Cumulus Shares Rise 9 Percent on Quarterly Results

Shares of Cumulus Media surged 9 percent on Tuesday after the nation's second-largest owner-operator of radio stations said quarterly net revenue rose 5 percent to $275.5 million.

According to THR, stripping out acquisitions of Townsquare and Westwood One, which Cumulus did not own a year ago, revenue increased 1 percent.

The company said pro forma earnings before interest, taxes, depreciation and amortization rose 6 percent to $96 million despite tough comparisons due to political advertising a year ago.

The earnings results were disclosed Tuesday prior to the opening bell on Wall Street and shares of Cumulus were up 59 cents to $7.33.

Cumulus stock has been on the rise lately as observers speculate it would make a nice acquisition for a larger media company.

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Lew Dickey

In a conference call Tuesday with financial analysts, co-CEO Lew Dickey said, "The fourth quarter capped off a strong year of performance by our team in the face of very tough political comps. Additionally in the quarter, we closed two significant transactions, completed the first equity offering our industry has been in nine years, and refinanced our credit facilities leaving us with a simplified capital structure consisting of first lien bank debt and senior subordinated notes, again while significantly reducing our borrowing costs.

Finally, we invested an Rdio, an already exciting online music service that holds tremendous potential upside for Cumulus and serve as a worldwide distribution platform for our newly acquired content engine, WestwoodOne. Now, our sale of 68 radio stations to Townsquare Media closed on November 14. That provided us with the capital to purchase WestwoodOne, which we closed on December 12.

Dickey also commented on certain company initiatives:

• CBS Sports Radio as well as Right Now Traffic, are all hitting their stride as national content brands. Both sports and traffic are currently exceeding expectations for 2014 and are taking share in their respective markets. "And we will be again substantial growth drivers as we expected them to be. We are very encouraged by the level of interest by both the advertisers and affiliates in these products, which is a testament to the high-quality nature of the content and again the efficacy of broadcast radio advertising on sports and traffic sponsorships respectively."
• For SweetJack, "we have evolved the business model over the past year to in essence transform it into a sustainable EBITDA accretive strategy providing mobile activation for national advertisers, while again continuing to utilize the platform to supply local daily deal opportunities throughout our owned and operated markets. And as we mentioned, these have really been shifted more to weekly deals from daily deals to get enough traction behind them."
• "While our earlier three growth initiatives are hitting their stride, it’s our more nascent NASH country music brand that is really beginning to unfold in 2014 and holds tremendous potential as a growth initiative for the company. Within the next three years, it has the potential to actually eclipse the other three initiatives combined in both revenue and EBITDA contribution. NASH was launched just a year ago on FM station that we bought in New York City and its nationwide rollout is accelerating nicely and right on schedule. As it enters its second year, NASH 94.7 FM in New York is one of the most listened to country music stations in the United States, with over 1 million people tuning in weekly and has been responsible for driving country music sales in the New York area at record levels."

Also concerning the Nash Brand, Dickey said, "We’ve now rolled out a morning show in 21 markets. We expect that to be in 50 markets by the end of the year and the goal is to have that in 100 markets by the end of next year or NASH nights programs which of course outside of prime time – midnight, we are not getting the highest rates, but that is already now in the 100 markets, same thing with our – in our overnight shows and more than that and our countdown shows in more than that."