Cumulus Reports Net Revs Up 2.1% In Third Quarter 2013

Q3 Financials

CUMULUS MEDIA has reported financial results for the three and nine months ended SEPTEMBER 30th, 2013.

Chairman/CEO LEW DICKEY stated, “This was another solid quarter for the Company. Our growth initiatives complimented our core business, which continued to take share, and we are seeing a continuation of these trends in fourth quarter.”

Net Revenues

Net revenues for the three months ended SEPTEMBER 30th, 2013 increased $5.7 million, or 2.1%, to $281.1 million, compared to $275.4 million for the three months ended SEPTEMBER 30th, 2012. The company notes, "this increase was primarily attributable to a $4.6 million increase in local spot advertising revenue, an increase of $2.1 million in national advertising revenue, an increase of $1.3 million in live event revenue, and an increase of $0.9 million in revenue due to the addition of stations in the Bloomington and Peoria markets which were acquired in JULY 2012, all of which was partially offset by a decrease of $2.9 million in cyclical political revenues."

Direct Operating Expenses, Excluding Depreciation And Amortization

Direct operating expenses for Q3 increased $12.3 million, or 7.6%, to $174.0 million, compared to $161.7 million for Q3 2012. "The increase was primarily attributable to $4.0 million of ongoing investments in national content initiatives, a $1.9 million increase related to ongoing investments in our sales infrastructure, and a $0.6 million increase in expenses due to the acquisition of stations in the BLOOMINGTON and PEORIA markets," noted CUMULUS.  In addition, music publishing license fees increased by $8.3 million as a result of a non-recurring, one-time credit received in the comparable 2012 period from an industry-wide settlement with BROADCAST MUSIC.

Corporate, General And Administrative Expenses, Including Stock-based Compensation Expense

Corporate general and administrative expenses, including stock-based compensation expense, for Q3 2013 decreased $1.2 million, or 9.4%, to $11.8 million, compared to $13.0 million for the three months ended SEPTEMBER 30th, 2012. This decrease is primarily due to a decrease of $1.7 million in acquisition costs, partially offset by an increase of $0.4 million in other overhead costs.

Interest Expense, Net

Total interest expense, net of interest income for Q3 2013 decreased $4.6 million, or 9.2%, to $45.2 million compared to $49.8 million for the three months ended SEPTEMBER 30th, 2012. Interest expense associated with outstanding debt decreased by $5.2 million to $41.7 million as compared to $46.9 million in the prior year period. The company noted, "this decrease was due to lower average indebtedness outstanding resulting from principal repayments and a lower weighted average cost of debt due to the DECEMBER 2012 amendment to our first lien credit facility."

Capital Expenditures

Capital expenditures for Q3 2013 totaled $3.6 million, which represented routine capital expenditures required for the maintenance of the Company’s technical facilities. Capital expenditures during Q3 2012 were $2.7 million.

Lew Dickey Fields Questions On Investor Call

Speaking with reporters and financial analysts on a conference call, LEW DICKEY also touched on several other topics of interest to investors. He noted that the Affordable Healthcare Act, also known as Obamacare, would be a catalyst for spending. DICKEY also pointed out that the hospital category has “cracked the top ten” in revenues for CUMULUS.

Speaking of sales, DICKEY told those on the call that “We just gave the edict to bring on 50 more salespeople,” and pointed to successes in turning around 9 of 10 “Code Red” stations that were lagging in billing.

Responding to a question about the former DIAL GLOBAL -- now WESTWOOD ONE, DICKEY described the combined WESTWOOD ONE and CUMULUS MEDIA as “More of the network television model, with syndication and production.” Discussing CUMULUS' 15% stake in RDIO, DICKEY said he was looking to expand distribution on the digital/mobile front. He avoided answering one analyst’s question about the future of the current deal with iHEARTRADIO which expires soon. He did note “RDIO will have a content aggregation play,” but “not in 2014.”

DICKEY said the CBS SPORTS RADIO NETWORK exceeded the plan CUMULUS had for this year, noting it was “off to a very strong start in the upfronts for 2014.”

Responding to a question about the future of Country WNSH (NASH FM)/NEW YORK, and the rollout of a national NASH brand, DICKEY said “think of NASH as ESPN for country,” and predicted the country offerings would be “consolidated at the beginning of next year under the NASH umbrella.”

As for the company's SWEETJACK offering, DICKEY said it "continues to gain traction.”

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