Cumulus files for Chapter 11…again
This time, the filing is different
Atlanta-based Cumulus Radio announced it’s filing for bankruptcy again – but this time, with a different twist.
The owner of WLS-AM/FM and Q101 in Chicago has reached a restructuring agreement with a group of lenders that will eliminate the remaining $600 million in debt and balance its books. To do so, the company plans to file a prepackaged Chapter 11 bankruptcy to move quickly and avoid disrupting its day-to-day operations. Cumulus owns about 400 radio stations in the U.S. and syndicator Westwood One, which distributes the NFL to local stations. The company filed voluntary petitions March 5 with the U.S. Bankruptcy Court for the Southern District of Texas in Houston.
“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, said Cumulus CEO Mary Berner in a statement. “Against that backdrop, it became clear that Cumulus’s remaining debt burden limited our ability to fully realize the Company’s potential, and this agreement represents a major step forward. 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.”
With the prepackaged reorganization, Cumulus will exchange 100 percent of the debt owed to lenders as they receive ownership of 100 percent equity, along with $50 million in new convertible notes. As a result, Cumulus becomes a privately-held company. Amendments to Cumulus’ asset-based revolving credit facility will continue to provide liquidity after the restructuring.
The majority of debtholders have agreed to the plan, making the bankruptcy process smoother and quicker. The bankruptcy court should hear the plan within the next 60 days, and if approved by the court and the FCC, Cumulus should emerge from bankruptcy with a stronger balance sheet.
This is the second time Cumulus has filed for bankruptcy; the company last did so in 2017, which allowed the company to exit unprofitable sports deals, including those with the Chicago Bulls and Chicago White Sox, and the Seattle Seahawks.
Since the last bankruptcy, Cumulus has sold several stations, including its entire New York City cluster, with the former Hot AC outlet WPLJ being sold to EMF (now K-Love, Inc.) and conservative talk WABC-AM to Red Apple Broadcasting.
Cumulus has been involved in a legal battle with Nielsen since last fall, with the ratings service publicly delisting all of its stations from its ratings lists. The move created some awkward situations, including a new station claiming the top spot in Dallas after iHeartMedia’s Hot AC KDMX-FM topped the market in a non-Christmas PPM survey, following the Cumulus station (sports talk KTCK, The Ticket) being pulled.
Before Nielsen pulled the plug, numbers for Cumulus’ Chicago cluster were inching upward in the past year, with WLS-AM’s terrestrial and streaming numbers growing, and Q101 showing tremendous growth in the 25-54 and 18-49 demos.