Cumulus Q3 Revenue Down 7.8%, EBITDA Off 11.5%

Cumulus Q3 Results Off

After a personnel shake-up that saw sweeping changes at the top of its executive hierarchy (NET NEWS 10/13), CUMULUS MEDIA announced its operating results for the three and nine months ended SEPTEMBER 30th.

Net revenue for the quarter was $289.4 million, down 7.8% vs. 2014, while Adjusted EBITDA of $70.6 million for the same period was down 11.5% from last year. For the nine months ended SEPTEMBER 30th, net revenue and Adjusted EBITDA were $859.9 million and $196.1 million, down 8.0% and 18.0%, respectively, from the comparable measures a year ago. During the third quarter of 2015, the company also recorded an impairment against intangible assets and goodwill of $565.6 million.

The news sent CUMULUS stock down 8% to $0.43. It has fallen further to after-hours trading to $0.35. You can keep tabs of it here.

Newly named CEO MARY G. BERNER, who took over from the company's founder/CEO LEW DICKEY on OCTOBER 13th commented, “Despite CUMULUS' recent challenges, my early experiences have reinforced my appreciation for the strength of the company’s aggregate assets, including its people. I was hired by the company’s Board of Directors to maximize the value of those assets and I believe that, through focused execution, we will be able to capitalize on the operational leverage that appears to exist in the company. While such efforts will not be easy nor, in many cases, immediate, I intend to institute a relentless commitment to improvement over the coming months to drive results for all stakeholders.”

Conference Call Highlights

In the conference call, CEO MARY BERNER admitted that CUMULUS "continued to face challenges" in Q3, and that "we expect them to continue to Q4." And while she couldn't go into specifics on exactly what she wants the company to do going forward, BERBER did cite three general goals for success: to create "legacy content that people want" ... "offer advertisers a differentiated and measurable value proposition" ... and "operate and execute well on every level and function of our business.

"I believe CUMULUS has all the all elements necessary be one of the winners," she stated. "However, previously we spent years building assets. This requires a change in emphasis from expansion to execution -- and we're going to focus on areas of immediate improvement."

They are 1) increasing ratings; 2) fixing "a large number of executional issues, especially in advertising sales" and 3) "make CUMULUS a place where employees can maximize talent that are aligned with the company's goals."

BERNER also offer these observations:

* Programming and ratings issues were often due to "command and control programming" that was impacted by a "lack of collaboration." She plans to realign "programming in the organizational structure to take advantage of local input, particularly in major markets." Doing so would ensure "faster and better-informed decision making, implemented in a cost-neutral fashion."

* Employee turnover was a major problem -- BERNER cited a turnover rate high of over 40%, most of that voluntarily. Naturally, bringing the turnover numbers down is a major goal, which will "require strategy, a clear direction and time."

* She wholeheartedly believes in and is excited about "lifestyle-affiliated brands in general and NASH in particular."

* A digital strategy with a "holistic approach" will be developed over time, but will be prioritized behind fixes for the core businesses that have the "most upside potential ... To turn around the company, we will focus on areas that move the needle fastest, has the most impact and the lowest amount of risk.

"In the past, this company has over-promised and under-delivered," she concluded. "I won't do that, which is why I can't go into details on what we're going to do at this time."

BERNER did say she will offer details of her 60-day review to the Board in DECEMBER, and some of those details will likely be announced during the fourth-quarter conference call early next year.

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