By: Taylor Bullard
Cumulus Media, Inc. announced on June 4, 2018 that it has emerged from Chapter 11 bankruptcy, reducing its total debt balance by $1.04 billion. The radio company previously announced bankruptcy proceedings in November 2017.
The company’s CEO, Mary Berner, emphasized that the restructuring process would have “no effect on day-to-day operations.” The company used what it called “ample cash on hand,” which amounted to about $69.4 million at the time it filed for bankruptcy, and revenue from its continued operations to maintain its current processes.Cumulus Media, Inc. is a radio broadcasting company that owns 441 stations in 90 United States media markets. It reached the point of filing for voluntary restructuring largely because it over-expanded by acquiring about $5 billion in companies from 1998 to 2013. Cumulus was unable to establish the proper infrastructure to support its forecasted revenues for the acquisitions, which included a $2.5 billion purchase of Citadel Broadcasting. The company also cites competition from music-streaming sources for its under-performance.
Streaming sources offers as many types of music programming as there are people who subscribe to the sources. These companies offer many thematic and genre-specific company-created playlists, playlists that automatically update on daily and weekly intervals for each subscriber based on his or her listening patterns, subscriber-created content, and in cases like Apple, the company even offers traditional radio format content. To combat the pressures of highly-individualized programming, Cumulus Media created Amazon Alexa skills for 300 of its local stations, which makes the broadcasted content much more accessible. The launch of this new distribution channel was coupled with a nation-wide marketing campaign that included on-air promotion of the Alexa skills and instructions on how to conveniently add Alexa skills with only vocal commands. This is one of several major changes implemented after Mary Berner took the reins as CEO in September 2015.
Under Berner’s leadership, employee turnover sharply reduced from fifty percent each year to twenty-four percent per year. By increasing employee pay and “creat[ing] a culture that fosters motivated and engaged employees,” Cumulus brought this employment shift into fruition. Further, the company held the distinct goal to “build an operational foundation to support” strategies that will help the company heal. This goal led to higher ratings, market shares, revenue, and EBITDA – or Earnings Before Interest, Taxes, Depreciation and Amortization.
Under the terms of the financial restructuring, Cumulus Media’s “previously outstanding equity was cancelled and certain former stakeholders are being issued 11,052,211 shares of the Company’s Class A common stock, 5,218,209 shares of the Company’s Class B common stock and warrants to purchase 3,729,589 shares of common stock in exchange for their prior claims.” The company said that it entered into the Restructuring Support Agreement “with a group of lenders that hold roughly sixty-nine percent of the company’s term loan.
The company’s revenues decreased from $1.141 billion in 2016 to $1.135 billion in 2017, but its net losses also decreased from $543 million in 2016 to $206 million in 2017. Cumulus Media’s $1 billion debt reduction is a significant step forward for the radio giant, but the competitive threats of streaming still remain and are growing, so to maintain its pace of progress, it will have no choice but to continue to adapt to the highly-accessible and highly-customized entertainment marketplace consumers have come to expect.
 Press Release, Cumulus Media, Inc., Cumulus Media Successfully Completes Financial Restructuring (June 4, 2018), https://www.cumulusmedia.com/wp-content/uploads/2018/06/FINAL-Emergence-Press-Release-6.4.18.pdf.
 Jessica Nicholson, Cumulus Files for Chapter 11, Music Row (Nov. 30, 2017), https://musicrow.com/2017/11/cumulus-files-for-chapter-11/.
 Jessica Nicholson, CRS Keynote: Cumulus Media CEO Mary Berner Speaks, Music Row (Feb. 7, 2018), https://musicrow.com/2018/02/crs-keynote-cumulus-media-ceo-mary-berner-speaks/.
 Cumulus Strikes Restructuring Deal – Using Chapter 11 Process, InsideRadio (Nov. 29, 2017), http://www.insideradio.com/cumulus-strikes-restructuring-deal-using-chapter-process/article_f40793d6-d549-11e7-ac29-83ec6bc006bf.html.
 Press Release, Cumulus Media, Inc., supra note 1.
 The Inside Story on How Cumulus Ended Up in Bankruptcy Court, InsideRadio (Dec. 14, 2017), http://www.insideradio.com/the-inside-story-on-how-cumulus-ended-up-in-bankruptcy/article_2bda44a2-e0ad-11e7-b750-b3f91046de3c.html.
 Jessica Nicholson, Cumulus Media Launches Amazon Alexa Skills for 300 Local Stations, Music Row (Dec. 14, 2017), https://musicrow.com/2017/12/cumulus-media-launches-amazon-alexa-skills-for-300-local-stations/.
 Rodney Ho, Cumulus Emerges from Bankruptcy Protection, AJC (June 4, 2018), https://www.ajc.com/blog/radiotvtalk/cumulus-emerges-from-bankruptcy-protection/ps7lkGCAu74lGgCxVK80GO/.
 Nicholson, Cumulus Files for Chapter 11, supra note 2.
 Press Release, Cumulus Media, Inc., supra note 1.
 Cumulus Strikes Restructuring Deal – Using Chapter 11 Process, supra note 4.
 Ho, Cumulus Emerges from Bankruptcy Protection, supra note 11.