Published in Breaking News

Cumulus Media seeks restructuring amid changing radio market

BY Friday, December 01, 2017 04:22pm

GRAND RAPIDS — An Atlanta-based media company with significant holdings in West Michigan voluntarily filed for Chapter 11 bankruptcy earlier this week, amid an ongoing industry upheaval that’s also affecting competing operators.

Cumulus Media Inc. (OTC: CMLS) on Wednesday filed paperwork in the U.S. Bankruptcy Court for the Southern District of New York seeking bankruptcy protection, reorganizing the overly-leveraged company and a debt-reduction by more than $1 billion.

Locally, the company owns radio stations including classic rock station WLAV, sports radio WBBL FM and talk station WJRW AM, as well as operates multiple broadcast stations around the rest of the state.

The restructuring is expected to have minimal impact on local operations, according to executives.

“Cumulus is doing quite (well) operationally and Chapter 11 will have no impact on our day to day operations,” Jeff Cartwright, vice president and market manager for Cumulus Media’s West Michigan operations, told MiBiz in an email on Friday afternoon. “I can also confirm that operations, sales and programming across our Grand Rapids and Muskegon clusters will continue as normal.”

But not all observers are that optimistic for the company’s future.

Cumulus Media’s long-term debt woes share similarities with the situations plaguing another industry in the middle of drastic disruption nationally, according to a turnaround expert.

“To me, it’s a little like retail. You really can’t be an agnostic supplier anymore of any type of good or service,” said Steve Wybo, a senior managing director in the Birmingham office of Conway MacKenzie Inc., an international consulting and turnaround firm. “The (retailers) that have been successful have a niche product or service that people are willing to pay a premium for.”

Wybo — who is not involved in the Cumulus Media restructuring — notes that the possibility exists in which the company may have to shed some stations. Post-bankruptcy, the company may need to put a stronger focus on exclusive content to survive, he added.

“I think you’ve got to appeal to people that want to (tune) in to listen to something specific,” Wybo said. “If it’s pop radio or country, (you’ll) go to Spotify or Rhapsody and tailor your listening to those types of songs.”

Cartwright, the West Michigan vice president for Cumulus Media, said corporate executives have not indicated they planned to shed any stations.

Cumulus Media joins a list of struggling radio station operators nationally. Its main competitor — San Antonio, Texas-based iHeartMedia Inc. — also has been trying to restructure its debt load.

On Thursday, The Wall Street Journal reported that a group of iHeart Media’s creditors rejected a debt restructuring deal in favor of a plan that could send the company into Chapter 11 bankruptcy.

In West Michigan, iHeartMedia operates stations including B-93, WSNX and WOOD Radio.

A report earlier this year published by Entertainment and Sports Lawyer, a publication of the American Bar Association, the disruptive effect of digital streaming might be yet to come.

That’s because while the automobile remains the number one place for consumers to listen to the radio, cars are increasingly becoming more and more connected with new entertainment options.

“As such, the connected car and its multiple audio offerings may be the greatest threat to AM/FM radio broadcasting, with 75% of new cars expected to be connected by 2020,” according to the report.

It’s unclear how Cumulus Media’s attempts to restructure will work out, given the ongoing shift to the digital delivery of content, many of which have struggled in their own right, according to The New York Times.

Wybo with Conway MacKenzie said he could foresee a future where either Cumulus Media or iHeartMedia — the two dominant, national players left in radio — no longer exist.

“I don’t think there’s room for both in the market, frankly. I think what you’re going to see is these organizations have to scale up and get some synergies,” Wybo said. “Because there’s probably not enough room in the space for many large players.”

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