by Josh Campbell

Cumulus Media, Inc.

3280 Peachtree Road, NW Suite 2300
Atlanta, Georgia 30305
TEL. (404) 949-0700
FAX. (404) 949-0740 [1]

Cumulus Media Logo [2]

1.0 Company Overview

Cumulus Media Inc. is the largest “pure-play” radio company in the United States, with roughly 550 stations in 110 cities, including major markets such as San Francisco, Houston, and Dallas. [3][4] Cumulus Media also operates Cumulus Media Networks, a network with over 4,500 radio affiliates to which Cumulus provides content [5]. Cumulus Media Networks syndicates talk shows by popular personalities like Dr. Sanjay Gupta, Mike Huckabee, Michael Savage, and Geraldo. [6] In addition to its radio holdings, Cumulus Media also owns SweetJack, a daily deals service similar to Groupon. [7] Cumulus is using its extensive radio network to market the relatively new SweetJack. [8]

2.0 Key People

Lewis W. Dickey [10]

Chairman, President, and CEO–Lewis Dickey: Lewis W. Dickey received his bachelor’s from Stanford University, and an MBA from Harvard University. In addition to serving in his current capacity at Cumulus Media, Mr. Dickey is also on the Board of Directors of the North American Broadcasting Co. and National Association of Broadcasters. [9]

Director–Alexis Glick: Alexis Glick received her bachelor’s degree from Columbia University and was previously employed as a Principal by CNBC, Inc., and as Vice President of Fox Business Network. [11]

3.0 Financials

3.1 Income Statement [12]

(2012): Revenue: $1,076,600,000 (+51.67%)

Gross Profit: $415,100,000 (+51.13%)

(2011): Revenue: $520,000,000 (+54.50%)

Gross Profit: $203,700,000 (+54.39%)

(2010): Revenue: $236,600,000 (-8.12%)

Gross Profit: $92,900,000 (+2.69%)

Cumulus Media has had several good years, with both revenue and gross profit rising by roughly fifty percent in 2012 and 2011. Much of this increase is likely due to a number of acquisitions that Cumulus has made recently, most notably its takeover of Citadel Broadcasting Corporation. [13] Cumulus is doing well when compared with what is arguably its biggest competitor, Clear Channel. Clear Channel Communications (CCC), while dwarfing Cumulus in revenue, earning $6,246,884 in 2012, lost money last year, pulling in a net income of -$425,500,000. [14]

3.2 Stock History and Target

Cumulus Media (NASDAQ: CMLS) started the year 2013 at 2.66, and has since risen to 3.28 as of April 5, 2013. On April 9, 2012, approximately this time last year, Cumulus Media was traded at 3.32. [15] This shows CMLS stock to be relatively stable in the long term, though there were some fluctuations in the short term. On November 27, Cumulus dipped to 2.16, its low point of this past year (Apr 2012-Apr 2013). Cumulus Media’s target for the end of the year 2013 is a stock price of 4.00. [16]

As a comparison, Clear Channel Communications (OTCBB: CCMO) is currently traded at 2.80. CCC’s stock price has decreased from a year ago, when it was traded at roughly 5.25. Over the past year, Clear Channel’s stock price has fluctuated to a far greater extent than that of Cumulus Media, hitting a high of 6.2 in late April and a low of 1.2 in late July [17]

4.0 Recent Activity

4.1 January

The beginning of 2013 saw legendary New York DJ Don Imus’s old contract with Cumulus expire. However, the well-known personality stayed on the air under new conditions specified in a deal inked with Cumulus in mid-December of 2012. [18]

Nash 94.7 Logo [23]

Possibly the company’s most publicized decision this year, the purchase of WFME from Family Stations for $40,000,000 allowed Cumulus to rebrand the previously religious station as NASH 94.7, a country music station–the first to serve the major New York City area in many years. [19][20] The station has proven that there was a latent market in NYC for country music; by March, NASH was already averaging 1 million listeners each week. [21] Cumulus CEO Lew Dickey has stated that he hopes NASH 94.7 will be just the start of a “multimedia entertainment brand” including not only radio, but also television, online, and publishing. He stated that this will help draw advertisers to the brand by offering one stop shopping for cohesive advertising on all platforms. [22]

4.2 February

Cumulus Media Networks signed a deal to distribute college football broadcasts by Gino Torretta, a former college athlete who currently provides play-by-play and commentary on a college football game each week. [24]

4.3 March

In March, 2013, Cumulus Media had its earning call for Q4 2012, which showed the net income of the company dip slightly, as many analysts had predicted. [25][26][27] Despite this, the stock price of Cumulus Media did not decrease significantly. [28]

4.4 April

In April, 2013, it was reported that the Senior Vice President, Treasurer, and CFO of Cumulus Media, Joseph P. Hannan, purchased 25,000 shares of Cumulus stock at the market price of $3.30 per share. This most recent purchase increases his total holdings in the company to 70,943 shares. [29] Insiders in Cumulus Media tend to buy CMLS stock in far greater quantities and with far greater frequency than competing company’s executives buy their respective company’s stock. This is seen as a good sign by many analysts. [30]

5.0 Future Plans

Lewis Dickey, the CEO of Cumulus Media, recently conducted a series of interviews with Bloomberg TV about the future of Cumulus Media and of the radio industry in general. Mr. Dickey was excited about the future of SweetJack, the previously mentioned daily deals service that Cumulus Media just started offering. Cumulus is optimistic about the future of SweetJack, believing that the “daily-deals” style business model is essentially a sound one. Cumulus has partnered with Clear Channel to air ads for SweetJack on the latter’s stations as well as Cumulus’s own affiliates. [31]

Cumulus hopes SweetJack will allow them to tap into the daily deals market [35]

Dickey also stated that he believes the radio industry is headed towards more consolidation of ownership, made possible by the Telecommunications Act of 1996. Responding to that trend in the industry, Cumulus is planning new acquisitions in the near future. [32] Cumulus industry has been keen on acquiring stations in the past, having orchestrated over 150 acquisitions since their founding in 1997, including the 2011 buyouts of Cumulus Media Partners, LLC and Citadel Broadcasting, which added 32 and 225 stations to Cumulus’s total amount, respectively. [33][34]

The future looks bright for Cumulus Media; The estimated earnings growth for the next fiscal year for Cumulus, at 83.9% are the highest among several large communications companies, including Discovery Communications, Scripps Communications, and CBS. [36][37]

Sources:

[1] http://www.cumulus.com/contact-us/

[2] http://www.allaccess.com/assets/img/editorial/raw/cu/cumulus2011.JPG

[3] http://www.cumulus.com/local-radio-2/

[4] http://www.cjr.org/resources/?c=cumulus

[5] http://www.cumulus.com/cumulus-media-network/

[6] http://affiliates.cumulusmedianetworks.com/

[7] http://www.sweetjack.com/local/

[8] http://www.clarkhoward.com/news/clark-howard/shopping-retail/sweetjack-heats-daily-deal-marketplace/nF3qr/

[9] http://quotes.wsj.com/CMLS/company-people/executive-profile/115649131?mod=WSJ_qtpeople_dir#less

[10] http://sportsrantz.com/media/files/2012/10/Dickey.png

[11] http://quotes.wsj.com/CMLS/company-people/executive-profile/66954?mod=WSJ_qtpeople_dir#less