Entercom: IMHO will pass everybody in what really counts profitability and serviceability. Both CC / iHeart and the cloud company merely exist to service debt. Like trying to bail out the Titanic with a Dixie cup.
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Cumulus stock worth less than a candy bar !!!
- Thread starter gregg75
- Start date
Entercom: IMHO will pass everybody in what really counts profitability and serviceability. Both CC / iHeart and the cloud company merely exist to service debt. Like trying to bail out the Titanic with a Dixie cup.
That is not the case at all. For one share to be worth $1 then the 7 other shares would be what, 15 cents.... if one share is now equal to 8.
A reverse split is not done that way.
If XYZ, Inc. has 7,000,000 shares outstanding (issued) and they do a 1 for 7 split, they will then have 1,000,000 outstanding shares. Every shareholder electronically "turns in" their shares and are issued the new post-split shares.
So if you had 1,000 shares before the split, the old shares are cancelled and in their place you get 142.85 shares.
On the market, if the shares of XYZ had been selling for $1 before the reverse split, the second the split happens, each new share of XYZ, Inc (made up of 7 old shares) will start trading at $7.00 per share.
The old shares are gone, cancelled and deleted. They have been exchanged for new shares, each worth 7 times the value of an old share.
In the specific case of Cumulus, they now have 29.31 million new shares: pre-split they had slightly less than 210 million old shares.
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That really does not matter at all.
Then why are my shares worth LESS than the old shares were? In your view they are worth the same amount (just fewer shares) which is not the case.
Because since the split, the company lost a court battle over a deal to convert some debt to equity. The company hasn't come up with a new plan. So until then, they're seen as a wounded dog. They haven't had ANY good financial news at all.
Bankruptcy is inevitable for the company John & Lew Dickey ran into the ground. The only question is whether or not they enter court with a pre-pack.
You're not going to grow revenue (and the bottom line) substantially when (i) radio overall is stagnant to slowly declining as an overall advertising medium, (ii) many of their radio stations in large markets continue to have mediocre to downright terrible ratings, (iii) they are doing a terrible job at cultivating new talent and (iv) they are burdened with horrible contracts negotiated by John Dickey.
This is a mess that Mary Berner cannot fix! It's an impossible task. Simply allowing more time to "execute the turnaround plan" is no solution.
How many more conference calls are we going to hear about the stupid land sale near D.C. with Toll Brothers that will never close???
The fact of the matter is WABC and WLS will never return to their pre-Cumulus ratings, WRQX will never return to its pre-Cumulus billing, the Nash brand has been and will remain a complete dud, and Newsradio 106.7 will always be a total loser of a radio station with its current format.
You're not going to grow revenue (and the bottom line) substantially when (i) radio overall is stagnant to slowly declining as an overall advertising medium, (ii) many of their radio stations in large markets continue to have mediocre to downright terrible ratings, (iii) they are doing a terrible job at cultivating new talent and (iv) they are burdened with horrible contracts negotiated by John Dickey.
This is a mess that Mary Berner cannot fix! It's an impossible task. Simply allowing more time to "execute the turnaround plan" is no solution.
How many more conference calls are we going to hear about the stupid land sale near D.C. with Toll Brothers that will never close???
The fact of the matter is WABC and WLS will never return to their pre-Cumulus ratings, WRQX will never return to its pre-Cumulus billing, the Nash brand has been and will remain a complete dud, and Newsradio 106.7 will always be a total loser of a radio station with its current format.
Bankruptcy is inevitable for the company John & Lew Dickey ran into the ground. The only question is whether or not they enter court with a pre-pack.
You're not going to grow revenue (and the bottom line) substantially when (i) radio overall is stagnant to slowly declining as an overall advertising medium, (ii) many of their radio stations in large markets continue to have mediocre to downright terrible ratings, (iii) they are doing a terrible job at cultivating new talent and (iv) they are burdened with horrible contracts negotiated by John Dickey.
This is a mess that Mary Berner cannot fix! It's an impossible task. Simply allowing more time to "execute the turnaround plan" is no solution.
How many more conference calls are we going to hear about the stupid land sale near D.C. with Toll Brothers that will never close???
The fact of the matter is WABC and WLS will never return to their pre-Cumulus ratings, WRQX will never return to its pre-Cumulus billing, the Nash brand has been and will remain a complete dud, and Newsradio 106.7 will always be a total loser of a radio station with its current format.
You're not going to grow revenue (and the bottom line) substantially when (i) radio overall is stagnant to slowly declining as an overall advertising medium, (ii) many of their radio stations in large markets continue to have mediocre to downright terrible ratings, (iii) they are doing a terrible job at cultivating new talent and (iv) they are burdened with horrible contracts negotiated by John Dickey.
This is a mess that Mary Berner cannot fix! It's an impossible task. Simply allowing more time to "execute the turnaround plan" is no solution.
How many more conference calls are we going to hear about the stupid land sale near D.C. with Toll Brothers that will never close???
The fact of the matter is WABC and WLS will never return to their pre-Cumulus ratings, WRQX will never return to its pre-Cumulus billing, the Nash brand has been and will remain a complete dud, and Newsradio 106.7 will always be a total loser of a radio station with its current format.
IIRC the reverse split was 1 for 10 or 1 for 20. They should have made it 1 for 100 or 1 for 200 since the stock has continued to decline in value and is now being threatened with delisting again.
The split was one-for-eight.
The de-listing deadline is this Friday. My expectation is they won't be doing any more reverse spits. It simply dilutes existing shares, and there's no point in doing that. I'm not sure that being listed on NASDAQ is a big concern of theirs. There are more fundamental issues to focus on. It certainly has had very little impact on operations.
I have to say it is pretty interesting to hear national talk show host Phil Valentine explain to his listeners, last week, why he jumped from music radio to talk back in the late 80's. I do not think I have heard a more logical and real assessment of the overall radio picture. I think we all have had more than our fair share of discussions, on this board, on how radio has to be totally different from "better" products or apps that allow a person to program their own music station on their own. Phil nailed it by saying "radio has to give listeners entertainment and something worth listening too. You can't just have some dude VT-ing by reading dead sounding, boing liners." He is on a Cumulus station in Nashville and threw plenty of arrows at Cumulus and iHeart for "creating" a shell of what radio once was before deregulation and technology. That being said, as more cuts continue and certainly no good financial news, Big A, what do you do to bring the heart and soul back to radio to such a point that the audience responds and advertisers (agencies) feel like the investment is solid without sinking into more debt? I know listenership is actually pretty good, given so many options. How do you turn it all around? You would think there would have been a serious all out "creative call" to get a concise plan together. This is a tough problem, but is it impossible?
You're talking about two different things. Programming won't solve debt issues. Right now the audience and the advertisers are responding in huge numbers even at companies struggling with debt. Advertisers respond to where the audience is, and the audience responds to getting what it wants easily and cheaply. Debt isn't a part of either transaction.
True. I get what you are saying. Having not studied this in a few years, Big A, would/could even say a hypothetical 20% or 30% increase in revenues (indirect, online and on air) really even matter enough to help solve any major part of the debt? (Again, just been off the grid for a while worrying about my own fun projects to tune into the big companies situations.) How else can you stop the looming disaster?
Maybe, but the fact is there won't be a 20 or 30% increase in revenue at any of these places. They can't increase their spot rate, and they can't increase the number of spots. That's simply the truth. They're trying to cut losses. That's a bigger issue.
Managing debt is a fact of life. Most people have home loans or credit card debt. They make their monthly payments, and that's it. Principle plus interest. The interest is a tax deduction. Same with radio company debt. These companies aren't going to be paying off the debt. The issue is managing it. That's a very dull discussion that has nothing to do with on-air operations. That's why you have radio stations continuing to hire DJs, continuing to provide local services, and continuing to stay on the air. I just read where iHeart signed Elvis Duran to a five year deal. Why would he do that if the company is about to go belly up? That's because the company isn't about to go belly up. There will be a deal made over the debt, the debt holders will not be happy, and life will go on. That's how this will end up. Same with Cumulus.
When a local radio station makes staff cuts, it's not because of corporate debt. It's because local hasn't met its sales goals. If you look at both iHeart and Cumulus, neither has used any savings at local stations to pay down debt. The debt has stayed the same, regardless of changes at local stations. They've taken certain cost savings to pay for other increased costs. As I said, it's a very dull conversation. You're seeing a lot of the same things at stations that aren't making the headlines.
For Cumulus, possibly. Their total year 2016 revenue was $1.14 Billion, and operating profits were roughly $200 million.
If revenue increased 30%, to approximately $1.5 Billion, and the cost of that revenue was the same, profits would be about $600 million a year and Cumulus would be able to pay off its entire debts in about 3.5 years.
For iHeart, I doubt it at this point. If you could wave that 30% revenue enhancement magic wand in 2010 or 2011, Clear Channel/iHeart would be in good shape. But with lots of debts coming due in the next 12-18 months, it's pretty late.
If revenue increased 30%, to approximately $1.5 Billion, and the cost of that revenue was the same, profits would be about $600 million a year and Cumulus would be able to pay off its entire debts in about 3.5 years.
For iHeart, I doubt it at this point. If you could wave that 30% revenue enhancement magic wand in 2010 or 2011, Clear Channel/iHeart would be in good shape. But with lots of debts coming due in the next 12-18 months, it's pretty late.
Added revenue comes at a cost, which is sales expense and commission. National business has both a rep firm commission and an agency commission as well as the NSM's override or commission.
Local sales increases might require more sellers, or a different commission structure.
So any increased revenue does not flow directly to the bottom line. And,as BigA stated, it is not likely that any significant increase in sales will happen in an era of flat of slightly declining industry revenue.
I know. I did use the phrase "magic wand" in my post. 
Thanks...I didn't have the figure handy but when I found out what it was when it happened I wondered why they didn't go farther since the new share price was still awfully low.
Reverse stock splits don't dilute shares--everyone gets the same adjustment. Same percentage of a smaller pie. Same as a regular stock split, just the other direction.
But if there are questions about the company as a going concern, it's really just the proverbial rearranging deck chairs on the Titanic at that point. And as the other poster said, Nasdaq delisting is probably the least of their concerns.
The stock exchanges require minimum share prices (because they don't want to deal with penny stocks that could sully the other stocks they serve as an exchange for by association), and stock buyers like share prices in a nice range that make it easy to buy a lot of shares in round 100-share lots (one of the perpetual complaints about Berkshire Hathaway--BRK.A is trading at $248,750.00 a share at this moment), and stock splits are considered a bullish signal (reverse splits a bearish signal), but fundamentally stock splits don't change a darn thing with a company's finances.
Looking into my crystal ball, CMLS is going to go bankrupt and the CMLS shareowners will be wiped out, as will most of the debt. The question is whether there will be a "New Cumulus" with a much improved capitalization, or whether it will be parted out. My guess is the former, since nobody is going to want to buy big blocks of radio stations (someone might be interested in Westwood One). I could see other station owners (Cox, CBS/Entercom, etc.) buying a few onesy-twosy to round out existing clusters, but nobody is going to "want to get into radio".
One interesting question is what happens to their bad assets, like various and sundry underperforming, cash-flow-negative AM stations. Would there be a lot of licenses simply mailed back to the FCC and tax writeoffs taken?
Three possibilities:
Back several years ago you could "sell" tax losses to folks who needed them. A tax "loss" would be of no value unless you are making a profit and had to pay tax.
#1 They could "sell" the real dogs (negative cash flow) to somebody needing a tax loss and let them shut them down.
#2 A class B's AM footprint is usually much larger than a lot of the C and D stations there could be some value in larger AM coverage area for a much taller translator antenna to an existing AM / FM translator operator.
#3 I forget the time but I believe they are going to let AM A's and B's get translators too.
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