Cumulus Media, Inc. Q4 FY2024 earnings call

Key Points - Radio industry faced challenges like pandemic, secular trends, and ad slowdown, but Cumulus outperformed peers on metrics. - Invested in digital, evolved sales of broadcast business, reengineered cost structure, and refinanced balance sheet. - Digital marketing services grew 27%, podcasting has growth opportunities, streaming impressions grew 15%. - Broadcast had bright spots like live sports and BHM. - $35 million annualized net cost reductions in Q4, with fixed cost base reduced by 22% from 2019 to 2024 and expected to be over 27% by 2025. - Completed debt refinancing extending maturities to 2029.

Digital businesses account for approximately 19% of total company revenue. Digital marketing services grew 27% year-over-year, becoming the largest digital business; podcasting revenue was down slightly in 2024 due to Daily Wire but excluding that up over 35%, with Q1 expected to offset Daily Wire loss but Bongino's departure adding a headwind; streaming was down 4% in 2024 but impressions grew 15% and revenue is pacing up in Q1. Broadcast was affected by national and local ad headwinds but had political ads, live sports success, and BHM grew 35% YOY.

Forward-Looking - Q1 revenue pacing down mid-single digits, ex-political and ex-Daily Wire down low single digits. - Daily Wire impact in Q1 ~$4M, full-year ~$15M; Bongino's departure adds ~$15M headwind from Q2. - CapEx expected $22.5M in 2025, no material taxes.

Risks - Macro environment impacts on ad revenue. - National and local ad slowdown. - Daily Wire and Bongino's departure affecting podcast revenue. - Debt maturity management challenges. - Uncertainties around media deregulation.

Q: What is needed to turn around national advertising?

A: Mary Berner said declines are driven by external macro environment, and improvement will come when external factors change. Frank Lopez-Balboa mentioned cost efficiency efforts and sports in portfolio as buffers.

Q: Are there specific ad categories tied to interest rates in broadcast spot?

A: Frank Lopez-Balboa said it was broad-based, with auto, mortgage, and job sectors affected. Some sectors like financial services (auto insurance) had relative outperformance.

Q: What's the margin for DMS segment?

A: Frank Lopez-Balboa said unit contribution margins of DMS business is approximately 35%, with investments in people and fulfillment showing improved margins.

Q: Prospects of non-core assets for debt pay down?

A: Frank Lopez-Balboa said they have non-core assets like land in Nashville, monetized FM sticks before, and will look to monetize excess land to help reduce debt.

Q: Any improvement in spot ad sentiment?

A: Frank Lopez-Balboa said first quarter had continued weakness, with hope for improvement as market conditions change.

Q: Thoughts on media deregulation and participation?

A: Frank Lopez-Balboa said supportive of deregulation, particularly raising caps, which could bring potential increased yield activity and new entrants, but speculative on participation.

Q: How is podcasting approached as a growth area?

A: Mary Berner said growth comes from new podcasts, growing existing ones through marketing, and expanding into video.

Q: Stickiness of DMS services?

A: Frank Lopez-Balboa said DMS has high retention, over half of customers are new, and it's behaving like a business with low churn and great products.

Q: Thoughts on debt maturities and shareholder rights plan?

A: Frank Lopez-Balboa said focused on debt stack evaluation, and the Board decided not to renew the shareholder rights plan as it was for a specific situation.