Cumulus Media Files for Chapter 11 Bankruptcy

[tvbobn]

On Thursday morning, Cumulus Media filed for a Chapter 11 bankruptcy, as the broadcaster entered into a prepackaged restructuring support agreement that will eliminate roughly $600 million in debt.

The company said operations will continue as usual for employees, advertisers, and listeners during the process.

The filing, made in the US Bankruptcy Court for the Southern District of Texas, is designed to substantially reduce the broadcaster’s leverage and set a financial structure aimed at long-term stability and investment. Cumulus said the restructuring will not affect day-to-day station operations.

According to the proposed Plan of Reorganization, all existing funded debt will be canceled in exchange for 100% of the reorganized equity and $50 million in new convertible notes. The company’s revolving credit facility would be amended and restated to provide ongoing liquidity. Cumulus expects the court to consider approval of the plan within 60 days, with emergence dependent on receiving FCC approvals.

The company said the move follows prolonged economic and industry pressures that weighed on revenue across the sector and created limits on its ability to invest at needed levels.

Cumulus Media President and CEO Mary G. Berner said, “While we have outperformed the market on many of our most important metrics, including share gains in both local and digital revenue, the broader macroeconomic and industry-wide pressures we have faced have remained unrelenting. Against that backdrop, it became clear that Cumulus’sremaining debt burden limited our ability to fully realize the Company’s potential, and this agreement represents a major step forward.”

Berner continued, “The prepackaged process is intended to address the Company’s debt efficiently with no disruption to our operations, our people, and our strategies. On emergence, a stronger financial foundation will better position Cumulus to continue investing in premium content, enriched audience experiences, advertiser performance enhancements, and the ongoing growth of our digital marketing offerings.”

From Radio Ink

[TC Talks]

"We continue to find new ways to crush the souls of our teams, and offshore sourcing has proven a hug-e success"

[MWmetalhead]

Cumulus should've given Connoisseur's unsolicited acquisition offer more serious consideration when it was made a few years ago.

So, will the incumbent equity holders get wiped out, or will they receive a percentage of equity in the new co?

I assume equitizing lenders from the last bankruptcy already sold their equity positions on the open market in most cases prior to this new filing.

[MWmetalhead]

I just reviewed the proposed Plan of Reorganization.

Key tenets:
- The ABL Revolving Credit Facility will remain in place uninterrupted during the case, the full prepetition debt amount will survive Bankruptcy, and the facility limit will be increased from $100 million to $125 million upon exit from Bankruptcy. Upon entry into Bankruptcy, about $55.2 million in loan principal was already outstanding. There were also $5 million in unfunded letters of credit issued under the ABL facility limit.
- There were $638.9 million in senior secured term loans due 2029 or senior secured notes due 2029 outstanding. These claim holders are proposed to receive economic consideration with estimated value of 25.4 cents for every dollar of extinguished prepetition debt, mostly in the form of stock in Reorganized Cumulus. ($50.0 million in recovery will come from issuance of Convertible Notes.)
- There were $24.2 million in senior secured term loans due 2026 or senior secured notes due 2026 outstanding. Holders of much of these claims appear to have made a deal with holders of the 2029 claims whereby 2026 claims will be assigned to holders of 2029 claims. The terms of that sidecar deal are unclear. So, true recovery to holders of 2026 claims are unclear. Based on the proposed Plan of Reorg itself, holders of 2026 claims are proposed to receive stock worth a measly 1.2 cents for every dollar of extinguished prepetition debt.
- Holders of prepetition equity (common stock) will receive absolutely no consideration of any kind and are proposed to suffer a complete loss.

I'd love to know how many equitizing lenders from 2017's bankruptcy still held stock in Cumulus leading up to 2026's bankruptcy. I bet most of that stock was dumped a long time ago. I wonder if a majority of Cumulus' Board of Directors still consists of the parties the equitizing lenders nominated coming out of 2017's bankruptcy?

I'd also to love to know how many day #1 debt holders to Cumulus upon emergence from 2017's bankruptcy still held debt leading up to 2026's bankruptcy. I bet that list is small. If anyone lent "new money" at par value in recent years, they are about to get taken to the cleaners.

I suspect the 2026 & 2029 term debt & notes have seen active trading on the secondary market for some time, likely at heavy discounts to par value. This likely explains why the votes were there for a Prepack.

Upon emergence from the new Bankruptcy case, Reorganized Cumulus will have debt consisting of only the following:
- Balances borrowed under the ABL Facility (my guess is this balance will be similar to current levels; I'll say $60 millionish)
- $50 million in convertible notes.

Compare that to early March 2026, where total debt outstanding equaled $718.3 million.'

The suggestion that debt load will shrink by about $600 million is accurate.

ABL Lenders are being treated better than the other debt holders because (a) Cumulus needs an ongoing ABL Facility for liquidity support and (b) ABL Lenders are not interested in converting debt to equity.

[whitebalance]

Poor management.

[CurlyHoward]

The company said operations will continue as usual for employees, advertisers, and listeners during the process.

Too bad.

Maybe Mary can come up with another cartoon character to help the company emerge like "Sulumuc" from last time.

[OneBigFan]

Another major corporation filing for bankruptcy in Texas Southern District.

The Texas Two Step in Houston for a bankruptcy typically offers judges who provide quick resolutions and decisions / solutions that filers desire.

If you are lending millions to corporations you are wise to see if the entity wanting the loan has established a “local” Texas presence.

[MWmetalhead]

Poor management.

In my opinion, Big Radio made a mistake when it largely abandoned aggressive local sales efforts in favor of relying on advertising placed by agencies and on national sales.

Long-term face to face relationships with local advertisers can be enduring.

That said, the flight of ad / marketing spend to social media and other digital platforms is indisputable. Radio is facing severe headwinds from that and so is broadcast & cable TV.

Linear radio usage declined because of the change in commuting & work habits that occurred during COVID. It is amazing how a few folks on the Radio Discussions site were in denial of that fact for some time. The cume data was staring them right in the face. Numerous stations in Detroit suffered long-term weekly cume declines of 25%, 30%, even 35%. Of course, Nielsen conveniently changed the minimum listening session duration from 5 minutes to 3 minutes recently in an attempt to artificially "prop up" cume levels. It hasn't helped much. Cume levels continue to decline.

In Detroit, for instance, WOMC just scored a 7.4 share. That is one of their best AQH shares ever. The incredible part? Their cume was only 665,000. A decade ago, they would cume close to 1,000,000 like clockwork.

WCSX used to cume 750,000 to 800,000 like clockwork. In the 1/8 to 2/4 survey, they cumed only 430,000.

WKQI is another station that used to cume 1,000,000 like clockwork. in the 1/8 to 2/4 survey, they cumed only 509,000.

Disinvestment in programming (i.e. crappier air talent, fewer & lamer contests, elimination of big station sponsored concerts, entrenchment of outdated research methods), diminished support from record labels, and the rise of competing platforms have all served to cripple legacy AM/FM radio.

[MegaHertz]

Disinvestment in programming (i.e. crappier air talent, fewer & lamer contests, elimination of big station sponsored concerts, entrenchment of outdated research methods), diminished support from record labels, and the rise of competing platforms have all served to cripple legacy AM/FM radio.

Bingo. Radio hasn't given anyone a reason to listen in years. To be fair, this has been happening for decades.

[CurlyHoward]

Disinvestment in programming (i.e. crappier air talent, fewer & lamer contests, elimination of big station sponsored concerts, entrenchment of outdated research methods), diminished support from record labels, and the rise of competing platforms have all served to cripple legacy AM/FM radio.

This time of year Cumulus here in Toledo once gave away trips to the Final Four or Tigers spring training. I remember noticing one March that instead they were giving away tickets to a Bee Gees tribute show at the casino here. On the sports station, mind you.

This was over a decade ago, before the prior bankruptcy.

[MegaHertz]

Disinvestment in programming (i.e. crappier air talent, fewer & lamer contests, elimination of big station sponsored concerts, entrenchment of outdated research methods), diminished support from record labels, and the rise of competing platforms have all served to cripple legacy AM/FM radio.

This time of year Cumulus here in Toledo once gave away trips to the Final Four or Tigers spring training. I remember noticing one March that instead they were giving away tickets to a Bee Gees tribute show at the casino here. On the sports station, mind you.

This was over a decade ago, before the prior bankruptcy.

Pretty soon it's gonna be a $5 gift card to Dairy Queen and tickets to a puppet show. Shit's dwindling.

[armchair pd]

I'm tempted to say I can't believe radio is still doing the lame 'text keyword to 12345 for a chance to win a prize'' contest no one cares about.

But I can believe it.

Radio has forgotten how to do what made it great: Entertain people.

I read articles all the time about how the only thing that will save radio is great content, then hear that shit on every fucking station everywhere.

When Gen X, the last generation to have any affection left for radio, dies off, so will whatever is left of radio.

[BKRPDM]

I'm tempted to say I can't believe radio is still doing the lame 'text keyword to 12345 for a chance to win a prize'' contest no one cares about.

But I can believe it.

Radio has forgotten how to do what made it great: Entertain people.

I read articles all the time about how the only thing that will save radio is great content, then hear that shit on every fucking station everywhere.

When Gen X, the last generation to have any affection left for radio, dies off, so will whatever is left of radio.

Agreed. Outside of morning drive, content as a whole is boring. Why should I listen to WOMC (although their ratings are solid), for example, to afternoon drive? Same 250 songs….If they allowed Beau to be interesting, it’d be worth it. But the low amount of mic breaks, coupled with “blah blah blah…check it out on WOMC.com”…boring.

I guess the days of great listener interaction, and jocks allowed to be interesting are things of the past.

[A1B1C1D1]

With unlimited cell data for under $30 from multiple providers I am amazed FM radio stations continue to sell for as much as they do. A few years go I still believed free radio would still be the majority of car listeners choice, but not anymore. Podcasts, Apple/Android Music and the XM app are superior unless you are in a dead zone such as a national park or reservation.

[CurlyHoward]

With unlimited cell data for under $30 from multiple providers I am amazed FM radio stations continue to sell for as much as they do. A few years go I still believed free radio would still be the majority of car listeners choice, but not anymore. Podcasts, Apple/Android Music and the XM app are superior unless you are in a dead zone such as a national park or reservation.

Anywhere that's remote enough to be a dead zone for both cell service and XM isn't likely to have much in the way of terrestrial radio coverage anyway.