Cumulus sees business improving


While Cumulus Media is expecting Q1 to end up flattish overall, CEO Lew Dickey told analysts that each month is getting better, so look for positive numbers as the year goes on. Also, the bigger markets of privately owned Cumulus Media Partners (CMP), are already tracking positive for Q1.

Providing some detail on the numbers that Cumulus had reported Wednesday evening, Dickey noted that the final results for Q4, with revenues down 7.3%, was better than the pacing information the company had provided to Wall Street three months ago. The company is continuing to see each month improve. January was dow 4%, February was flat and Dickey is expecting to see March go positive, producing the flat revenue guidance. But with the cost cuts that the company instituted over the past year, that flat performance in revenues will produce revenue growth.

CMP, meanwhile, is doing even better. While Dickey didn’t disclose any dollar figures for the privately owned large market radio group, he did tell analysts that CMP’s larger markets have been recovering faster than the smaller markets of the public company. CMP saw revenues rise 2% in January, 4% in February and March, Dickey said, is “pacing considerably higher.”

Asked about pricing, the CEO said there is not yet upward pressure on pricing, but Cumulus is selling more of its inventory to produce the improving revenue picture.

“In March we will sell more spots than we sold in March the previous year,” Dickey said of the trendline. “The recvovery by the industry will be led based on utilization first and pricing will follow. We’re seeing some early signs – a leading indicator would be national. We’re seeing some early signs of better pricing, but this recovery will be led initially through increased utilization and pricing will follow,” he told the analysts.

“The fear is starting to leave the system,” Dickey said of the mood of the small business advertisers being called on by the local ad staffs of the Cumulus stations.

In Dickey’s view, the recession has permanently imparied newspapers and directories (Yellow Pages), which have traditionally taken the lion’s share of local revenues. He believes that local advertising will have a positive CAGR (compound annual growth rate) over the next five years. “Radio’s ability to maintain its share and potentially grow its share, we’re very optimistic about. We remain the low-cost provider to begin with and a couple of the major players that compete for that pie of local advertising are permanently imparied coming out of this cycle. They’ve lost their relevance and their product is being consumed on a differeent distribution platform – and that distribution platform eliminates their compeitive advantage of barriers to entry. So, thereefore the price has been driven down pretty dramatically,” Dickey said of the new digital reality in local media markets.