Cumulus Media is telling Wall Street to expect more of the same in Q3 – a 3-4% decline in revenues – after reporting that Q2 revenues fell 4.2% to $83.6 million. Station operating income was down 9.2% to $30.7 million for the quarter.
In his first conference call with Wall Street analysts since May of 2007, before the company’s now-abandoned attempt to go private, CEO Lew Dickey blamed the radio industry for its own problems with pricing. “It’s been the behavior of the industry to allow steep discounting once we are in month, therefore it’s encouraged everybody to delay booking,” Dickey said. “As we do a better job of firming our pricing, and do a better job of selling value, rather than just pricing to stimulate demand, I think some of these things are going to naturally fall away,” he added.
Q3 is actually pacing a bit better than the company’s guidance. Dickey said Cumulus is currently pacing down 2.8%, but that the company wanted to be conservative with its guidance of a 3-4% decline. Asked about monthly pacings, Dickey declined to give any numbers, but said July and September are better than August.
Not all was gloom and doom in Q2. Dickey said nine of the company’s 58 markets posted double-digit percentage gains in revenues, with two of those above 20%.
Asked about market conditions for selling radio advertising, Dickey said rates are under pressure, particularly for national. “We’re seeing a reduction in rates across the board. Some of this is due to shorter length spots being sold and being priced accordingly, and otherwise due to just a lack of demand on the national side,” Dickey said. He noted both fewer units sold and lower pricing as holding down national revenues in Q2.
RBR/TVBR observation: If you’re like us, you were waiting to hear what Lew would have to say about the company’s RFP for radio ratings service in its markets outside the top 100. Well, we didn’t learn much. He did say that the competition is now down to a couple of entries and he expects to have something to announce within 30 days. Of course, that’s about what he said 30 days ago.