Cumulus Media on Tuesday morning released its fourth quarter earnings report. On its surface, it is a downbeat assessment of the audio content creation and distribution company’s final three months of 2023, as net revenue was down by some $30 million year-over-year. A $65 million-plus non-cash impairment charge on its station licenses was also seen.
But, is there more to the story, as Cumulus registered higher expenses and saw its net loss significantly widen in the fourth quarter of last year?
That’s what some investors may be asking, as the company led by CEO Mary Berner saw its net revenue in Q4 decline to $221.3 million, from $251.27 million.
Expenses rose, as restructuring costs increased to $4.47 million from $1.4 million. Then there’s that impairment charge, which came in at $65.31 million in Q4, compared to $15.54 million a year earlier.
This shifted operating expenses upward to $284.42 million, from $241.8 million, resulting in an operating loss of $63.12 million, shifting from operating income of $9.47 million.
The Q4 adjusted EBITDA, as a result, declined by 46.6% to $22.8 million, from $42.7 million; Cumulus Media’s Q4 net loss widened, shifting from $54,000 ($0.00 per share) to $98.07 million (-$5.94).
Did Wall Street foresee these results?
Three analysts provided estimates to Yahoo! Finance, and the consensus was for revenue of $220.07 million. Thus, Cumulus beat the Street on revenue, even with the decline.
Meanwhile, the consensus Earnings Per Share estimates from the three analysts came in at -$0.59.
The Q4 results included $14.8 million in proceeds from the sale of Broadcast Music, Inc. (BMI).
For the full-year of 2023, adjusted EBITDA was down 45.3% to $90.73 million, from $165.98 million; a net loss of $117.88 million (-$6.83 per share) was seen for Cumulus in 2023. This compares to net income of $16.24 million ($0.81 per diluted share) in the full-year of 2022.
STORMY TWELVE MONTHS, WITH CLOUDS AHEAD
For Berner, the fourth quarter showed how Cumulus’ “couldn’t escape the week environment,” with “a tough year across the media landscape,” national advertiser demand remains uncertain, and “current headwinds” remain strong.
But, she said as she opened the company’s Q4 2023 earnings call early Tuesday, local radio broadcast clients that bought digital in addition to linear stations have seen greater overall benefit. This speaks strongly of Cumulus’ digital business growth, Berner said.
In Q4, digital revenue grew by 5%, to $39.58 million, from $37.71 million. But, even with growth from CPG and Insurance advertising, that increase fell well short of offsetting the steep decline in broadcast radio revenue.
As shown above, both spot and network were down significantly. For CFO Frank López-Balboa, tough comparisons to Q4 2022 are at play, due to political EBITDA dipping to $1.41 million from $7.47 million year-over-year.
On the subject of political advertising, López-Balboa suggested that political advertising revenue will not be as strong as in 2020 on the presidential front, as it won’t be as competitive as a race. However, thanks to Cumulus’ footprint, Congressional races appear to be strong revenue-generation opportunities.
For Q1 2024, Cumulus is pacing in the low-single-digit range, with political not yet impacting the company as “intentions to buy,” Berner said, mean advertising is coming … and just hasn’t yet been booked. López-Balboa remarked that the first quarter is typically the lowest revenue quarter of the year for Cumulus.
A debt exchange to further reduce leverage is also in the works, even as Cumulus Media’s net debt was down to $595.1 million, from $611.95 million.
Meanwhile, there was no formal discussion regarding a “poison pill” shareholder rights plan. However, López-Balboa says this has “nothing to do with foreign ownership,” as the company has filed documents with the FCC seeking regulatory approval for an increase in the amount of foreign control it may have without running afoul of Commission policy.
The filing came as a Manoj Bhargava-bankrolled entity based in Singapore has been snapping up Cumulus Media shares. Bhargava’s media holdings include the parent company of NewsNet, the 24/7 digital multicast TV network that has been gobbling up low-power TV stations.
As of 10am Eastern, Cumulus shares, which trade on the Nasdaq exchange, were down 13% to $3.90.
