Radio titan Cumulus Media Inc. has filed for Chapter 11 bankruptcy protection to reduce more than $1 billion in debt. That cuts its debt load down to about $1 billion.
While Chapter 11 usually eliminates any contracts a company may have, Cumulus expects all radio operations, programming and sales to continue as normal throughout the restructuring process, according to a company news release.
The company said it has plenty of cash on hand, combined with funds generated from ongoing operations, to support the business during the financial restructuring process. It does not intend to seek debtor-in-possession (DIP) financing.
The Restructuring Support Agreement includes lenders holding approximately 69% of the company’s term loan, the company said. The Chapter 11 petition was filed Wednesday (Nov. 19) in the U.S. Bankruptcy Court for the Southern District of New York.
Cumulus owns 466 stations in 90 U.S. markets. In Arkansas, the company owns 17 stations in Fayetteville, Fort Smith and Little Rock. They include:
Fayetteville — KAMO-FM 94.3; KKEG-FM 98.3; KMCK-FM 105.7; KQSM-FM 92.1; KRMW-FM 94.9; KFAY-AM 1030; KYNG-AM 1590
Fort Smith — KBBQ-FM 102.7; KLSZ-FM 100.7; KOMS-FM 107.2
Little Rock — KAAY-AM 1090; KARN-AM 920; KARN-FM 102.9; KIPR-FM 92.3; KLAL-FM 107.7; KPZK-FM 1250; KURB-FM 98.5
The Fayetteville and Fort Smith markets are managed by Dale Daniels. Keith Liesmann oversees the Little Rock market. Both declined to comment when contacted by Talk Business & Politics, and instead referred questions to Joele Frank, a New York-based corporate communications firm assisting Cumulus in responding to inquiries from media and investors.
Andrew Squire, a director at Joele Frank, did not offer any additional comment beyond what was in the Cumulus news release.
In a statement, Cumulus president and CEO Mary Berner said the following about the restructuring deal:
“Over the last two years, we have focused on implementing a business turnaround to reverse the Company’s multi-year ratings, revenue and EBITDA declines, create a culture that fosters motivated and engaged employees, and build an operational foundation to support the kind of performance we believe Cumulus is capable of delivering. As we have demonstrated in many measurable ways – including increased ratings, revenue market share gains, improved employee satisfaction, reduced employee turnover and, over the last several quarters, our return to year-over-year EBITDA and revenue growth – that turnaround has not only been successful but is continuing. However, as we have noted consistently, the debt overhang left by previous years of underperformance remains a significant financial challenge that we must overcome for our operational turnaround to proceed.
“The actions we are taking [Wednesday] to address our balance sheet are a critical step forward for Cumulus. We will use this restructuring process to relieve the financial constraints on our continued progress, allowing us to focus our resources on investing in our business and people to strengthen our competitiveness and ultimately drive growth. We have ample cash to support our operations and service our advertisers, vendors and affiliates during this period, and we look forward to becoming an even stronger partner to all of them when we complete this important phase of our turnaround strategy.”
Cumulus is the second-largest radio station owner in America behind iHeartMedia, formerly known as Clear Channel. Earlier in November, Cumulus reported third quarter net revenue of $287.2 million, up 0.4% from the three months ended Sept. 30, 2016. For the first nine months of 2017, the company reported net revenue of $841.8 million, a net loss of $0.4 million from the nine months ended Sept. 30, 2016.
Cumulus was delisted from NASDAQ on Nov. 20, a result of the company’s noncompliance with NASDAQ listing rules.