Company Overview
Cumulus Media Inc. (CMLS) is a leading audio-first media company that has been at the forefront of the evolving media landscape. With a diverse portfolio of assets, including over 400 owned-and-operated radio stations across 84 markets and a vast network of affiliated stations, Cumulus Media has established itself as a dominant player in the audio industry.
History and Background
The company's history can be traced back to 2002, when it was founded as a successor to a previous Cumulus Media entity. Cumulus Media Inc. was originally organized as a Delaware corporation in 2002. However, the company's predecessor, CM Wind Down Topco Inc. (formerly known as Cumulus Media, Inc.), filed for Chapter 11 bankruptcy in November 2017. In response to this, Cumulus Media Inc. was organized in 2018 as the successor to the previous Cumulus Media entity. The company emerged from bankruptcy in June 2018, transferring substantially all of the remaining assets of the old Cumulus Media to the newly formed Cumulus Media Inc.
In addition to its owned-and-operated radio stations, Cumulus Media delivers nationally-syndicated programming through its Westwood One network, which has more than 9,500 affiliated stations. This extensive network has allowed the company to maintain a strong presence in the audio industry despite facing various challenges over the years.
Challenges and Adaptations
One of the significant challenges Cumulus Media has had to navigate is the extensive federal regulation in the radio broadcasting industry. The company has had to adapt to the FCC's ownership rules and other regulations while maintaining its operations. Additionally, Cumulus has faced the ongoing challenge of adapting to technological changes and shifts in audience preferences, as new digital audio platforms have emerged to compete with traditional radio.
Managing its debt load and capital structure has been another crucial aspect of Cumulus Media's business operations. Following the bankruptcy filing of its predecessor in 2017, the company has worked diligently to refinance and manage its debt obligations. This has included engaging in debt exchanges and repurchases to extend maturities and optimize its capital structure, demonstrating the company's commitment to financial stability and growth.
Over the years, Cumulus Media has navigated through various challenges, including the pandemic's impact on the industry, and has emerged as a more resilient and adaptable organization.
Performance and Strategy
Despite the headwinds faced by the radio industry, Cumulus Media has consistently outperformed its peers on key metrics such as cost takeouts, EBITDA margin recovery, free cash flow generation, net leverage, and liquidity. This strong operational performance has been a testament to the company's ability to adapt and innovate in the face of changing market dynamics.
One of the key drivers of Cumulus Media's success has been its strategic focus on digital transformation. The company's digital marketing services (DMS) business has been a standout performer, with revenue growth of 27% year-over-year in 2024. This growth is a result of Cumulus Media's ability to leverage its local sales force and relationships to provide an expanded suite of marketing tools and services to its existing and new customers.
The company's podcast business has also been a source of growth, with the Cumulus Podcast Network ranking among the top podcast networks in the country. Cumulus Media's content creation and distribution capabilities have allowed it to develop engaging and thought-provoking original podcasts that have resonated with listeners.
Recent Developments
In 2024, Cumulus Media faced additional challenges, including accelerated national headwinds and an industry-wide slowdown in local radio advertising. The company responded by doubling down on its digital initiatives and implementing further cost-reduction measures to maintain its profitability and financial flexibility.
One of the key strategic moves made by Cumulus Media in 2024 was the comprehensive refinancing of its debt, which extended the maturity to 2029. This refinancing has provided the company with additional financial flexibility and optionality, allowing it to focus on executing its long-term strategy.
Financials
Cumulus Media's financial performance in 2024 was impacted by the challenging market conditions, with revenue declining 2.1% year-over-year to $827.1 million. EBITDA for the year was $82.7 million, down from $90.7 million in the previous year. The company's net debt position at the end of 2024 was $578 million, down from $595 million at the end of 2023, reflecting its ongoing efforts to reduce leverage and strengthen its balance sheet.
For the full year 2024, Cumulus Media reported an annual net loss of $283.25 million, annual operating cash flow of -$3.12 million, and annual free cash flow of -$22.58 million. In the most recent quarter (Q4 2024), the company reported revenue of $218.58 million, representing a 1.2% year-over-year decline. This decline was driven by reductions in spot and network revenues as a result of current macroeconomic conditions. However, it was partially offset by 1.9% growth in digital revenue, with the digital marketing services business growing 23% year-over-year. The net loss for Q4 2024 was $231.08 million.
Liquidity
As of December 31, 2024, Cumulus Media had $63.84 million in cash and cash equivalents, and $4.5 million outstanding in letters of credit under its $125 million 2020 Revolving Credit Facility. The company's debt-to-equity ratio stood at 114.32, while its current ratio and quick ratio were both 1.85.
Looking ahead, Cumulus Media remains focused on reengineering its business to drive operating efficiency, while continuing to invest in its digital businesses to drive growth. The company's capital allocation priorities will continue to be centered on reducing net debt, utilizing cash generated from operations and the monetization of non-core assets.
Business Segments
Cumulus Media operates in two main business segments: Broadcast Radio and Digital, with an additional "Other" segment.
The Broadcast Radio segment generated 68.2% of total net revenue in 2024. This segment includes the sale of terrestrial, broadcast radio spot advertising time to local, regional, and national clients. Local and regional spot advertising is sold by Cumulus-employed sales personnel, while national spot advertising is marketed and sold by both its internal national sales team and Katz Media Group, Inc. in an outsourced arrangement. The company also monetizes its available inventory in the network sales marketplace, distributing content and programming through third-party affiliates to reach a broader national audience.
The Digital segment accounted for 18.7% of total net revenue in 2024. This segment includes the sale of advertising and promotional opportunities across Cumulus' podcasting network, streaming audio network, websites, mobile applications, and the provision of digital marketing services. The company operates one of the largest streaming audio advertising networks in the U.S. and sells display ads across 400 local radio station websites, mobile applications, and ancillary custom client microsites.
The "Other" segment contributed 13.1% of total net revenue in 2024, including trade and barter transactions, remote and event revenues, and non-advertising revenue such as fees received for licensing network content, imputed tower rental income, satellite rental income, and proprietary software licensing.
Future Outlook
For Q1 2025, Cumulus Media is currently pacing down mid-single digits on a total company basis. Normalizing for political and the loss of Daily Wire, Q1 revenue is pacing down low single digits. The loss of the Daily Wire podcast is expected to have a $4 million negative revenue impact in Q1 2025 and a $15 million negative revenue impact for the full year 2025. Additionally, the loss of the Bongino podcast is expected to have an additional revenue impact of approximately $15 million through the balance of 2025.
The company expects capital expenditures to be $22.5 million in 2025 and does not anticipate being a material payer of taxes. Cumulus Media remains committed to reengineering its business to drive operating efficiency while investing in its digital businesses to drive growth. The company's capital allocation focus will remain on reducing net debt.
Conclusion
The audio industry as a whole has been grappling with significant challenges, but Cumulus Media's adaptability, innovative mindset, and strategic execution have positioned the company to navigate these headwinds and capitalize on emerging opportunities. With its diverse portfolio of assets, strong digital capabilities, and financial flexibility, Cumulus Media is well-poised to continue transforming the audio landscape and delivering value to its shareholders.