Cumulus Media Bankruptcy: Radio Broadcaster Seeks Chapter 11 Protection, with $2.4bn in Debt

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Cumulus Media to Reduce Debt by $1bn, Enters into Agreement with Loan Holders

Cumulus Media Inc. (OTCMKTS:CMLS), the second-largest radio operator in the U.S., filed for Chapter 11 bankruptcy, saying it plans to restructure and reduce its debt by more than $1.0 billion. The Atlanta-based radio giant has $2.4 billion in debt and has reached agreements with 69% of its term loan holders.

Cumulus said all of its operation, programming, and sales will continue as normal throughout the restructuring process. It also said it has “ample cash on hand” and will not seek debtor-in-possession financing. On top of that, Cumulus will not pay interest on bonds or interest that accrues on bonds during its financial restructuring process.

Mary Berner, CEO of Cumulus said, “The debt overhang left by previous years of underperformance remains a significant financial challenge that we must overcome for our operational turnaround to proceed.”

Berner noted that the restructuring process will allow Cumulus to “focus our resources on investing in our business and people to strengthen our competitiveness and ultimately drive growth.”

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Cumulus has been struggling to restructure its debt load for years now as advertising revenue and listenership numbers continue to slide. The company has $2.4 billion in debt and faces key deadlines when most of its debt matures in 2019.

Cumulus Media owns and operates 446 radio stations in 90 U.S. media markets, including news/talk KABC and classic rock mainstay KLOS in Los Angeles, KFOG and KSAN in San Francisco, along with WABC and WPLJ in New York.

Cumulus is not the only radio broadcaster struggling. iHeartCommunications Inc., the largest radio broadcaster in the U.S. by revenue, has been in talks with its biggest creditors as it looks to slash some of its $16.0 billion in debt. The company said there were a number of “going concerns” and “substantial doubt” it could continue operating next year.

Cumulus Media Blames Falling Revenue and Digital Media

Cumulus has blamed falling revenue and the ease of digital media for much of its economic woes. That said, the company’s financial performance has improved of late, reporting higher revenue and earnings before interest, taxes, depreciation, and amortization (EBITDA) for the first time in a number of years.

In the third quarter, revenue inched up 0.4% to $287.2 million. EBITDA was up 40% at $61.8 million. In the second quarter, revenue advanced 1.2% year-over-year to $290.5 million and EBITDA increased 6.7% to $67.4 million.

Current CEO Mary Berner replaced co-founder and long-time CEO Lew Dicky in 2015. Since then, Berner has initiated a turnaround plan, which includes changing the corporate climate and cutting down the high employee turnover rate.

Jeffrey A. Marcus, partner at Crestview Partners (which owns a minority stake in Cumulus) recently told The Wall Street Journal, “Speaking for the Board, we are very impressed with the turnaround that Mary Berner and her management team have accomplished. We hope the lenders will recognize the progress that is being made and will take all steps necessary to continue the momentum.”

Sources

Cumulus Enters Restructuring Support Agreement to Reduce Debt by Over $1 Billion,” Cumulus Media Inc., November 29, 2017.

Investors,” Cumulus Media Inc., last accessed December 1, 2017.

Form 10-Q,” iHeartCommunications, Inc., November 8, 2017.

Cumulus Reports Operating Results for Third Quarter 2017,” Cumulus Media Inc., November 9, 2017.

Cumulus Reports Operating Results for Second Quarter 2017,” Cumulus Media Inc., August 14, 2017.

Cumulus Media Kicks Off Debt-Restructuring Talks With Creditor Groups,” The Wall Street Journal, September 29, 2017.

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