Earnings Season

Digital, national spot and network business drove Cumulus Media to what President and CEO Mary Berner called “another quarter of strong results.” Third quarter revenues rose by $10.5 million, or 3.2% on a same-station basis, clocking in at $280.8 million, and were up 3.9% when political revenues are backed out in this non-election year.

Same-station national spot grew by double-digits and Westwood One network billings increased nearly 5% while local spot continued to be a challenge. Digital revenues lurched ahead by 51.4% to $19.9 million, as more radio advertisers opted to buy digital products. Of 30,000 local direct clients, 40% also bought a streaming schedule during the quarter, and almost 10% bought a product from C-Suite, the company’s local digital marketing services platform. September brought milestones for both channels as each booked more than $2 million in revenue.

“Our multi-pronged digital strategy continues to result in meaningful and profitable revenue growth,” Berner told analysts during a Monday afternoon conference call.

During the quarter the company introduced Cumulus Creative Concierge, a white label platform that provides coordinated spot and digital creative to local advertisers. Berner said it “significantly simplifies” the process of selling and buying integrated ad campaigns.

Podcasting is the third leg in the company’s digital stool, with Berner boasting of almost 70 million monthly downloads and about 85% revenue growth in the quarter. The rapid growth has Cumulus poised to deliver $25 million in revenue from podcasting this year. “Our podcasting business has been nicely profitable from the beginning and continues to contribute to our positive EBIDTA momentum,” Berner said.

Each of the three digital channels contributes about one third of digital revenues, with streaming netting the highest margins, podcasting the lowest and C-Suite in between the two.

Revenue Management Tools Pay Dividends

Investments the company made during the past two years in a new traffic and inventory management system are paying off, Berner said. Cumulus booked $6 million in new incremental revenue as a result of these revenue management tools, which are now fully implemented across the company.

Best performing markets for Cumulus in Q3 were Chicago, Cincinnati, Washington, Indianapolis and Baton Rouge. Ratings at its news/talk stations grew, in aggregate, every month during the quarter with syndicated host Ben Shapiro’s 18-49 ratings up 60% for the simulcast broadcast of his podcast and up 40% for his live show from Fall 2018 to Spring 2019. “Our strength in news/talk positions us particularly well for what we expect will be a very robust political environment as we count down to the 2020 election,” Berner said.

The chief executive used the call to call out some market-level achievements. In Indianapolis, where it added stations from Entercom in a multi-market swap, new rock station “93.9 X” WNDX increased ratings by 100% year over year. And in San Francisco, adding an FM simulcast to KNBR enabled the sports station to grow its audience share 73% year over year.

Cumulus has made paying down debt a top financial priority. A $29 million voluntary debt prepayment, funded by free cash flow generation, reduced the company’s net leverage to 4.5-times. During the quarter, Cumulus completed a $525 million term loan refinancing that reduced interest expense and kicked out the maturity date to 2026. “We think we’re doing the right things,” Berner said of efforts to improve the Cumulus balance sheet.

Looking ahead to fourth quarter, Cumulus revenues are pacing down low single digits on a same station basis, excluding political. “The quarter got off to a sluggish start, where we saw declines in advertiser demand that we believe reflected the macroeconomic and political uncertainty that has dominated the news cycle,” Berner explained.

Net income shot up 28% to $16.3 million. Earnings before interest, taxes, depreciation and amortization (EBIDTA, a measure of cash flow) dropped 5.5% to $58.7 million on an “as reported” basis or down 0.8% on a same-station basis. EBIDTA grew 2.2% on a same-station basis, minus political.

Same-station revenue at its radio station group – which delivers about seven of every 10 ad dollars Cumulus books –was largely flat at $161.2 million. The smaller Westwood One network division did better, up 4.9% to $78.4 million. Total broadcast radio billings were up 1.5% on a same station basis to $239.6 million.