With all of the belt tightening and trimming of employees, it will be interesting see if Cumulus turns a profit in second profit. Even a modest profit would stablize the stock price.
Did ad sales really increase as one of the company's reps claimed on this board? We'll soon see. Although I have a good idea of what we'll hear on August 5, I'm keeping that to myself for now.
The CFO was Marty and he left around 7/1....
It was just a couple days after the amendment to Cumulus' senior secured credit facility...
...which all happened during a slide that started at the beginning of June and turned around the middle of July or so... Doesn't look like it affected the price much.
CCU is in alot of trouble trying to make their payments... Smart is not a word I would use with Clear Channel.
Cumulus still has ALOT of money due coming in the next 2 to 4 years to payoff the Susquehanna properties.
We are in the year 2009.... the Radio World will not return to the glory days of the 90's when money was flowing in. Who will Cumulus get to work for them in the next few years when the economy picks back up??? Why would you want to start out at minimum wage to be a voice talent??? They are cutting the sales staff commission now too. Soon, no one will be selling for them and no voice talent will be working for them. No revenue will be coming in... except for the Tricky Dickey's. They always can vote on another bonus for themselves while cutting more and more positions.
what you described is the common public perception of Radio. That's why the PE of radio stocks have dropped a lot these years. But in private market it is still valuable (and I believe in general private investors are more smart than public ones). CCU was taken private at >10X ebitda. Cox Radio, which was taken private just a couple of months ago in such a difficult environment still fetched 5X ebitda. Once the economy improves, there is no reason to believe that this company could be taken private at a multiples in between, which will reflect a stock price of $7-8 at least.
Earnings were slumping and the price was down starting in 2007, before the downturn took hold. Cost saving measures were instituted in Q1 and Q2 the consequences of which have yet to be felt on sales. (Dumping Arbitron Ratings services, commission restructuring, cutting significant on-air talent etc.) To call radio a "Highly Profitable Industry" is to ignore the effects the internet has had on traditional media, namely newspaper, radio and television. With the advances in Wi-Fi technology and the internet entering automobiles it has yet to be determined if radio will be a viable media in the future, or if people will turn to other non-traditional sources for their music and talk content. Satellite has proven to be a non viable alternative, but the real competition comes from Pandora and other on-demand IP based media that will be consumed with greater frequency. For this reason expect earnings on all radio and traditional media to slump without regard to future economic conditions.
We don't need a "growth" story. We just need the economy to turnaround and this company back to its normal days. It's in the middle-sized market and the revenue is relatively stable to support its free cash flow. Eventually this company will be taken private at a higher multiples because it is a highly profitable business.
They generated $14M free cash flow last quarter in such a economic environment and current market cap is $50M? That's ridiculous.
There were major staffing and commission cuts in the sales department. (Think Circuit City). This has pared the bottom line drastically. However, whether or not it is conducive to long term revenue growth is up for debate. The positive revenue stream is directly tied to cost cutting - not new revenue generated. Until this company (or any radio company) can show that they have a strategy for creating long term revenue growth your best bet is to grab short term gains and dump this stock ASAP.