In 2022, Cumulus Media posted a final net income of $16.2 million. In 2023, that figure plummeted to a net loss of $117.9 million – not the news the broadcaster wanted to share with the looming threat of a hostile takeover from billionaire Manoj Bhargava.
Cumulus President and CEO Mary Berner said, “While 2023 was a tough year across the media landscape, we were able to offset some of the effects of the weak national advertising climate through strong execution in our key focus areas. Specifically, we grew our digital businesses, meaningfully reduced fixed costs, and improved our balance sheet.”
In its year end financial outcomes for 2023, the company faced a decrease in total net revenue, reporting $844.5 million, marking an 11.4% decline from the previous year, and a net loss of $117.9 million, compared to a net income of $16.2 million in 2022. The loss reflects a pre-tax non-cash impairment charge of $65.3 million.
Q4 2023 saw the lion’s share of that loss, with quarterly change from 2022 falling from $54,000 to $98.06 million – a sheer falloff of 181,503.7%. Total radio broadcast revenue fell 16.2% year-over-year, to $594.55 million. General services and auto led the over-the-air ad sphere, according to CFO Frank Lopez-Balboa.
As mentioned by Berner, Cumulus Media strategically grew its digital footprint despite the challenges posed , achieving a 2.9% year-over-year rise in digital revenues, which now constitute 17% of the company’s total revenue. This includes a 16% increase in streaming revenue, buoyed by NFL streaming, and a 13% expansion in local digital marketing services, attributed to new product additions and enhanced digital sales capabilities.
Podcasting had the largest negative impact digitally, falling 8%. However, those numbers are expected to climb.
Cumulus Media continued to shore up its defenses against that hostile takeover, of which there was little discussion on the earnings call. On February 22, Cumulus Media put a “poison pill” defensive strategy in place against Renew Group Private Ltd, a Singapore-based entity led by Bhargava. This response comes as Renew Group doubled its shares in Cumulus from 5% to over 10% since January 2023, expressing ambitions to further increase its stake to 20%.
The shareholder rights plan, effective until February 20, 2025, will grant current Cumulus stockholders the right to purchase more shares at a discount if any party acquires more than 15% of the company’s Class A common stock, potentially reducing the acquirer’s control. Each share of Class A and Class B common stock as of March 4, 2024, will receive one right under this plan, with the board having the authority to end the plan if deemed in the best interest of the company and its shareholders.
So what does 2024 hold for Cumulus?
The company retired $43.6 million in debt in 2023 and repurchasing $7.2 million of shares. Total debt was reported at $675.8 million with net debt amounting to $595.1 million as of the end of 2023. Lopez-Balboa says this process will continue to be a major focus in 2024.
The company is launching a debt exchange offer for its 6.750% Senior Secured First-Lien Notes due 2026, proposing new 8.750% Senior Secured First Lien Notes due 2029, alongside an opportunity for lenders to exchange their existing term loans for new senior secured term loans under a new credit agreement.
“Looking ahead, though national advertisers are expressing interest in increasing their radio buys, as of yet, ad demand remains choppy, reducing our visibility into the rest of 2024,” said Mary Berner. “That said, our industry-leading performance during similarly weak macro environments gives us significant confidence in our ability to navigate through this one and rebound strongly when the advertising market improves.”
Lopez-Balboa said numbers are improving from the fourth quarter, but Q1 2024 is pacing down low single digits. Political is a positive factor, but it won’t be the same as a more heated primary season in Q1 2020.
Can you believe this was a $500 million EBITDA / $4.5 billion EV company at one point? Now it’s not even worth $500 million, less than the debt it carries. The value erosion here over the last decade is shocking, by any standard.