Radio Giant Cumulus Files For Bankruptcy

Cumulus Media announced Nov. 29 it has filed for chapter 11 bankruptcy to reduce the radio giant’s debt load by more than $1 billion. 

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Cumulus says it expects all operations, programming and sales to continue as normal throughout the restructuring process.  The Restructuring Support Agreement includes lenders holding approximately 69 percent of the company’s term loan and is designed to to reduce the its debt load by more than $1 billion, according to a statement. 

Mary Berner, president and CEO of Cumulus Media, said, “The actions we are taking today 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.”

A note on the Cumulus website notes that “the Company’s current common stock will be canceled and will not receive a recovery in the restructuring. Once effectuated pursuant to an approved plan of reorganization, our existing secured lenders will become our new majority shareholders.”

Cumulus Media controls 446 owned and operated radio stations in 90 U.S. media markets and claims to be the nation’s leading provider of country music and lifestyle content through its NASH brand.

Cumulus/Westwood One is the exclusive radio broadcast partner to brands including the NFL, the NCAA, the Masters, the Olympics, the Grammys, the Academy of Country Music Awards, the American Music Awards, Westwood One News, and more.

In early November it became clear that the Atlanta-based company was in talks with lenders and had a bankruptcy plan in place, with more than $2.4 billion in debt and reports of the company defaulting on debt payments.  The company’s stock tanked in February and dropped from $1.17 to less than 25 cents per share by the end of April.

The announcement follows a larger trend of major radio broadcast companies having debt issues, with reports of iHeartMedia edging close to bankruptcy after posting a 2Q loss of $174 million and CBS Radio preparing to take on $1.5 billion in debt ahead of an initial public offering that it later canceled altogether.  

Berner also stated: “Over the last two years,  [Cumulus has] 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. … 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.”