|All eyes on Cumulus
The clean-up continues at Cumulus Media.
CEO Mary Berner kept talking on yesterday’s Q3 call about “headwinds” and is still in the uncomfortable position of telling investors that “the challenges are fixable, with time.” How much time do she and Cumulus have? She’s 13 months into the job, and (for example) is forced to spend $14.4 million cleaning up “long-standing disputes” with CBS Radio. On the plus side, Berner says “We negotiated multi-year renewals for most of those arrangements,” like CBS Sports Radio. Last year she set four basic goals like improving station ratings, partly by freeing up local decision-makers. Berner reports that “a year ago, we were staring at four straight years of ratings declines,” and until “some setbacks” in the Summer, they’ve made some progress. Now she’s adding a pivot to “sales execution.” She says some of the best ideas come “from the trenches,” and she’s traveled to meet with Cumulus sellers. No doubt they said they’ve been hampered by the clunky proprietary systems that Lew Dickey used to brag about. Berner’s team has brought in a third-party CRM system. Berner also knows that “advertisers continue to underappreciate” radio, so it’s not just her company that needs fixing. There’s also the demise of Rdio, “our only large digital initiative.” And digital’s one of the engines other radio operators are employing to replace lost spot revenue. (Event promotion and sales is another engine – something you’ll be reading more about in today’s NOW Newsletter.)
“To put it simply, we have too much debt.”
CFO John Abbot’s been on the job just four months, and he signals that he realizes the nub of the problem - $2.4 billion in debt. That “must be addressed,” he says. And when a C-level executive says they “continue to review all available options,” that’s a pretty reliable signal that everything’s on the table. One observer says that while CEO Mary Berner talks about leading the turnaround of Cumulus, in reality she may’ve been brought in to lead a re-structuring – to address the debt that’s barely moved. Berner says they’re “still in dialogue with our key stakeholders.” Presumably that includes the largest holder of Cumulus stock, Crestview Partners. The street’s doing its own signaling, with the stock price. “CMLS” managed to stay flat yesterday at $1.10 a share. (It was even up a bit, in after-hours trading.) The NASDAQ officially tells Cumulus that it’s regained compliance with the $1-per share minimum. But the $1.10 price puts the Cumulus market-cap at just $32 million – a recognition of all that debt.
Cumulus stations grew revenue 0.7% in Q3.
Political helped, and so did national business. CFO John Abbot says for the first quarter in several years, Cumulus stations turned in some revenue-share gains in local markets. But local revenue must’ve been relatively soft, and Abbot says political was “slightly weaker than expected.” (Cumulus certainly isn’t the only radio company to report that sentiment.) Radio station revenue comes in 0.7% ahead of last year, at $206.2 million. The bigger problem at the moment is Westwood One, which is about 28% of total Cumulus revenues. Westwood was off 5.5% in the quarter, to $79.4 million. Management does say that Westwood “picked up a little share” in third quarter, compared to its peers. For this current fourth quarter, Westwood’s pacing down “mid to high single digits.” While the radio station group is pacing “up slightly, thanks to political.” But there’s another reminder from Mary Berner about the thin cushion she’s working with – management teams are on alert in case additional expense cuts need to be made. Combining the stations and Westwood, Cumulus revenue dipped 1.1% to $286.1 million.
Townsquare gets a raw deal from Mother Nature.
CEO Steven Price labels it “a perfect storm” for his Entertainment business in Q3 – long stretches of inclement weather at four important outdoor fairs. Last year’s $75.5 million acquisition of NAME (North American Midway Entertainment) re-shaped the company – and made it more vulnerable to swings in the weather. How bad was it? At those four particular fairs, 60% of the dates had weather issues. For the Indiana State Fair, 12 of the 17 days experienced lousy weather/lower attendance. Price says that “at fairs with good weather, revenue was up 10%” over last year. He’s “still confident about the health of the fair business.” Pro forma revenue at Townsquare’s “Entertainment” sector dropped 4.5% to $76.8 million – not a catastrophe, though it can’t be fun sitting at a muddy fairground and gazing on an empty parking lot. Townsquare promotes plenty of non-fair events like craft beer and country music festivals, and Steven Price says they’re always experimenting. (They’ll try a craft beer festival at a NAME event.) Townsquare also produced its first “self-promoted fair” in Rockford, Illinois – and says it “out-performed the heritage fair, located just 30 miles away.”
No breakout for radio per se, but Townsquare says radio + digital revenue grew 3.8%.
“Local Marketing Solutions” is what Townsquare calls its fused-together revenue streams, and maybe that’s the way more radio companies will go in reporting results. Connecticut-based Townsquare was built around radio-plus-digital in smaller markets, so their approach feels logical to them – though it’s now impossible to discern how over-the-air radio sales are doing. The pro forma third quarter revenue grew 3.8% to $89 million. CEO Steven Price still likes the local ad business, though he says “some of the national advertising has gone to the larger markets.” Like other group heads, Price says his managers report “some unease going into the elections…a general hesitation both from consumers and small businesses.” Category-wise, automotive was “one of our worst-performing categories” (though “not horrific”), and it’s the largest single category in “Local Marketing Solutions,” accounting for 17% to 20% of total revenue. Political was – and we’re used to this by now – “a bit of a disappointment.” Townsquare had budgeted to do $10 million in political for all of 2016, and now expects perhaps $8.9 million. Across all its businesses, Townsquare pro forma revenue dipped slightly, to $165.8 million. Net income fell 31% to $15.9 million, partly due to last year’s sale of broadcast towers and this year’s impairment charge. Earnings per share were 58 cents, down from a year-ago 60 cents.
Events and “online newspapers” grow more important for Saga.
For local events, CEO Ed Christian says they don’t need to own them – co-sponsoring reduces the risk from “rain days” and other last-minute problems. Ed says “that’s a model that we’re looking at, more and more, partnering with other companies.” Saga stations have been involved with golf tournaments, auto tours, and “Baconfests” (playfully inviting actor/musician Kevin Bacon to show up). Searching for fresh revenue sources (“enhancements”) has taken Saga “very deeply” into recruitment advertising. They run seminars for local H.R. professionals, and Ed Christian says “in some of our markets, there are hundreds of thousands of dollars” in potential recruitment dollars – money that used to automatically flow to newspapers. Newspapers and print are also the target of a “open home Saturday” promotion in Clarksville, Tennessee, focused on real estate agents. Clarksville is where the Saga cluster presents an “online newspaper” named ClarksvilleNow, and the CEO says it’s generating “high-six figures in revenue,” with a very small staff. Expect Saga to open similar web-based news sites next year in Bellingham and Ithaca. For the adult alternative stations, Ed Christian’s talking about “micro-concerts,” inviting 40 to 50 people to a sponsored lunchtime show, with audio repackaged for airplay. Even with all that ancillary activity, though –
“Local is still the backbone of what we do,” says Saga. But it’s concerned about the future of national business.
This topic is clearly on Ed Christian’s mind. He says “I don’t think there’s any less national business in terms of spots, but what we’ve seen is a continued erosion in the rates.” (He doesn’t mention the Katz national rep or iHeart, but obliquely mentions “groups of stations” and pricing.”) Ed jokes about stations a few years down the road offering “a $100 coupon to get you back in to advertising” on the national level. Saga’s seen its own percentage of national business fall from 18% to 20% some years back to about 12%. Overall, CFO Sam Bush reels off the Q3 numbers for “a good quarter” at Saga – same-station net revenue up 2.2% to $33.9 million, and same-station expenses flat at $23.9 million. Net income per share improved from 53 cents to 92 cents. Cap-ex (capital expenditures) for the quarter was $1.6 million. How about political revenue? Sam says radio booked $529,000 of political, compared to $130,000 in 2015, a non-election year. We learn that Saga sold a tower in Norfolk for $1.6 million and “signed a favorable lease” to keep using it. Saga’s paying its tenth straight quarterly dividend, now increased to 30 cents per share. In the last four years, it’s paid out $38.9 million in quarterly and special dividends. Business sounds pretty brisk in this current Q4. Sam Bush says it’s pacing up low to mid single digits.
Univision’s new “El Show de Renzo y Maria Esther” debuts in Chicago, San Diego, Austin and on Houston-market KOVE, Galveston. (KOVE is Spanish contemporary “Mas Variedad 106.5.”) The morning show’s a mix of motivational talk, beauty tips and music, and there’s more about this new syndicated program from Univision here.
Pandora’s searching for a new CFO, now that Mike Herring’s handling both the President and CFO duties following this year’s re-org. The company says that since March, “Mike has admirably balanced the demands” of the two jobs. But especially with Pandora’s new on-demand tier (more like Spotify), “Mike will be required to devote more of his time and attention to driving revenue and on the successful execution” of the “new, expanded product set.” Pandora’s hired a third-party executive search firm to look for “a highly-qualified external candidate to fill the role of CFO.” Herring joined Pandora in early 2013.
New York City’s NYMRAD “Holiday Party” moves to a new site – “Rock & Reilly’s NYC Rooftop” - while keeping the smart policy that advertisers and clients attend for no charge. As the trade group says, “NYMRAD is footing the bill” for the always-popular bash the afternoon of Friday, December 2. The New York Market Radio Broadcasters group continues past blandishments such as “a magician, Coney Island photo booth and raffle prizes.” They also mention the #1 attraction – networking. Rock & Reilly’s is just a block or so north of Penn Station at 218 West 35th Street, between 7th and 8th Streets. More info and Holiday Party tickets for broadcasters from NYMRAD here.
New call letters for new formats on stations owned by iHeart, Entercom and others, including iHeart getting “Real” in Indy. That’s where it’s attacking Radio One’s urban cluster with urban “Real 98.3.” It abandoned the “Big 98.3” country format on WUBG Plainfield, Indiana and files for “Real” calls of WZRL. More from the FCC’s just-released Call Sign sheet, like iHeart’s former CHR “Party” KPLV/93.1 in Las Vegas going variety hits as “Mountain” – and taking new calls of KYMT. In Wichita, Entercom’s former KFH-FM Clearwater becomes “KNSS-FM,” representing its new simulcast with talk KNSS/1330. One thing’s evident in the FCC list – at least a temporary respite in the number of new Low Power FMs. In some previous releases, almost all the new call letters granted were for LPFMs. Scan the latest Call Sign Actions for the markets you’re interested in here.
Now that licensee Brian Dodge is paying a $100,000 civil penalty as part of a consent decree with the Commission, he’s free to move forward on some long-planned transfers. For instance, he’s selling a North Bennington, Vermont translator to a group that will move it to Westerly, Rhode Island. Down in the Ocean State, W228AU will appear at 103.1, as a companion to variety-programmed WBLQ Westerly/1230. It’s owned by DiPonti Communications, whose Chris DiPaolo signs the $40,000 piece of paper to purchase the translator. Brian Dodge holds the translator license through Harvest Broadcasting Association. Broker - RadioStationsForSale.net.
An Ithaca translator whose hometown plans turned controversial is instead now strapping in for a drive all the way to Long Island. Edward Farmer originally filed to modify the facilities of W266CI right there in Ithaca, but that drew objections from Saga and Vizella Media. All parties reached a settlement, and now Farmer’s selling the translator to Dr. Richard Yoon’s WIN Radio Broadcasting for $65,000. It’s moving to Islip (“EYE-slip”) on Long Island and will run 250 watts at 100.7. The translator will partner with WIN’s Spanish contemporary Christian “Radio Cantico Nuevo” WNYH Huntington/740. The AM needs help at night, because its 25,000-watt daytime signal shrivels to just four watts after dark. Broker – Griffin Media Brokers for the seller.
Full-service AC WKTN/95.3 in Kenton, Ohio does it all – news and talk from a full local staff, community announcements, snow cancellations, high school football, a “church of the month,” and reports from the Hardin County Fair, mixed in with AC and oldies music. Radio General Ltd. has owned the Class A facility at 95.3 since at least the late 1970s, and now sells it to Home Town Media Ltd., led by members of the local Haushaulter family. The all-cash price is $450,000, with an additional $75,000 non-compete payment going to Radio General president/GM Keith Gensheimer. WKTN will be Home Town’s only radio property.
Reno’s “The Fine 89” KJIV is sold again, probably ending some dreams of Jeff Cotton, Bruce Van Dyke and their partners at Open Sky Radio Corp. In early 2015, they bought then-KXNV Sun Valley, Nevada from the Progressive Leadership Alliance of Nevada for $1 – one dollar – and have been running it as a community-involved variety station. (Bruce recently produced specials about Prince and the Jefferson Starship’s Paul Kantner, and Jeff Cotton offers a tribute to “Hot Licks” bandleader Dan Hicks, here.) Now Open Sky Radio is selling Class C2 KJIV to Nevada Public Radio for a lot more than they paid – they’re accepting $550,000. Open Sky still has country non-com KLAP Gerlach, Nevada/89.5. Brokers on the KJIV sale – Greg Guy of Patrick Communications for the seller, and Colorado-based Public Media Company for the buyer.
Beasley closes on $250,000 worth of Florida translators, and is moving one of them from the East coast to Tampa. That’s W242CG, re-licensing from Broward County to Tampa, with new primary station “Money Talk 1010” WHFS Seffner. The other two translators remain on the east coast. W280DU stays at 103.9 while re-licensing from Greenacres to Boca Raton, paired with “Money Talk Radio” WSBR/740. The third translator is Pompano Beach-licensed W237BD at 95.3 which will rebroadcast brokered-talk “Health and Wealth Network” WWNN Pompano Beach/1470. Seller of all three translators is not-for-profit Reach Communications/Calvary Chapel Church. Broker for Beasley – Bob Heymann of Media Services Group.
“Monetization of podcasting: A Race to $100 million” and “Listen Up!” are two new papers about podcasting from the collaboration between Dr. Billy McKim and his students at Texas A&M, and DMR/Interactive (September 26 NOW). The “Monetization” piece written by Ben Haase consults with experts in the space like Norm Pattiz of PodcastOne, Nielsen VP Rob Kass and consultant Steve Goldstein. The “Listen Up!” article is “a brief history of podcasts,” crediting Dave Winer (who created an RSS feed for public radio host Christopher Lydon in 2003) and Adam Curry, a.k.a. “The Podfather.” Read “Listen Up!” and “Race to $100 million” at “The Download on Podcasting” site here.
“There will be no more new music formats” is Mark Ramsey’s provocative title for a post. His analysis is that “new formats come from two places – new tastes from young consumers and unserved tastes from the audience at large.” Ramsey says that for the first category, “there have been no new youth-based formats blasting on the radio for generations, and I submit there never will be,” because of “fractured tastes” – unlike the 1970s or 1980s. As for “unserved tastes,” the underachieving classic hip-hop format shows Mark that “radio’s competitive is advantage is breadth,” not a “deliberate narrowing of variety.” Read “no more new music formats” here.
“Trademark tales from the campaign trail” is entertaining reading from attorneys Mitchell Stabbe and Kelly Donohue at BroadcastLawBlog. What happened when a candidate for governor in Ohio parodied the AFLAC duck? Ultimately nothing, because the court ruled the ads were “core political speech warranting First Amendment protection.” But a Maryland pol named Steve Hershey had repeated trouble with a certain large candy company, for using ads that “mimicked the trade dress of a Hershey chocolate bar wrapper.” He also tried a First Amendment defense, but a district federal court ruled that “political activities” were included in Hershey’s mark protecting “goods or services.” Read more real-world trademark tales of campaign ads here.
Don Dalesio adds another New Jersey radio operator to his C.V., joining Press Communications as its Chief Operating Officer and Market President. He’ll report to Press CEO Bob McAllan, and work with stations like the “Thunder” country simulcast of WKMK Eatontown/106.3 and /WTHJ Bass River Township/106.5. Press says Don will “have complete oversight of marketing, sales, promotions, programming and digital sales efforts, as well as day-to-day operations.” Dalesio will look to “increase event-related marketing” – a popular theme these days. Don was Townsquare’s Monmouth-Ocean Market President for 3-1/2 years, and before that EVP/COO of Princeton-based Nassau Broadcasting.
Harvey Wells started in Chicago radio as a part-time jock at adult alternative WXRT/93.1 40 years ago, and eventually managed it and other stations for CBS. He later managed in Chicago for Newsweb and other owners, then last year teamed with another familiar Chicago manager, Michael Damsky, to form the Radio Program Reps consultancy. Harvey’s next job isn’t in Chicago at all, but in the state capital of Springfield, Illinois. He’ll be running the Mid-West Family Broadcasting cluster. Robert Feder says says Harvey’s winding down the consultancy, ahead of his November 28 debut at news/talk WMAY/970, country “US 92.7” WUSW, AC WNNS/98.7 and “Real Rock” WQLZ/97.7. Owner Mid-West Family says it’s “seven radio markets, all locally-owned by shareholder employees.”
Laurie Pracher worked extensively in the New York-based rep-firm scene, at Katz (VP/director of sales for CBS Radio Sales & Entercom Radio Sales) and before that Interep (VP/Sales for the CBS and ABC Radio rep). Four years ago, she joined New York Public Radio and she’s been the Senior Director of Sponsorship Sales at the WNYC Podcast Studios. Now Laurie’s the latest to jump from pubradio to a commercial podcaster. She takes a job as Senior VP of Brand Partnerships at Wondery. The platform launched earlier this year with backing from 20th Century Fox. RAIN News reports its hiring of Laurie Bracher, and also Karo Chakhlasyan as Director of Audience Acquisition.
His little basement station brought national fame, and then… - Veteran Jerry Clegg says “It began in 1957 with a letter to WSOC in Charlotte, asking for permission to rebroadcast something on my little community radio station, WSJC. That precipitated a visit from WSOC President Earl Gluck and his PD Fred Dixon, to record an interview to be used on NBC Radio’s ‘Monitor.’ From the Monitor broadcast, Mark Goodson/Bill Todman’s producers flew me to New York, all expenses paid, to appear on the CBS-TV game show ‘Two for the Money.’ I was paired with another teenager who had his own newspaper (we split our winnings of $2,160). As a result of the Two for the Money appearance, I was given a mid-morning summer radio show on WSOC. During this time, the Voice of America filmed a short documentary called ‘The World’s Smallest Radio Station.’ It featured my neighbor Bob Rose and me. It aired in Europe on VOA-TV and the video’s on YouTube here. There was significant Charlotte Observer newspaper coverage of all of this. But I got a visit from FCC Inspector Donahue, accompanied by WIST Chief Engineer Buster Richardson. After making a few signal strength measurements, Inspector Donahue said, ‘Turn it off, and don’t turn it back on.’ Did I comply? What do you think?” Many future radio pros began with a home-made station assembled when they should’ve been doing school-work. Share your favorite radio story – Email “You Can’t Make This Up” – Tom@RTK-Media.com.
iHeart’s re-scheduled Q3 call is this morning, and its Rich Bressler might enlighten us about why they pushed it back a week. But for sure, we’ll get a look inside radio’s largest operator. Full report tomorrow. In iHeart’s operational base of San Antonio, the Express News quotes Debtwire senior credit analyst Seth Crystall saying “Keeping track of this company is difficult. That’s why people don’t trust them,” he says, due to a lack of transparency. Want to reach our highly-engaged readership with your company’s marketing message? Kristy Scott is your contact. She’s at Kristy@RTK-media.com or phone 818-591-6815. Hope you’re not feeling a post-election hangover, and see you back first thing tomorrow - Tom