Cumulus Media touting growth as it awaits Citadel addition


Cumulus Media CEO Lew Dickey, pictured, had plenty to tell Wall Street about the pending deal to acquire Citadel Broadcasting. But he also had good numbers to report for Cumulus as it stands now – and good pacings for the first half of this year.

On an as reported basis, Q4 net revenues were barely up for Cumulus Media – a mere 0.3% gain to $69.8 million. But Dickey and CFO J.P. Hannan explained that Q4 of 2009 had included a one-time trade deal for the launch of an online initiative. Excluding that one-time item, cash revenue for Cumulus Media was up 6.2% for the quarter. Station operating income (SOI) jumped 20.2% to $30.8 million and adjusted EBITDA gained 28.2% to $27.5 million.

Although political drove Q4 growth, Dickey said the company is seeing sequential improvement in national business and in key local categories, such as auto, education, insurance, home improvement and restaurants.

For all of 2010 net revenues were up 2.8% to $263.3 million, SOI rose 14.6% to $103.5 million and adjusted EBITDA was up 20.5% to $87.5 million.

Dickey proudly noted that by the end of this month Cumulus Media will be back below its senior loan covenant leverage of 6.5 times EBITDA, due to improving business and the pay-down of debt (nearly $40 million in 2010) from free cash flow. Citadel’s board of directors had cited Cumulus being out of compliance with its debt covenants as one argument when it was resisting investor pressure to sell to Cumulus.

For Cumulus Media Partners (CMP), the private company managed and partly owned by Cumulus Media which is set to be rolled into the public company, Q4 revenue grew 7.7% and it was up 7.5% for the full year. CMP doesn’t report its figures publicly, but a slide used in the presentation showed 2010 revenues at $181.7 million. Adjusted EBITDA was up 21.3% for Q4 and 18.8% for all of 2010. Again, the slide showed full year EBITDA at $78.2 million.

Looking ahead, Dickey told Wall Street analysts that growth is continuing. “With respect to Q1, CMI [Cumulus Media Inc., the public company] is currently pacing at 2.5% up and CMP this Q1 is currently pacing up at 3%. As you all know, Q1 represents the lowest billing quarter for the year and accounts for approximately 20% of the year’s revenue. Looking at Q2, both the month of April and Q2 are currently up more than double the pacing for Q1 for both CMI and CMP,” he said.

Dickey detailed how merging CMI, CMP and Citadel is expected to produce $50 million in annual savings from synergies – most achieved quickly – to produce a company with $1.18 billion in pro forma net revenues (based on 12-month trailing numbers already reported), adjusted EBITDA of $466.3 million and a blended EBITDA margin of 39.5%. The Cumulus CEO pointed to growing per station revenues and EBITDA margins at Citadel as an important upside to the deal, since Citadel’s current margin of 36.4% is more in line with smaller-market CMI’s 35.6% than big market CMP’s 43%.

RBR-TVBR observation: Lots of moving parts here, but Lew Dickey is gung-ho about making Cumulus the radio big dog on Wall Street, since it will be the only pure-play radio company with a market capitalization exceeding $1 billion. Now we wait to see how many brokerage firms re-activate analyst coverage of the radio broadcasting sector.