Tag Archives: consolidation

Cumulus

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By: Kaitlyn Vincent and Cairo Spencer

Cumulus Logo

History

Cumulus was co-founded in 1997 by brothers Lew and John Dickey in Atlanta, Georgia. The company broadcasts local programming as well as sports, syndicated media, entertainment brands and much more. The company has 447 owned-and-operated stations in 90 different US markets. The two platforms of Cumulus includes Cumulus Radio and Westwood One which contribute to massive reach of 245 million listeners per week. [1] 

Similarly, Cumulus is known for the station NASH, which launched in 2013 and is the Nation’s leading provider of country music. In addition to the NASH radio sector, NASH has a country weekly magazine, television, live events and their own record label. Cumulus is now the second largest radio company behind iHeartMedia. [2] [13]

Key Executives 

mary-g-berner

Mary G. Berner – President and Chief Executive Officer

john-abbot

John Abbot – Executive Vice President, Treasurer and Chief Financial Officer

richard-s-denning

Richard S. Denning – Senior VP, Secretary & General Counselor

Affiliates

Cumulus Radio and Westwood One are both syndicated services of Cumulus Media. In 2013, Cumulus acquired Westwood One which focuses on selling syndicated advertisements. Together they have become the exclusive radio broadcast partner to some of the biggest brands in news, entertainment, sports and talk. This includes major sports such as NFL, the NCAA and the Olympics, major events such as the Academy of Country Music Awards, the American Music Awards, the Billboard Music Awards, and even the Grammys. Cumulus has risen to become the nation’s leading provider of country music and lifestyle entertainment through its renowned NASH brand; named for the country music center that is the Nashville, Tennessee brand. NASH caters to country music fans nationwide through the use of radio programming, exclusive digital content, and live events. Cumulus Radio serves a demographically-diverse group across its 90 US markets. [1] 

Cumulus and Westwood One Stations

Management

Cumulus hired Mary Berner, a former CEO of Reader’s Digest Executive, as the new Chief Executive Officer to try and turnaround the company in 2015. Before Mary stepped in, Cumulus’ stocks were dropping tremendously. One of Cumulus’ major shareholders, Crestview Partners, pushed out the founder Lew Dickey as the CEO and replaced him with Mary Berner. Before the turnover, the shares had dropped 80% of their value whereas after the turnover the shares dropped 39% after a couple of months. [8] [13]

In the coming months Mary is striving towards a “multi-year exercise” starting with fixing the operational basics. Secondly, she’ll be working on retaining the employees and improving satisfaction within the company due to a 50% turnover rate in 18 months in the company of 6,000 people. Her final area of concern is the rating decline for the company. [5] 

“This company has lost more than a dollar of revenue for every dollar of expense reduction over the past four years,” she said. “So I’m focused on intelligently managing the cost structure.” – Mary Berner [7] 

Although Cumulus’ headquarters is in Atlanta, Mary Berner is stationed within New York City, within the large market in which its syndicated service Westwood One caters to. According to Mary, there are four challenging feats she is facing with Cumulus which includes inescapable clean-up items from prior years, non-existent investment in systems, annual cost escalation due to the dynamic industry, and major capital investments. [5]

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The New Cumulus CEO, Mary Berner

Financial

Cumulus had a low third quarter with a $286.1 million in the quarter. This was down from the $289.4 million in 2015. The low numbers are due to CEO Mary Berner’s adjustment period, the falling rating decline, and the lack of company structure. Recently however, Cumulus is heading into the fourth quarter with a positive stride with a 35.58% increase over the past 5 days. The price target for the company is currently at $5.00. Consequently, the Wall Street analysts recommend a hold recommendation for investors. [5] [8]

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Cumulus Media Equity Stub 2016

Cumulus is consumed in $2.5 billion in debt ever since the former CEO, Dickey Berner bought up several stations and lost Citadel back in 2010. However, a spokesperson disclosed that enough generated operational cash and asset sales will prevent Cumulus from becoming bankrupt and expects to gain $200 million at the end of 2017 from real estate sales. Furthermore, “We have no plans to file for bankruptcy and the next maturity for debt is not for three more years until May of 2019, so we have significant runway to begin to stabilize and ultimately grow the business,” the Cumulus spokesman said. [16]

In terms of trends, as of November 28, the 14-day ADX for Cumulus Media is at 39.28 which indicates a strong trend for investors. However, this number reflects the trend strength but not the direction of the trend. In another technical reading, Cumulus presently has a 14-day Commodity Channel Index of 31.93 which reflects the company’s normal oscillation since the reading is between -100 to +100. This represents how the Cumulus commodities are in a normal range between the overbought and oversold territory. These technical readings further reflect the positive direction for Cumulus entering into the fourth quarter. [6] [7] [12]

Recent Antitrust Lawsuit

Last April, Cumulus was sued for an antitrust suit by Talk Radio Network Enterprises LLC and three other Radio networks for allegedly conspiring with Westwood One, Cumulus’ advertising package bundler. This suit was filed in Oregon due to a group of radio producers claiming that Westwood One and Cumulus were trying to monopolize a national radio that solely benefits the Cumulus station while undermining independent programmers. By conspiring to monopolize, Cumulus Media and Westwood are violating the Sherman Antitrust Act. In addition, these companies are already thwarted due to Cumulus Media controlling 90% of the national syndicated ad bundling market. [9]

In a complex system of advertising bundling, the companies buying advertisements expect a certain amount of trust from Westwood One. These companies have been experiencing a lack of transparency of payment from Westwood. Similarly, Westwood has been accused of paying the companies lower than the deserved amount. However, this month the Oregon judges decided to gut the claim by rejecting half of the allegations based on prejudice. According to an attorney for the group of Radio Networks, they have no intent of stopping the suit. [10]

The Issue

While, Mary is working to solve the company’s problems, the main issue with the company is the large amount of debt it holds. This monetary debt is due to the former purchase of Citadel, a Nevada-based broadcasting holding company and the general decline in Radio revenue due to the amount of music streaming services online. Michael Harrison, a former radio station owner and publisher of RadioInfo agrees: 

“Cumulus is suffering from the tail end effects of the era of consolidation… The biggest problem in the industry, he said, is “smothering debt,” – Michael Harrison [7]

Overview

The biggest question for Cumulus is how to combat the growing online streaming music services and the consolidation of radio amidst their staggering debt and turnover struggles. Cumulus must continue to cut spending and manage to find a solution that will boost revenue through services that can compete as opposed to services that tail behind the forefront of the changing world of radio. In terms of debt handling, the company has until May of 2019 to pay it off which should hopefully be enough time for Berner to stabilize the company.

Works Cited

[1] Cumulus Website. Retrieved: November 28, 2016.

[2] Jackson, Hazel. “Market Rating: Are Analysts Bullish Cumulus Media Inc (NASDAQ:CMLS) After Last Week?” Money Making Articles Hot Stuff. Retrieved: November 21, 2016.

[3] NASH Website. Retrieved: November 28, 2016.

[4] Cumulus Key Executives. Retrieved: November 28, 2016.

[5] “Big Challenges Remain For Radio’s Number Two.” Radio Ink. Streamline Publishing, Inc. Retrieved: November 28, 2016.

[6] Ho, Rodney. “Cumulus Media Drowning in Debt, Stock Slides.” Radio and TV Talk. Cox Media Group. Retrieved: November 29, 2016. 

[7] Grantham, Russell. “Cumulus Media Hit by Debt, Radio Industry Troubles.” Cumulus Media Hit by Debt, Radio Industry Troubles. Cox Media Group. Retrieved: November 29, 2016.

[8] Karp, Hannah. “Cumulus CEO Aims to Revive Radio Broadcaster.” The Wall Street Journal. Dow Jones & Company. Retrieved: November 29, 2016. 

[9] Sege, Adam. “Cumulus Hit With Antitrust Suit Over Advertising Payouts.” Law360. Portfolio Media, Inc. Retrieved: November 29, 2016. 

[10] Koenig, Bryan. “Cumulus Media Gets Advertising Antitrust Suit Gutted.” Law360. Portfolio Media Inc. Retrieved: November 29, 2016. 

[11] Oliveira, Michael Wiggins De. “Cumulus Media: A Highly Speculative Equity Stub.” Seeking Alpha. Retrieved: November 30, 2016.

[12] Weakley, Vanessa. “Looking at the Gauges on Cumulus Media Inc. (CMLS).” Microcap. Retrieved: November 30, 2016.

[13] Atkinson, Claire. “Cumulus Media’s New CEO Can’t Stop Company Slide.” NYPost. Retrieved: November 30, 2016.

[14] “Struggling Cumulus Media Loses its CFO” American City Business Journal. Retrieved: November 30, 2016.

[15] “Organizational Leadership Changes at Cumulus Media” MusicRow. Retrieved: November 30, 2016.

[16] Grantham, Russell. “Radio Giant Cumulus Tumbles After Flying High”. Cox Media Group. Retrieved: November 29, 2016.

Cox Media Group/Cox Enterprises

Posted on by 
Autumn Boatner

1000px-Cox_Media_Group_svg

 http://www.coxmediagroup.com/

Headquarters Contact Info: 6205 Peachtree Dunwoody Rd.
Atlanta, GA 30328
(678) 645-0000

Overview [1]

Cox Media Group is an integrated broadcasting, publication, direct marketing, and digital media company which is a part of Cox Enterprises that includes Cox Target Media. Cox Target Media operates two leading American companies which are Valpak (direct marketing), and savings.com (online savings). The company’s operations currently include 19 broadcast TV stations, one local cable station, 87 radio stations, eight daily newspapers and more than 100 digital services. CMG’s reach includes more than 30 media markets and 52 million Americans weekly, which includes 18 million radio listeners, 32 million TV viewers, and more than four million print and online newspaper readers.

2012 Key Metrics [2]

  • Revenue: 1.9 Billion
  • TV Stations: 19
  • Local Cable Channels: 1
  • Television Markets: 11
  • TV Viewer Reach: 30+ million
  • AM Radio Stations: 15
  • FM Radio Stations: 72
  • Radio Markets: 20
  • Combined Weekly Radio Listeners: 18 million

The Business of Communications

A duopoly is a specific type of oligopoly where only two producers exist in one market. In context, Cox Media Group is a duopoly due to the fact that it is one of two firms with dominant control over the communications market. Cox Media Group is in the process of changing its structure as part of a new business strategy to sell off their stations in smaller markets. The broadcast realignment was announced in July 2012 by CMG President Doug Franklin following the purchase of duopolies in larger markets — Jacksonville, Fla., and Tulsa, Okla. — from Newport Television . [3] CMG’s strategy is focused on larger markets, cross-media collaboration, and heightened reach in fewer markets. “This simplified structure will enable CMG to capitalize on continued growth and synergies, while retaining its size financially,” said Franklin.

Simultaneously, CMG is realigning leadership structure to fit the new broadcast portfolio.  Leadership changes in 2013 are as followed:

  • January 11th – Romeo Solomon Named General Sales Manager at KICU-TV

  • January 14th – Cox Media Group Appoints Matt Dalton as National Sales Manager of Long Island’s 106.1 WBLI-FM and 102.3 WBAB-FM

  • January 30th – CMG Orlando Tammie McGrath promoted to Director of Sales for six stations [4]

  • February 7th – CMG Tulsa Radio Promotes Matt Ledbetter to Director of Sales for Its Five Station Cluster [5]

  • March 1st – Tom Calococci Joins CMG Miami as New Program Director East Coast

  • March 8th – Cox Media Group Atlanta Names Adam Wolfson New General Sales Manager

  • March 11th – Greg Bilte named general manager, Suzanne Nadell named News Director for CMG Tulsa

  • March 13th – CMG Jacksonville Named Eric Lauer GSM, CMG San Antonio Names Jeff Garrison as New Program Director of Y100 [6]

  • April 1st – Lee Rothenthal named News Director at KUTV in Indianapolis [7]

Consolidation

On February 12th, Cox Media Group announced the sale of radio stations in six markets to SummitMedia  – a Birmingham, Ala.-based ownership group which includes David DuBose, Cox Media’s Birmingham Vice President and market manager.

consolodation

Source: http://www.freepress.net/

Cox Media Group also sold three Southern Connecticut radio stations and contract rights for an additional station to Connoisseur Media based in Conn. Four stations were sold to Connoisseur and 21 stations were sold to Summit. In southern Connecticut, Cox sold WPLR-FM, WEZN-FM, WFOX-FM, and contract rights for WYBC-FM to Connoisseur Media for $40 million. SummitMedia paid $66.25 million for a number of stations in Birmingham, AL, Greenville, SC, Louisville, KY, Richmond, VA, and Hawaii, according to documents filed with the FCC. [8] As part of the broadcast realignment, Cox recently added four TV stations to its broadcast portfolio: WAWS-TV (fox) and WTEV-TV (CBS) in Jacksonville, Fl, and KOKI-TV (fox) and KMYT-TV (MyNetwork) in Tulsa, OK. [9]

Sbg

Source: www.sbgi.net/

Sinclair Broadcast Group had the opposite strategy, and acquired four COX small television stations for $99 million on February 25th, 2013; the purchase was part of a string of over thirty acquisitions over the past year and a half. [10]  They also purchased 18 stations from Barrington Broadcasting Group for 370 million. [11] Sinclair Broadcast Group Inc. is a Hunt Valley, Maryland-based diversified television broadcast company.  The four stations Sinclair purchased from Cox were:

  • KFOX (Fox) El Paso, Texas DMA 91

    WJAC (NBC) Johnstown-Altoona, Pa. DMA 102

    KRXI (Fox) Reno, Nev. DMA 108

    WTOV (NBC) Wheeling, W.Va.-Steubenville, Ohio DMA 158

FCC rules prohibit ownership of two stations in markets as small as Reno, Nev., therefore Sinclair plans on getting past this loophole by operating MNT affiliate KAME Reno under contract with a third-party licensee, Deerfield Media. [12] Sinclair said it expects to finance the deal through a bank loan, the deal will close in the second quarter and is pending FCC approval. Sinclair is arguably taking this strategy because there are less medium-sized stations for sale, but small stations provide large profits through local advertisements. [13] “Over the past 18 months, we have led the industry’s consolidation efforts in the mid-sized markets, purchasing 30 TV stations and creating over $400 million of equity value,” said David Smith, Sinclair President and CEO.

On March 4th, 2013, Broadcast stock analyst Marci Ryvicker and Wells Fargo Securities approved the Sinclair buy. “We like SBGI’s scale, leverage and opportunistic approach to M&A and anticipate there is more to come,” stated in an investor’s note. According to the note, Sinclair is paying a reasonable 4.6 times cash flow for Cox and 5.2 times for Barrington while maintaining a healthy debt profile of 5.1 times projected for the end of 2013. [14]

Other news concerning COX

Source: RadioInk.com

Source: RadioInk.com

On January 18th, Cox Media Group made radio history with Tampa 97X by giving local listeners total control of the music by utilizing social media. Listeners chose songs they wanted to hear by selecting from over 1,800 songs listed on 97X app and website. The app gave listeners the ability to interact with an ‘Open Mic’ feature which enabled them to record and upload themselves introducing songs. [15]

On March 6th, Cox Media Group was accepted into the Google AdWords (TM) Premier SMB partner program. This partnership allows CMG to be a leading provider in digital marketing solutions for local and regional advertising clients. Premiere SMB partners meet Google’s highest criteria for qualification, transparency and customer service, which include completing extensive Google product and account management training to provide businesses with the most effective AdWords advertising solutions. In addition to in-depth AdWords knowledge, PSP partners provide campaign management, detailed reporting, one-on-one customer support, and broad marketing guidance to help advertisers make the most of their advertising campaigns. [16]

Sources

1 & 2. http://www.coxmediagroup.com/about/
3.  http://articles.baltimoresun.com/2013-02-26/business/bs-bz-sinclair-acquires-cox-stations-20130226_1_sinclair-plans-station-owner-stations-in-mid-sized-market
4. http://www.coxmediagroup.com/news/2013/jan/
5. http://www.coxmediagroup.com/news/2013/feb/
6. http://www.coxmediagroup.com/news/2013/apr/
7. http://www.coxmediagroup.com/news/2013/may/
8 & 9. http://www.mediapost.com/publications/article/193537/cox-sells-25-radio-stations.html#axzz2PoUSjKxl
10. http://articles.baltimoresun.com/2013-02-26/business/bs-bz-sinclair-acquires-cox-stations-20130226_1_sinclair-plans-station-owner-stations-in-mid-sized-markets
11. http://www.bizjournals.com/baltimore/print-edition/2013/03/08/sinclair-broadcast-group-tuning-into.html?page=all
12.http://www.tvnewscheck.com/article/65729/sinclair-buys-four-cox-tvs-for-nearly-100m
13. http://www.bizjournals.com/baltimore/print-edition/2013/03/08/sinclair-broadcast-group-tuning-into.html?page=all
14. http://www.tvnewscheck.com/article/65893/ryvicker-gives-thumbs-up-to-sinclair-buys
15. http://www.coxmediagroup.com/news/cmg-press-releases/tampa-bays-97x-does-it-again/nTzz2/
16. http://www.marketwatch.com/story/cox-media-group-selected-as-google-adwords-premier-smb-partner-2013-03-06