Cumulus Takes Stock Of 2021: Ad Recovery, Balance Sheet Right-Sizing.


CEO Mary Berner called 2021 “a pivotal year” for Cumulus Media, one marked by “significant progress and accomplishment” as the company continued the growth trajectory and balance sheet right-sizing it first embarked on back in 2018. During a call with analysts and investors Wednesday, she focused less on the fourth quarter and more on the company’s rosier full year performance.


Berner cited a “strong revenue recovery” in core radio ad sales (+7% over 2020, excluding political) and “substantial” digital growth (up 48% year-over-year to $125 million), along with two things that make investors smile: cost cuts and debt reduction.


She also played up the broadcaster’s repositioning as an “audio first media company” with tentacles in podcasting, streaming, and digital marketing services. Revenue at the Cumulus Podcast Network, home to Ben Shapiro and Dan Bongino, expanded by more than 25% in 2021 and generated 1.2 billion downloads last year. Cumulus is among the handful of radio companies to delve into local podcasts, which Berner said reached an annual run rate of 100 million downloads as of January 2022.


CFO Frank Lopez-Balboa said more than a third of Cumulus Media’s digital revenue comes from the podcast business. “It's grown nicely, it's profitable, and it's an important part of our business,” he said. Lopez-Balboa also told analysts the podcast business’ profit margins have been “consistent” as they lean on a mix of their own podcasts and outside shows that Cumulus represents. “That gives us the benefit of not spending a ton of money in terms of green field production or being a studio,” he told analysts.


Cumulus said its third quarter digital revenue grew 47.3% to $35 million and rose 47% to $126.9 million for the full year.


‘Natural Extensions’ Of Local Brands


Like other broadcasters, Cumulus is pushing local air talent to develop new content for digital platforms. For example, sports “104.5 The Zone” WGFX-FM Nashville video streams its local sports programming and creates new original sports content on YouTube, Facebook, Twitter and Twitch that has generated four million views. “These kinds of natural extensions of our strong local brands increase audiences, driving valuable new monetization opportunities for our stations,” Berner said. “We continue to expand on what we do best – monetizing, promoting, and growing personality-driven content across and within genres.”


Using its 800-person sales force, which now largely works remotely, to leverage relationships with local businesses, Berner said Cumulus increased sales of digital marketing services by 30% year-over-year in 2021. “We see a lot of room to run in this area, as we add local digital sellers who can take to market existing and additional products that we create ourselves or have access to through partnerships,” she explained.


Cumulus is among the media companies enjoying a windfall from accelerating sports betting advertising. Berner said they developed partnerships with more than 20 sports betting operators in 2021, nearly triple the number from 2020. Although a much-touted partnership with WynnBet that made the sportsbook one of its biggest advertisers ended earlier than expected, sports betting was the biggest growth category for Cumulus in Q4. Entertainment and travel also roared back, although Lopez-Balboa noted they are “still down significantly versus 2019 but trending in the right direction.” So is the professional services category, which eclipsed its 2019 performance.


Auto Remains ‘Sluggish’


Auto advertising remained weak, down 40% from 2018. Although Cumulus is still feeling the hit from the auto supply chain and labor shortages, Lopez-Balboa said the Omicron variant “has not impacted business nearly to the extent that delta variant did a year ago.”


The company reported a 2.6% year-over-year gain in total revenue to $252.3 million in fourth quarter. Total broadcast radio revenue fell 3.8% year-over-year to $193.1 million with network radio growth outpacing spot sales at the company’s radio station group. Still, that continued the trend of sequential revenue growth throughout 2021 as Q4 2021 was down 10% compared to the same period in 2019, compared to Q3, which was down 14% compared to pre-pandemic 2019. First quarter is pacing up in “the low teens,” compared to 2021.


“We're definitely seeing improving advertising sentiment, and we've got several categories that are now exceeding or very close to 2019 levels,” said Berner. “The big one, which is auto, continues to be sluggish. But we are seeing some green shoots in the larger markets as they can they start to get more deliveries. It's a nice change in sentiment that we're seeing.”


After several years focused on paying down its debt – Cumulus paid down $176.3 million of debt last year – the company now has one of the smallest debt loads in radio. Its focus appears to be more on potentially paying a dividend to shareholders later this year than deal-making, even though Cumulus began the year with $177 million of cash in the bank.


“We've learned that through the pandemic, having lower leverage gives us more flexibility and buffer and dealing with unforeseen events,” said Lopez-Balboa.But he also said that a small debt burden will give the company “additional flexibility to do creative M&A if opportunities arise.”

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