Lew Dickey OUT As CEO, John Has Left The Building

Its stock price plummeting, Cumulus Media, the second-largest radio broadcaster in the United States, announced on Tuesday that it would replace its chief executive.

Lew Dickey

Cumulus’s board said that 53-year-old Lewis W. Dickey Jr., who founded the company in 1997, would step down as president and chief executive on Oct. 13. Mr. Dickey, one of the company’s largest shareholders, will become its vice chairman.

He is to be replaced by Mary G. Berner, the former chief executive of MPA, the Association of Magazine Media, and a former head of Reader’s Digest Association and Fairchild Publications. Ms. Berner has been on Cumulus’s board since May.

The company shake-up was said to be initiated by Chairman Jeffrey Marcus, who is also a partner in Centerview Partners and owns a 27 percent stake in Cumulus.

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This year, Cumulus’s shares have lost more than 80 percent of their value. On Tuesday, the company’s share price closed down 8.1 percent at $0.68, its lowest price for the year. On Sept. 15, Moody’s cut the ratings of Cumulus’ $2.4 billion of debt to B3 — which is junk status.

John Dickey

The company has also invested in streaming music through a deal with Rdio, a competitor to Spotify and Pandora, that is valued at $75 million and added content from Cumulus stations to Rdio’s system.

Cumulus also started a country music brand, Nash, that it extended to radio stations, TV, a magazine and a record label. In 2013, Cumulus introduced the first country station to the New York City market in 17 years, WNSH-FM, the first of a string of stations using the Nash name.

But Cumulus’s growth has resulted in a debt load of nearly $2.5 billion, and while its revenue has quickly grown since 2011 with the addition of hundreds of stations, its profitability has stagnated. Last year, it had $1.26 billion in revenue, nearly triple the $466 million taken in during 2011. But in 2014, it had only $11.8 million in net income, down from $176 million the previous year.

The NY Times reports Marcus and Lew Dickey had clashed over the costs of content platforms like Nash. Mr. Marcus’s firm, Crestview Partners, manages funds that own about 27 percent of Cumulus’s outstanding stock.

Here is Lew Dickey’s memo to staffers:

Nineteen years ago, I laid out a plan to start a radio company. I found a partner to help raise capital and nine months later, Cumulus was born. Since 1997, through more than 150 transactions, we have grown from a pure start-up into the second-largest radio company in America with 460 stations in 90 cities as well as the industry’s most important network, Westwood One. We have grown to more than 6,000 employees and almost $1.2 billion of revenue. 

Over the last four years, we have seen the transformation of our company with the acquisitions of Citadel and Westwood One as well as the creation of NASH. Our national platform now reaches approximately 225 million people per week and is well-positioned to compete successfully in the rapidly evolving media industry. Importantly, we have recruited some of the most talented people in our industry to lead our business. 

After serving the company day-to-day for almost 19 years, with the last 16 as CEO of Cumulus, now is the right time for me to transition from CEO to Vice Chairman of the Board. I’ll be working closely with my fellow Board Members to support, guide and oversee our new CEO.