Some five years after the COVID-19 pandemic wreaked havoc on the nation’s mental, physical and financial health, the Radio industry is still suffering.
That’s the message being told to investors of one of the biggest audio content creation and distribution companies in the U.S., as it delivered its Q4 2024 results on Thursday.
“As you know, the radio industry has faced significant challenges over the last few years,” Cumulus Media President/CEO Mary Berner said as she opened a rather glum quarterly earnings call for analysts and investors. She blamed the pandemic and “unfavorable secular trends” as well as “a significant down-draft in national advertising,” which began in early 2022.
That national dollar dip impacted Cumulus disproportionately given its business mix, Berner added. Nonetheless, in the face of those headwinds, Cumulus “outperformed and continued to best its peers through the end of 2023” on key metrics including EBITDA margin recovery and cash flow conversion. In 2024, “additional challenges” surfaced for Cumulus. This included “accelerated national headwinds,” and a nationwide slowdown in local broadcast advertising, which became more pronounced for Cumulus in the latter half of 2024.
While Cumulus can’t control external factors hampering its financial health, it can mitigate the impacts, Berner said. Getting more out of Cumulus’ assets, which include national radio arm Westwood One, is a priority.
For the three months ending December 31, 2024, Cumulus’ net revenue slipped to $218.58 million, from $221.3 million. The 1.2% decline was slightly below the $218.8 million estimate on revenue based on the projections of two analysts that cover Cumulus Media.
While adjusted EBITDA rose 9.8% to $25.04 million from $22.8 million, Cumulus’ net loss widened in Q4 to $231.08 million (-$16.79 per share), from a net loss of $98.07 million (-$6.83) in the fourth quarter of 2023.
Political revenue totaled $10.12 million in Q4 2024 — another sign that radio did not capitalize on the dollars flowing to all media in the 2024 U.S. presidential election cycle.
Like many companies, investing in digital advertising solutions is starting to pay dividends. In Q4, Cumulus’ digital revenue climbed by 1.9%, to $40.33 million from $39.58 million. Still, that is dwarfed by network revenue — down to $49.25 million from $52.15 million — and Spot, which slipped to $100.05 million from $101.38 million in the quarter. Digital represents 19% of the company’s total revenue mix.
Meanwhile, Berner shared that a $4 million loss of Daily Wire revenue tied to Cumulus’ podcasts was seen as it adjusted how it handles it advertising needs. Still, podcast growth is healthy and she believes 2025 will bring dollars that will compensate for the income loss.
Also speaking on the Q4 2024 earnings call was CFO Frank López-Balboa. He reiterated earlier remarks from Berner that included pacing details for the first quarter of 2025. They’re not favorable, with Cumulus currently pacing down mid-single-digits and down low-single-digits on an ex–political and ex-Daily Wire basis.
López-Balboa also reminded creditors listening to the call that Cumulus is looking ways to reduce debt, and this could involve more land sales and reinvest in the business while lowering capital expenditures. “I would expect to see some degree of asset sales this year,” he said.
WHAT’S THE NATIONAL ADVERTISING SOLUTION?
During a Q&A period following remarks from Berner and López-Balboa, Michael Kupinski of Noble Capital Markets asked what is needed to turnaround national advertising.
Berner didn’t immediately answer, asking him to repeat the question. He clarified that he was wondering what the metrics are, or things that are needed that will spark an improvement in National dollars.
Berner replied that the declines “are driven by external Macro environments,” and “when, and if, they change, that will certainly help.”
She turned to Westwood One, which was hit hard because it is wholly National. Yet, coming out of the pandemic, it was the company’s best-performing segment. “As the external factors improve, I think we start to see that,” she said regarding National’s weak health.
Following Cumulus’ 8:30am Eastern earnings call, which totaled 40 minutes and kicked off a busy day of broadcast media company fiscal report card reviews, the company’s Nasdaq-traded stock was largely unchanged, at $0.90. Still, “CMLS” is down by 76.6% in value from today in 2024, and has not topped $1 in value since Halloween.
