It was an earnings call that featured just one analyst for a question-and-answer session that included a question on asset sales and potential radio industry deregulation from the FCC. Cumulus Media CEO Mary Berner and five-year CFO Frank López-Balboa shared details regarding the audio content creation and distribution company’s Q1 2025 results.
The big takeaway? While digital dollars are on the rise, macroeconomic issues continue to cloud the company’s P&L sheet while the end of a partnership with The Daily Wire — producer of The Ben Shapiro Show and founded by the conservative talk host a decade ago — also impacted the bottom line.
Overall, it was a dismal Q1 for Cumulus, with net revenue falling to $187.35 million from $200.05 million. The decline, along with expenses, ballooned the company’s net loss to $32.37 million (-$1.88 per share), from $14.15 million (-$0.85).
That was an earnings miss, as the one analyst covering Cumulus who reports to Yahoo! Finance pegged the net loss per share to come in at -$1.25. At the same time, two analysts offered earnings estimates for Q1 2025 of $189.8 million and $190.4 million, respectively — with Cumulus missing the low estimate by nearly $2.5 million.
Investors already preparing for a shift to the OTC markets from the Nasdaq for Cumulus’ stock were displeased, sending “CMLS” down by 24% to $0.1770 as of 10:07am Eastern on Thursday. At the Closing Bell, Cumulus shares finished their second-to-last day on Nasdaq at $0.1890.
MACRO MEDDLING
In prepared remarks ahead of an 8:30am Eastern earnings call, Berner resiliently explained that, despite that big analyst miss, Cumulus delivered revenue in line with its pacing guidance “despite worsening economic headwinds reflecting, among other things, the imposition of tariffs that have depressed both consumer and advertiser sentiment.”
Will tariff worries permeate the Q1 2025 earnings calls from other media companies, many of whom are reporting in one week? That remains to be seen. However, Cumulus’ has been blaming macroeconomic matters for its fiscal health for five years; peers in the broadcast media sector have worked to overcome their financial weakness in various ways, including Salem Media Group.
Furthermore, Berner on the 20-minute earnings call noted multiple times that the loss of The Daily Wire partnership and the absence of robust political dollars this year are playing their respective roles in dampening income. And, Berner attributed the advertising slowdown to a cascade of economic pressures, saying, “The imposition of sweeping tariffs in conjunction with ongoing government spending cuts has resulted in supply chain concerns, inflation pressures, and worsening consumer sentiment.”
By segment, Cumulus’ total broadcast radio revenue fell 10.6% year-over-year to $124.90 million, from $139.74 million in Q1 2024. Spot revenue dropped to $80.96 million from $90.57 million. Network Revenue fell to $43.93 million, from $49.16 million.
As López-Balboa detailed, the insurance and financial categories were the strongest for Cumulus. Alas, automotive, retail, and CPG underperformed. “We experienced pullbacks across several key advertising categories… with the impacts felt both on the local and national sides,” Berner said on the call.
Broadcast network revenues were also down, moving to $43.9 million from $49.16 million. López-Balboa expects further weakness in Q2, especially with sports inventory declining after the NFL season. “The second quarter network will have a tough comp because the environment for general market demand is weak,” he said. “So while not giving guidance, and it’s early in the quarter, I would expect the network to perform worse in spot and worse than we saw in the first quarter.”
That comment came as Noble Financial Markets’ Michael Kupinski took advantage of his sole presence on the earnings call to inquire about potential loosening of the local ownership caps by the FCC under Brendan Carr. He also wondered if asset sales were in the mix. Yes, López-Balboa confirmed, but not radio stations. Rather, Cumulus seeks to spin more real estate, and earned $1 million from a property sale in the most recent quarter. In Nashville, prime real estate is available, and the target sale price is between $10 million and $15 million.
THE DIGITAL STORY
While Cumulus’ Q1 report is downbeat, there is one exciting growth segment. The digital platforms are strong, with Digital revenue up a total 6% to $36.57 million, from $34.45 million. Thus, while 6% growth was seen in digital, the dollar component to the bottom remains less than half of that for Spot.
Berner spoke highly of Cumulus’ Digital Marketing Services division, which saw increases in customer volume, campaign size, and retention. “Revenue was up 30% in the first quarter, driven by growth in total customers, up 41%, average campaign order size up 16%, and improvement in customer retention,” she said. “This business is firing on all cylinders.”
Without the negative comp from the loss of conservative talk platform The Daily Wire, digital revenue would have risen 20%. Including it, digital posted a 6% increase overall.
Podcasting revenue declined 13%, primarily due to the end of the Daily Wire partnership and the departure of Dan Bongino, who was recently named Deputy Director of the FBI. “Excluding the negative comp from Daily Wire, we were up close to 40%,” Berner said.
The company replaced Bongino with WMAL-FM in Washington, D.C.-based conservative talk host Vince Coglianese, whose new show launched on 250 affiliates.
EXPENSE CONTROL
With the economic situation the way it is, Cumulus is maintaining a tight focus on cost controls. The company executed $7.5 million in new annualized net fixed cost reductions in Q1, adding to $163 million in reductions since 2019. Lopez-Balboa confirmed, “Total expenses in the quarter decreased by approximately $8 million year over year.”
Indeed they did, lowering to $202.12 million from $210.53 million.
Meanwhile, Cumulus says it is investing in AI to drive sales efficiency and customer service improvements. “Our sales organization is creating more efficient advertising proposals by using AI voice cloning to create sample commercials in seconds,” said Berner. “And we have implemented AI chatbots across our various e-commerce websites to improve customer service.”
Lastly, Cumulus responded to Kupinski’s queries about deregulation by reiterating previous comments about its benefits as Berner noted that the seating of Olivia Trusty as the third Republican on the FCC will spark swaps and sales. She commented, “We have to wait for the Republicans to have a majority [on the Commission]. We think that will be an earlier mid-summer. Then the expectation is that there will be a notice of proposed rulemaking… by late summer and fall.”
Not mentioned during the call? Cumulus’ delisting from the Nasdaq Stock Market, with stocks moving to the OTCQB market as of Friday’s opening bell.
Looking ahead, Q2 pacing is down approximately 10%, or 5% excluding political and Daily Wire impacts.
— Additional reporting by Cameron Coats, in New York
