Cumulus Media, Inc. Q4 FY2023 earnings call

• 2023 was a tough year due to macro factors like inflation, rising interest rates, and geopolitical issues, but Cumulus offset some impact through solid execution in digital growth, cost reduction, and balance sheet improvement. • Digital businesses are a fast-growing area, with digital marketing services growing 13%, streaming up 16%, and podcasting showing improving trends. • Total 2023 revenue was $844.5 million, down 11.4%, and EBITDA was $90.7 million. Expenses were reduced by over $33 million in 2023, with $120 million in annualized fixed cost reductions since 2019. • In 2024, there are green shoots in some categories like insurance and consumer packaged goods, and interest from national advertisers in premium sports franchises. • Launched a debt exchange offer to extend maturities and reduce net leverage, and filed a limited duration shareholder rights plan.

Digital businesses were a key area. In 2023, digital businesses generated $146 million in revenue, representing 17% of total revenue and a 3% year-over-year increase. In the fourth quarter, digital revenue was $40 million, 18% of total revenue for the quarter, up 5% from the prior year. Digital marketing services grew 13% in 2023, finishing the year at a $45 million annual revenue run rate. Streaming business was up 16% in 2023. Podcasting revenue fell 8% in 2023 but showed improvement in revenue trends with growth in the third and fourth quarters after declines in the first and second quarters.

• 2024 has limited visibility into ad demand, especially from national advertisers, but there are green shoots in categories like insurance and consumer packaged goods. • Q1 2024 is pacing down low single digits. • In 2024, CapEx is expected to be approximately $30 million, and capital allocation will prioritize debt reduction.

• Uncertainty in ad demand, particularly from national advertisers. • Macro factors like persistent inflation, rising interest rates, and geopolitical issues continuing to impact the business. • Risks associated with the debt exchange offer not being successful as it depends on debt holders' response. • The shareholder rights plan and its implications on foreign ownership, though clarified it's not about foreign ownership but single stock ownership.

Q: Can you give more color on the national network side of the business and revenue cadence in Q1?

A: Total company is pacing down low single digits, digital is pacing up nicely, broadcast local network is pacing down in low mid-single digits but improved from Q4, and orders are coming in later in the quarter.

Q: How much of the cost initiatives in 2023 will flow through in 2024?

A: 2023 had $33 million in cost reductions, roughly half fixed and half variable, some will roll into 2024, but inflation will impact, and half of $120 million cost reductions since 2019 is people related.

Q: Reconcile poison pill position with foreign ownership interest?

A: The 15% trigger in the shareholder rights plan is about single stock ownership, not foreign ownership; the plan is to address single stock ownership over 15%, and process with FCC is followed if someone wants to change foreign ownership beyond allowment.

Q: Economics of NFL rights streaming and cost-revenue increment?

A: NFL streaming is incremental, margin aspect is high as it's embedded in the rights deal and brings incremental revenues.

Q: Response required for debt exchange and options if not secured?

A: Exchange offer is open for 20 business days; refer to 8-K for details, and will talk more at the conclusion of the offer and next earnings call.

Q: Success in cross-selling between broadcast radio and podcast/streaming among local advertisers?

A: Local has held up well, local podcasting has 11 podcasts on Apple Charts, digital effort is doing well locally, and selling a full suite of services ties advertisers closer and provides stickiness.