrats. Took em ten years. What do we do? Cheer? I don't buy that. It's mediocrity. Let's revisit their numbers in February. Who (also) owns WKDF, which has had a few good books (about as many as WSM-FM in the past 15 years) and many, many bad books? Same company. If you actually have more listeners and you have great market presence, you don't get more local revenue or local sales? Really? Then why try? Why not fire everybody and just sit around and wait for the agencies to give radio their welfare checks? The failures are the big dogs with the easy formats on life support. So you believe better programming, which should equal better ratings/TSL and having good books won't increase revenues, which would CURE some of the debt issues?

Yes Mix and Jack sold. And guess what? They are STILL the top rated stations, along with IHeart's The River. And MW stations still are the top grossing stations by a landslide. Even a little throw away station that was a massive FAILURE for Crums is doing very nicely now against the River since it was bought for a STEAL by MW. Congrats Investors. You missed another opp thanks to no one really watching your investment. SC/MW has driven the market and rates for many years. Virtually unchallenged. I Heart and Cumulus should thank their stars for MW's rates. Jack will have to evolve. So will Mix. So will every other station.

I don't believe the programming vs. sales should ever be polar opposites. Nor do you, I would guess. I believe it should be a team. Some people want to program (2000/1000) and some want to (or can) sell (1/1,000,000,000,000). We all know that. But, look at what you just said in a summary: Mix and Jack / Small Company / Top Rated / Top Rate/Revenue Drivers / Locally Programmed and Mix virtually all Live / Quality Product / Hugely Loyal Proper Demographics / Local Presence on the Streets / Mix Hasn't been Beat in literally 100+ Books. Hmm. I don't know any one on their team that is remotely wearing T-shirts or growing beards staring at their lava lamp. Maybe the accountant in disguise taking the money to the bank so he won't get robbed? OMG, they are making money and actually having Fun. How dare they. I'll take that and that team any day. Who wouldn't? It's called WINNING. I do get why you see South Central's sell and/or Midwest's growth as an eventual problem. The fear that they would turn into the crap that is IHeart or Cumulus? I get your point!

Meanwhile, back at the "competition" Cumulus/IHeart = many miserable, beat-down people are riding the system, head down, just hoping to get retirement and pray every day that they don't get fired or the building is full of hires that are so new they can't find the bathroom. They never have a chance because no one teaches them. The system is so minimal, there is no one to actually process their future potential. Don't get me wrong, some people do love working there. I mean. It's gotten "better" since Crums allows for more local programming. (I guess those t-shirt wearing scum with beards get to program now?) Where is their fight, BigA? They can't do anything because of all of the edicts and rules. The best they can hope for is average ratings and revenue. They can't rock the sinking boat. We all know that.

Investors in EVERY industry are the same way. Some people don't have investors, thank God. Some people and companies have a different threshold of success. You have even noted that a Nashville station (or two) is a failure. No ratings. Horrible revenues. Bad demographics. On and on. Well, think what you will. Investors are notorious for killing their OWN success. Or at least minimizing it. So are the big companies.

The dirty Panbora, Sputify, next self-centered all about me (the listener) app secret has long been OUT. They are BIGGER failures than radio. They can't change that with all the on-line ads or all the best content in the world. They have positioned themselves into a corner of lifeless music with no soul. Everyone on this board does know they are all in trouble. It's NOT remotely a secret to 99% of the people who would take time to visit this board. I have never seen a board that exists where 1,000's of people chime in to give a rats @$$ about Pandora. RADIO IS DIFFERENT. Look, here we all are online on a Sunday when we can be watching the Titans lose another game.

That sir, is the difference I see and believe in. Radio had/has/can have a heart and a soul and connect people unlike anything else. Even Facebook is now so full of self-centered people that only talk about themselves and their viewpoints or capture their picture perfect lives that readers are turning away because they see little or no connection on what was supposed to connect like no other online invention. Radio is "there" as a companion. We severely lack more and more in our messed up world.

Radio may ultimately implode, but I do think a smart, effective front that can produce actual success can sway "investors" to embrace the future of radio and the cost to attempt to re-build it to compete vs. letting it languish into oblivion. The amazing thing is the cost to do this is virtually nothing. Radio has ALL of the platforms already to re-believe in itself. It's a matter of looking at it from a different vantage point. Maybe, investors could be happy if someone took one damn market and ripped radio on it's side there and tested actually breaking things to fix things and found a way to compete in the new world vs. adding a fourth bland country station to gain .000005 shares and $147 of new ad revenue. I don't look back, except to look at what did work vs. what did not work. I don't want what was. I want what should and could be. We all should. I want REAL solutions. If a bearded guy in a t-shirt can fix these radio disasters, I don't care. I might have more faith in him (or her) than some goofball suit spouting the same pre-written, generic talking point lines as the radio Titanic sinks. What solutions will work and be heard in 2017. Are you in a suit or t-shirt today? (Not just you BigA) - But, for you specifically, BigA - I am just saying, seriously, you write some great points all the time, here. I think the world of you, you know that, but this little industry we all LOVE is hurtin. Maybe this board could lead the future. Crazier things have happened.

Lester_the_NightFly said:

In the case of CumUlLess, they pushed out all the talented people, On the Air, OM, PDs, MDs, Promotions, Management, Engineering and sales.

I was in the Twin Cities Citadel cluster who has before the crash at 51% profit with one station alone billing $20-25 million.

Can't tell how it is working now, left in '13, but I'd bet heavily they aren't hitting 30% these days, the main station KQRS is not the leader in ratings any more. Plus nearly all the really strong sales staff left.

I my view, the only way Cumuless can turn it around would be to sell actual stations and that market is down as well.

They may make it, they may not.

But in the long run the worst thing to happen to radio and TV was to get Wall Street involved.

If radio ever goes back to smaller number of stations owned per group and keep the ownership locally driven, it may have a chance to recover.
Every so slightly.

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Thank you for your years in radio, Lester.

TheBigA said:

That was under the Dickeys. Then THEY got pushed out. This past year, Cumulus went on a hiring spree and hired some of the best people, and returned control of the stations to local management. But as I said, it didn't help the debt, and because of all the new expenses, the company is still losing money.

BTW, Wall Street has been involved in radio since it was invented.

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These best people may not be the right people. But, we all know, except bastardly evil investors , that this disaster in the making is celebrating roughly three decades in the making. It can not be turned around quickly. I will venture to agree - it did not help the debt to make these changes, but going back to the community is where the extra profits can right the ship and create a path to success. If anything, and with all due respect, investors should be embracing anything that's not a Dickey.

Tibbs4 said:

I get where you are coming from. Trust me, I really do. But programming is THE business, BigA. Formats are designed to get sales and sales are what drives business. Bad or complacent programming equals smaller revenues and possibly failure.

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Congratulations. That's exactly what new Cumulus CEO Mary Berner has been saying all year. Great programming gets great ratings gets great revenues. So Cumulus turned programming back to local markets, they're hiring lots of people, and revenues are still going down. What happened? Because sometimes, great ratings don't mean great revenues because of competition. Competition drives down spot rates.

Tibbs4 said:

Who (also) owns WKDF, which has had a few good books (about as many as WSM-FM in the past 15 years) and many, many bad books? Same company. If you actually have more listeners and you have great market presence, you don't get more local revenue or local sales? Really? Then why try? Why not fire everybody and just sit around and wait for the agencies to give radio their welfare checks?

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Congratulations. That's exactly what happened at KDF. They just replaced their very expensive morning host, and moved him to overnights. They just gave him a contract extension, so he'll get paid morning money in the overnight.

Tibbs4 said:

So you believe better programming, which should equal better ratings/TSL and having good books won't increase revenues, which would CURE some of the debt issues?

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Congratulations. That's exactly what I believe. Why? Because there are other factors. No amount of cash flow will ever add up to $2 billion plus interest. The only revenue stream for on-air radio is spots. You can't add more spots, because that leads to listener tune out. You can't increase the price because of competition. So better ratings can't increase revenue unless somewhere along the way you come up with a new revenue stream.

Tibbs4 said:

But, look at what you just said in a summary: Mix and Jack / Small Company / Top Rated / Top Rate/Revenue Drivers / Locally Programmed and Mix virtually all Live / Quality Product / Hugely Loyal Proper Demographics / Local Presence on the Streets / Mix Hasn't been Beat in literally 100+ Books.

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By the same token, look at 650 WSM. Owned by a hotel company. Their only radio station. Local ownership. Quality product. Loyal audience. How are they doing? How are revenues at Hippie?

Tibbs4 said:

I have never seen a board that exists where 1,000's of people chime in to give a rats @$$ about Pandora. RADIO IS DIFFERENT. Look, here we all are online on a Sunday when we can be watching the Titans lose another game.

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That's funny...but there ARE boards where people go to talk about Pandora and other online radio. Just not this one. The people there are as passionate in their opinions as you are in yours. They are extremely dedicated to the concept of free streaming, no commercials, and personalized playlists. They will never go back to FM radio. Right now, technology is in their favor. But the music industry is not. So that's a very different discussion.

I love you, BigA. You know I appreciate you very much. You know I am just having a little (very little) fun .... Titans are leading...so it's best to not curse a possible win. For this discussion, I will talk local, but it can be applied to national.

Point One - Hasn't there always been competition? Or did I miss something over the last 30+ years? Wait. You are right. Mary brought it with her. Back when I "loved" radio, every station had it's own building, parking lot, management, live on-air staff (complete with bongs and groupies), vehicles that actually had the parts to run, and were in schools, at events and had people actually making SALES CALLS verses waiting to see how much the agency revenues would decrease each quarter by email. I would venture to say, on average still two to three times more staff than even the NEW Cumulus (aka Mary's bad adventure) has added to continue their fall. Let's look at some of the possible pitfalls that need to be FIXED. IF anyone has driven rates down, it's been the aforementioned two companies, not the leading company in Nashville. Competition is not as strong now, with near-monopolistic ownership. If these two companies control 60-80 percent of the market, then whose fault are the lost rates and revenues? Oh, I guess Hippie at $XX-XX (? what do I know) a spot compared to $XX (unsure) for KDF? WE know which competition has driven down rates. You are correct, great formats don't always equal great ratings. I agree. And bad formats don't always spell doom. But, where you and I might gently disagree is staying with a lost in the middle format when you could do better elsewhere. Especially if elsewhere can generate tons of additional on-line profits that you think are where ALL the money is going. Why not generate both and more and hold the station teams accountable to report progress on a monthly basis and actually use some of that top heavy good management to continue improving EVERY station constantly vs. getting drunk and spouting how bad your company is at every NAB. (Not specifically you BigA.)

Point Two - Is it my fault, as an investor, that management made a bad mistake on their hiring practices? No. But, if I was at the plush corporate offices, I would blow a gasket. If he was so expensive and so ineffective, then I would blame the people who allowed his hiring and substantial contract to not reflect performance. I would blame all parties involved for a contract extension at a rate equal to or above the previous contract as a morning show host. I don't know who "he" is, so forgive me for not knowing why any station would find "him" valuable enough to keep on at night when there is no revenue. Maybe someone needs to give up their bonus (which Crums gave some SMALL amounts to on a local basis here last week) or salary for such a blunder. Looks like more of the same old big corp radio stupidity that has tanked em for decades here. I do ask, did said management locally promote him (them) as a morning show or get him out in public to help increase his value? I don't know. There are ways to make it work, if you do something a bit different.

Point Three - You are totally right. They should sign the stations off and hang the Dickey's on the public square. $2B, huh? And IHeart? They spent $2B on new signs and paper when they changed their name. Cut their losses now. At $1.95, the investors, should cash in and then buy those stations for what they are really worth, about $5M on average. But at an average of what, $517 million per station invested at this point, why even charge for any commercials? Let's see - Locally - Mix is maxed on hourly spots. They push 13 minutes an hour at top rate and how the hell can they stay number one with no TSL or listeners, especially now that Midwest bought them with so much competition defies logic. Especially for 12 years. My gosh, you just figured it out. If you have more than $1b in debt, you can't compete. Go figure. So just don't.

Point Four - Mix/Jack were debt free for years, SMARTER times a BILLION(s) than what we see with IHeart and Crums, but not as awe inspiring to those who sit around and pontificate things they can't actually afford. Well just call it debt envy. Like the people who trash Dave Ramsey. The ones that take his advice, sit back and accept smaller is smarter if there is no stress of debt nightmares. Yet, the people who have nada trash Dave for being a con or a know-it-all or used car salesman. WSM-AM is paid for, The Hotel company is doing just fine with or without WSM. WSM is a little project that is just like it was to the insurance company, something that might bring people in (like Opryland before some dumb@$$ that probably works in radio now ruined that cash cow.)
It's not driving it's company into the ground. Revenues at Hippie? Well, what do I know about that? - You and David obviously know more about that some dumb@$$ like me. Congratulations.

Finally - You gave me a lot of cant's. You really don't see any cans? The companies are that far gone? (I think they are, but they still have too try to justify why they are on the air?) I would not have EVER bought a share (although they did try that once when they paid me CASH for a station that they well overpaid me for.)

Tibbs4 said:

Point One - Hasn't there always been competition? Or did I miss something over the last 30+ years?

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Not to the degree there is today. But when National Life sold WSM, that was at a time when there were maybe five stations in Nashville, all AM. How many are there now, not only on AM, FM, satellite, online, etc, all competing for the same ad dollars. The competition has never been greater than it is now.

Tibbs4 said:

Point Two - Is it my fault, as an investor, that management made a bad mistake on their hiring practices?

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Investors don't get to manage. All they do is provide the money. No one asks them to second guess hiring. The stock was doing fine two years ago. It only started dropping a year ago. So before that, apparently, everyone was happy.

Tibbs4 said:

Finally - You gave me a lot of cant's. You really don't see any cans? The companies are that far gone? (I think they are, but they still have too try to justify why they are on the air?) I would not have EVER bought a share (although they did try that once when they paid me CASH for a station that they well overpaid me for.)

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I don't see them as "can'ts" Neither Cumulus nor iHeart has filed for bankruptcy. They're both doing fine in terms of day to day operations. iHeart has among the highest rated and highest billing radio stations in the country. None of those ratings or billings are paying off the debt. So that's why I say there's no relationship between programming and debt. Two different things. My approach to "can" is to focus on building other revenue streams besides on air. That's my advice. I give it for free. Take it for what it's worth.

NLT sold WSM-AM and WSM-FM in 1981. There were about 35-40 stations on the air with city grade signals. Most of the formats were non-talk, non-sports and a handful of religious stations, so there were actually many more music formats on the dial. I certainly concede more competition OFF the dial today without a doubt.

I never said investors should or do get to manage. They "should" know the chances of success or failure. These folks should be able to see the changing market if they are told the truth and decide whether to stay in the game.

I also see that day to day revenues cannot make up for the insane cost of debt to run these businesses. But, that does not preclude management from their fiduciary responsibility to run these stations at their best possible levels of performance, while watching the costs. That is what has always "scared" me about these two companies (or their predecessors) and where they have gotten at this point is where I felt like the would be back in the 1997 when they were already overpaying by many multiples. I want to give you credit for admitting they need to focus on other revenue streams. They certainly have too. But, someone should have kept the debt in line with what they thought the actual company holdings (at the time) could generate in revenues. Not "hope" for a possible evolution of a revenue stream to make up for the disaster they created by originally over spending and over buying. That kind of speculation just blows my mind. Who did not hear weekly that it was just a matter of time before radio was gone?

Your advice may be free, but it is worth a lot! You know that. My advice the other hand....is just from a guy who envisons a cracking radio dial controlled by huge broken machines that need to get themselves fixed to continue to be catalysts for any profit or lead listeners/viewers to additional potential revenue streams and not get killed by all the other music sources and, by default, stay around to ensure their lowly small competitors don't get thrown out with their dirty water.

Tibbs4 said:

I never said investors should or do get to manage. They "should" know the chances of success or failure. These folks should be able to see the changing market if they are told the truth and decide whether to stay in the game.

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And I think that's exactly what happened. They were sold something by a great salesman. They gave him carte blanche to build what they wanted. They paid him a management fee, and they owned the company. After a few years, they exercised their option and replaced the manager. Right now they're still in the game, with their hand-picked management. Nobody's calling in the loan, so bankruptcy is not on the horizon. Meanwhile they're banking the cash flow.

Tibbs4 said:

I also see that day to day revenues cannot make up for the insane cost of debt to run these businesses.

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Have you read their SEC report? Because truthfully, the cost of the debt isn't that unmanageable. They have two big pieces of real estate, one in LA and another in DC, that will return $250 million to their lender. That ought to keep them happy for a while. Meanwhile the cash flow is pretty healthy. However, there is no growth, and that's why no one is buying stock.

Cumulus didn't overpay as much as Citadel did. Cumulus bought Citadel in a bankruptcy sale. That's where most of the debt came from. And they bought after the crash, when the market was at the bottom. Good time to buy. Cumulus got all of Citadel, including ABC Radio, for the same price Citadel paid for just ABC. So that's not a bad deal. Plus they sold $100 million worth of Citadel stations after the sale. What I'm telling you is it's not as bad as you're saying it is.