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Interesting Article on Cumulus' New CEO and Operational Changes

C

ChannelFlipper

There was an interesting article in the WSJ yesterday about Cumulus' new CEO, Mary Berner, and her attempts to revitalize the company amidst the after affects of its recent poor acquisitions, reduced revenue, and crushing debt burden. KLOS is featured prominently in the article, which is unfortunately behind the Journal's pretty tough paywall. The site I linked to below has about half the article presented before it cuts off to the paywall.

http://mediaconfidential.blogspot.com/2016/05/report-cumulus-ceo-aims-to-revive-radio.html

I'll just add one more sentence myself, which is the last one that I know several posters here will find interesting.

In Los Angeles, KLOS has shot to first place among men between the ages of 25 to 54, from 17th a year ago as its programmers started subbing ’80s and ’90s hits for ’60s and ’70s favorites, and hired former Sex Pistols guitarist Steve Jones to revive his locally beloved “Jonesy’s Jukebox” radio show.

Take that, KSWD.
 
I remember threads here hypothesizing about format changes at KLOS, and that perhaps it might flip to Nash country because it was the brainchild of John Dickey. So now, under the new CEO, the focus has been towards less centralized programming, and more local decision-making. In that way, they've revived and preserved a heritage brand. The next question is how do you take that brand and reinvent it in today's media environment. I think that's what's missing in Berner's business plan. She seems so focused on making these stations profitable in the conventional media system that there's no future plan that involves other revenue streams beyond spots & dots.
 
When you're fighting a fire, you concentrate on putting it out...not a new piece of equipment. Berner knows what to do to improve cash flow, but the question that remains is does she have enough time? Like I ♥ Debt, lenders are very nervous about their money and could easily force either company into BK. But do they really want to try to untangle the mess? Doubt it. So far Berner is doing a much better job than the Dickeys did...but what a job it is!
 
There are only so many spots you can sell, and you can raise the price of those spots only by so much. If the primary focus is on selling those existing spots, there won't be much growth.

Based on her recent hires, she seems to think the problem can be solved by marketing. I'm not so sure that this is a marketing problem.
 
Cumulus is bumping their head against delisting by NASDAQ National Market System. They have to close about $1 for ten consecutive business days to avoid this fate that few companies survive. The deadline for this closing is coming up, and their current share price is $0.41. I don't think they can make it, unless they execute some kind of reverse split. The Pink Sheets (the place you go to die) has already reserved a symbol for them. They're ready.

One positive in this might come from sale of their assets to better companies and/or local owners.
 
Willits said:
Cumulus is bumping their head against delisting by NASDAQ National Market System. They have to close about $1 for ten consecutive business days to avoid this fate that few companies survive. The deadline for this closing is coming up, and their current share price is $0.41. I don't think they can make it, unless they execute some kind of reverse split. The Pink Sheets (the place you go to die) has already reserved a symbol for them. They're ready.

One positive in this might come from sale of their assets to better companies and/or local owners.
Click to expand...

The should read close "above" $1..
 
Reverse split time, when a lot of nothing becomes less of nothing. Emmis is doing a 4 for 1 reverse split which takes their share price of over 50 cents to about $2.50. Such a move reduces the number of outstanding shares in a company, but doesn't change the fact that the stock is just about worthless.
 
Willits said:
One positive in this might come from sale of their assets to better companies and/or local owners.
Click to expand...

Like who? There are no "better companies" or "local owners." No one in their right mind would buy radio stations that have already bankrupted one company (Citadel). There are lots of radio stations on the market now, and no local owners rushing to buy them.

Ask yourself: Would you spend your own personal money on radio stations?
 
TheBigA said:
Ask yourself: Would you spend your own personal money on radio stations?
Click to expand...

Well, I certainly wouldn't. But there might be a Gary Lee or two around that might.

As for "better groups", I would consider nearly every other one better than Cumulus. There's Hubbard, Greater Media, Bonneville, Alpha, Townsquare, and on and on. Being a better group than Cumulus is a really low standard, but that's just my opinion. A couple of those groups even seem to be on the hunt for good deals on stations right now, such as Alpha and Hubbard.
 
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I've heard from a few friends that there are people ready to buy radio stations once the fire sale happens, but then again, why aren't they buying now? In the unlikely event Cumulus or iHeart were to liquidate, who in the world would be lending money. Someone on Facebook told me he only needed 5 million dollars to start his deep oldies station. I rolled my eyes.
 
Willits said:
That's a good question, but my guess would be that they're waiting for a bankruptcy court type of fire sale where they might go for pennies on the dollar compared to the asking price now.
Click to expand...

The debt will go pennies on the dollar, but not the stations. Most Chapter 11's have the senior debt holders getting new equity in the emerged company in return for their investment. They don't like it, but 20 cents on the dollar is better than 5 cents. They usually go along with the plan in hopes the post BK company (sans massive debt) can make some money and their shares increase in value.
 
DrAkbar said:
The debt will go pennies on the dollar, but not the stations. Most Chapter 11's have the senior debt holders getting new equity in the emerged company in return for their investment. They don't like it, but 20 cents on the dollar is better than 5 cents. They usually go along with the plan in hopes the post BK company (sans massive debt) can make some money and their shares increase in value.
Click to expand...

And since the bulk of equity in a radio company consists of "goodwill" based on the ongoing operations of its stations, there is going to be no fire sale of assets. Everything possible would be done by the bankruptcy trustee to insure that all the value of projected leading cash flow is preserved.

As you say, a piece of something is worth more than all of nothing.
 
ChannelFlipper said:
There was an interesting article in the WSJ yesterday about Cumulus' new CEO, Mary Berner, and her attempts to revitalize the company amidst the after affects of its recent poor acquisitions, reduced revenue, and crushing debt burden. KLOS is featured prominently in the article, which is unfortunately behind the Journal's pretty tough paywall. The site I linked to below has about half the article presented before it cuts off to the paywall.

http://mediaconfidential.blogspot.com/2016/05/report-cumulus-ceo-aims-to-revive-radio.html

I'll just add one more sentence myself, which is the last one that I know several posters here will find interesting.

In Los Angeles, KLOS has shot to first place among men between the ages of 25 to 54, from 17th a year ago as its programmers started subbing ’80s and ’90s hits for ’60s and ’70s favorites, and hired former Sex Pistols guitarist Steve Jones to revive his locally beloved “Jonesy’s Jukebox” radio show.

Take that, KSWD.
Click to expand...

Heidi & Frank being #1 in the same period with Men 18-34 didn't hurt either.
 
Willits said:
Did they actually get to bankruptcy court, or were they just sold off?
Click to expand...

Yep, and there are a number of smaller groups that also went Chapter 11 and either sold or reorganized. An example would be Black Crow Media in GA, AL and Florida back in 2010.
 
DavidEduardo said:
Yep, and there are a number of smaller groups that also went Chapter 11 and either sold or reorganized. An example would be Black Crow Media in GA, AL and Florida back in 2010.
Click to expand...

There was also a company in the northwest that owns stations in Redding & Chico. Most of it was between 2008 and 2010.
 
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