Cumulus Media on Wednesday morning distributed a letter to its shareholders that played up the audio content creation and distribution company’s “strong financial results and outlook,” shared details regarding a new capital return program, and addressed an unsolicited bid for the company from a purported consortium of investors led by the man who founded and runs Westport, Conn.-based Connoisseur Media, Jeff Warshaw.
The latter subject is likely the one most industry observers have an interest in. And, Cumulus made it clear where it stands on Warshaw’s offer. In short, Cumulus’ board gave it a thumbs down while noting that it is open “to all paths that continue to drive superior shareholder value.”
The shareholder letter, from Cumulus President/CEO Mary Berner, acknowledges an April 14 Reuters report that shared details of Warshaw’s bid for the Atlanta-based owner of radio stations and the Westwood One national radio unit.
Warshaw has declined to comment on the bid to both Radio + Television Business Report and its co-owned Radio Ink. His offer pegged the buyout of Cumulus at or close to $1.2 billion, including debt, Reuters reported.
The Warshaw-led consortium offered take Cumulus private at a per-share value between $15 and $17. At the time, it was a premium; it still is, as CMLS finished the May 3 trading session at $13.15. Furthermore, Cumulus’ year-to-date performance was rather moribund until the Reuters report sparked a surge in CMLS value.
There was nary a conversation at last week’s NAB Show in Las Vegas.
Now, via the shareholder letter, Berner made it clear that the Board — after a careful and thorough review, conducted in consultation with its financial and legal advisors — unanimously concluded that the indication of interest “significantly undervalues the
company and is not in the best interests of its shareholders.”
Berner repeated the statement in the company’s Q1 2022 earnings report, in which she discussed growth in the digital (including podcast) arena. Digital dollars now comprise 14% of total company revenue, and this growth along with radio revenue improvements, underscore the Board’s belief that “execution of the company’s strategy will deliver significantly more value to shareholders” than the Warshaw offer.
Berner continued, “The company’s board is open to all paths that continue to drive superior shareholder value. Our strong momentum across business lines, multiple digital revenue growth drivers, operational efficiency and superior cash flow provide the company with substantial untapped upside that it expects to continue to realize on behalf of its shareholders. Given these facts and circumstances.”
