Cumulus Media owns many of the most prestigious broadcast properties in radio: KLOS and KABC in Los Angeles, WLUP and WGN in Chicago, WJR in Detroit, WABC and WPLJ in New York. All told, Cumulus owns and operates 460 different radio stations in 90 markets.
On September 29th, the stock of Cumulus Media bottomed out at 68 cents a share. This closing price for the number two radio ownership group in the US represented an 83% drop in the stock’s value since the beginning of 2015. As a result, Cumulus has since then languished in the low to mid 70 cent range and is now considered a penny stock. Compare this to its debt load of $2.5 billion and it’s net operating income of only $11.8 million, and you can see a significant problem. The market cap itself — about equal in value to that of 10 major market FM stations — has Cumulus worth more if it was broken up than from keeping it together. On the 29th, Cumulus’s board then announced that Lewis W. Dickey Jr., the founder of the company, would be stepping down as its President and CEO.
The number one station group owner, IHeartRadio, is also in depressed shape. IHeartRadio operates over 850 radio stations nationwide. The stock recently closed at 4.15, which is just shy of 4.01; the lowest overall share price in the last 52 weeks. While the stock rebounded to 8.50 in the late spring, news of what happened at Cumulus has driven IHeartRadio share prices down once again this year to near dangerous record lows.
For communicators and marketers, this lack of confidence from the financial markets is an urgent SOS. Confidence that radio is the direct medium to demographics who actively buy, make choices between products and are seeking new information seems nonexistent. The shift to personal digital technology has changed in how music, news, and information are all packaged, reported and consumed. This single fact has this once venerable industry now on its knees and begging for mercy.
Don’t think the broadcast industry is turning a blind eye to this. Every radio property has its own digital footprint, with website offerings and whole communities dedicated to music formats and lifestyles. Cumulus is betting heavy on Nash; the Modern Country outpost it created.
Even in your vehicles, where radio has long been king, the industry is on notice. In November 2015, the automobile industry and the radio broadcasters are jointly holding a conference titled “DASH – Radio and The Connected Car: A Survival Guide for Radio Broadcasters.” One of the marquee presenters is IHeart Radio CEO Robert Pittman.
Is there an answer to re-grow radio’s one dominant reach? The future actually seems quite uncertain. National radio consultants offer bland and generic music formats and syndicated talk programs that are the boringly same from coast to coast. This homogenized content suggests as if the answer to radio’s decline is to create this audio equivalent of cable TV in order to lower costs. Many radio purists have long insisted that radio stations should return to local content and talent. With all the added overhead and expense of companies operating with this much human capital, this move seems very unlikely.
The democratization of the Internet has put in place scores of competitors and options which didn’t exist back when the FCC was issuing licenses to broadcast at a set interval for each city’s radio and TV dials. Music streaming services and podcasts has created close, relative content for all who will embrace it. The change which was warned about 10 to 15 years ago is officially here, it is quite real, and these financial results demonstrate it in hard numbers.
To make the case for Markethacking and digital marketing, again look at this seismic shift in such a short time. This would have seemed unfathomable to so many as recently as twenty years ago. When done well, radio was an engaging medium which has provided a great deal of entertainment and information to its listeners. These days, the question is does radio fit into the content mix? While no one is surrendering large amounts of broadcast licenses back to the FCC and turning off transformers en masse, too many questions around the survival of radio remain.
The use of digital media to reach audiences on their personal devices such as cell phones, tablets, and streaming appliances has replaced the broadcast on an individual transistor radio. Anyone can wax nostalgic all they want, but this is the truth that radio is not the major player it once was both now and in the foreseeable future.