After announcing four deals in two months as part of its “portfolio optimization” strategy, Cumulus Media appears poised to strike more sales or swaps in the coming months. While the company isn’t providing specifics on future M&A plans, some brokers anticipate more deal making in the top 15 markets.

“Every top 15 market cluster owned by Cumulus, other than Dallas, is on the block,” says one broker who has connections to the company. With four FMs and three AMs, Dallas is the company’s top billing market with a reported $80 million in annual revenue, making it off-limits for potential buyers. But apart from Dallas, “most, if not all, will go in the next six months,” this broker predicts, adding that swaps are preferred, but outright sales that will pay down debt are also being looked at.

Cumulus maintains that it has no plans to exit all of its big markets. A company spokesperson notes that it just invested the majority of its “high impact” dollars into some of its biggest markets, including San Francisco, Houston, Dallas and Washington, DC. Monday’s $43 million sale of heritage rocker KLOS to Meruelo Media was “too good to pass up,” the spokesperson added, because it will bring in “cash in excess of the value we thought the station would deliver over the long term.”

As a standalone FM in one of radio’ most cutthroat markets, KLOS was at a competitive disadvantage to L.A.’s other players which have more fully developed clusters. “This very attractive sale price allows us to generate more value from the station than we would have realized otherwise, and the cash can be used for debt repayment and for investing in other parts of our business,” Cumulus president & CEO Mary Berner said in a memo to employees Monday about the sale of KLOS.

In a second deal announced Monday, Cumulus agreed to trade two stations in Southern Connecticut to Connoisseur Media in exchange for four stations in and around the Allentown-Bethlehem, PA market. “Together, these transactions mark another important step forward in our efforts to improve our long-term competitive position,” Berner said.

Coming two months after February’s bombshell announcement that it will sell six stations – including New York’s WPLJ and Washington, DC’s WRQX – for $103.5 million in cash, Monday’s deal making stoked the rumor mill about what M&A activity lies ahead. Cumulus says it is open to considering any and all opportunities to strengthen its financial and competitive position. “If future opportunities present themselves – whether buy, sell or swap – where the company thinks it can increase the competiveness of our station group, we will certainly try to take advantage of those opportunities,” a company spokesperson said.

A Debt-Reduction Strategy

The thinking among the company’s new equity holders, according to a source, is that many of its large market stations don’t contribute a great deal of cash flow and can actually be of greater value by selling them to continue to pay down debt. After erasing $1 billion in debt in bankruptcy court last June, Cumulus still owes roughly $1.1 billion, which comes due in May 2022. Brokers point to the low price KLOS fetched ($43 million) compared to what Mereulo paid to buy rhythmic CHR “Power 106” KPWR ($82.8 million) as evidence of how many large market Cumulus stations are not big cash generators.

Apart from Dallas and San Francisco, Cumulus’ top 15 market holdings are far from full-boat clusters.

Building Cumulus 3.0

To position it for long-term success, Cumulus says its strategy is to strengthen its presence in some markets while selling off others where its sees less of an upside. It notes that this goal is “irrespective of market size” and applies to the smallest and largest markets. “This includes strategically evaluating our collection of stations and adding stations where they can strengthen a winning (or potentially winning) market and, conversely, letting go of stations where it is more HABU to do so,” Berner said in a memo to employees after the Mereulo and Connoisseur deals were announced. HABU refers to “highest and best use” of resources, which Berner has made a company mantra since taking over as CEO in 2015.

The company points to the Connecticut-for-Allentown swap with Connoisseur and the multi-market swap with Entercom as examples that will make it a more significant competitor. In Indianapolis the swap with Entercom will give Cumulus the dominant cluster while yesterday’s exchange with Connoisseur will make Cumulus a more formidable player in Allentown-Bethlehem.

While paying down debt is a top priority – last October, Cumulus made a $50 million prepayment on its term loan using cash from operations – Berner said in February the company is equally focused on “building a new Cumulus 3.0 – not to tear it down.” Strengthening the balance sheet will give it more room “to invest in other areas of the company to the benefit of our employees and other stakeholders.”

But Berner also made it clear that Cumulus remains open to doing more deal and swaps. “Like any other well managed company, we will take advantage of opportunities that present themselves to strengthen our competitive and financial position… So if other value-enhancing swaps or sales or purchase transactions develop, we will certainly do what we can to capitalize on them,” Berner said.

So far, investor reaction to the latest deal-making—Cumulus’ stock price declined since the latest swap was announced—suggests Berner still has a case to make on Wall Street.