If the financial markets no longer trust big radio, can you?

cumulustrans copyCumulus 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.

smashed-radioDon’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.

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