The stock market appears to be reflecting the recent financial news from Cumulus Media and iHeart Media.
Stock prices were down significantly Friday for both broadcasters.
Cumulus was down 32.5% to close at 29/cents a share and iHeart dropped 25% to close at $1.50 a share, according to the RBR Radio Index.
In her first earnings report as the new CEO Mary Berner had sobering news, including some 48% turnover in the past 18 months, with 2,000 people leaving the broadcaster. She conservatively estimated the effect cost the company “millions” of dollars annually. The top-down decision-making of the former management “hindered collaboration between corporate and local market programmers,” which Cumulus plans to address.
Further, after 30 days trading under $1/share, Cumulus Media received a deficiency notice from Nasdaq, saying it’s not in compliance with its minimum bid price rule for Global Select Market. The move means the company has until May 2 to regain compliance with 10 straight days of a bid price closing at $1 or more, or risk delisting.
Meanwhile, some Wall Street analysts appear to be concerned about iHeart’s liquidity.
As of Sept. 30, its cash flow used in operating activities was $363M.
As of September 30, iHeartMedia Inc. debt net of cash totaled approximately $20 billion. During the quarter, the company borrowed $190 million under its receivables based credit facility.
Interest payments on that debt totaled $556 million in Q3. The company anticipates paying another $314M in Q4.
During the earnings call last week, analysts peppered company officials about its liquidity management plans.
iHeart SVP/Treasurer Brian Coleman said on Thursday: “The conflict that we have is, of course, our focus on liquidity and ensuring that we can continue to fund operations, fund debt maturities. We’ve built a liquidity runway and we’re trying to grow operations during that period of time.”
“We have to balance liquidity with liability management activity,” continued Coleman in answering a subsequent liquidity query, according to a transcript from Seeking Alpha. “There may be ways that we can effectuate liability management activities that is liquidity neutral or doesn’t have a material impact on liquidity, and that’s certainly something that we are considering, but that’s the challenge that we have. And so we recognize the issue.”
Though Wells Fargo analyst Marci Ryvicker doesn’t cover iHeart, (but does cover Clear Channel Outdoor) she echoed in a client note on Friday that many questions on the earnings call centered on liquidity issues, writing: “the market is clearly looking past ‘okay’ operational trends to focus on the balance sheet, which clearly isn’t strong … begging the question ‘what does management do now?’”
