Cumulus Media was created as a result of the 1996 end of the FCC cap on how many stations one company can own in the United States. Cumulus is the second largest radio station owner in the United States based on number of stations it owns or operates. Their newly created profile is [here]
Cumulus is currently in the news, but it is critical to understand the difference between Cumulus Media and Cumulus Media Partners (CMP).
Cumulus Media is the original company that did an IPO in 1998 and borrowed money to buy up around 300 medium market radio stations.
CMP is a holding company created in 2006 by 3 private equity firms when the hedge funds (the same ones who took Clear Channel private) acquired Susquehannah Radio, which owned about 33 major market radio stations.
Cumulus Media operates those major market stations for CMP (and receives a portion of their income) but Cumulus Media is not the owner of the CMP stations. The small ownership interest Cumulus Media had in CMP is completely written off, and Cumulus Media is not “on the hook” for the CMP debt of about $1.2 Billion. CMP is currently involved in trading that debt for equity with the hedge funds. [I am not a lawyer and none of this information is investment advice].
Cumulus owns about 300 stations of its own, all in medium sized radio markets. It is heavily burdened with about $700 million in borrowed money, and crippled by the writedown of the value of their radio licenses. They have recently announced “cost savings” by making employees take unpaid time off and other cost cutting measures.
They expect to be able to stay afloat at least for the rest of the year, but are very vulnerable if the LIBOR interest rate starts to go up. Bank of America (TARP recipient) is the manager of their credit facility.
Think “Toxic Aseet”, Tim Geithner “not wanting” to run companies and you can see one possible scenario for the future of this company.