Troubled radio giant Cumulus Media Inc. said late Wednesday that it filed to reorganize in Chapter 11 bankruptcy.
The Atlanta-based company (Nasdaq: CMLS), which is burdened with $2.4 billion in debt, owns and operates 446 radio stations broadcasting in 90 U.S. media markets. The company's historical focus had been on mid-sized radio markets in the United States. But in 2011, believing that large radio markets provided an opportunity for future growth, particularly for emerging digital advertising initiatives, Cumulus bought rival Citadel Broadcasting Corp. for $2.5 billion.
Cumulus said Wednesday it has entered a restructuring agreement with lenders to reduce the company’s debt by more than $1 billion. The company filed for Chapter 11 in the United States Bankruptcy Court for the Southern District of New York.
Atlanta Business Chronicle reported Nov. 13 that Cumulus had prepared a so-called "prepackaged" bankruptcy as it negotiated with its lenders. Earlier in November Cumulus defaulted on a nearly $24 million debt payment.
Cumulus said Wednesday it expects all operations, programming and sales to continue as normal throughout the restructuring. The company said it has ample cash combined with funds generated from ongoing operations to support its business.
Mary Berner, president and CEO of Cumulus, said in a statement, “Over the last two years, we have focused on implementing a business turnaround to reverse the Company’s multi-year ratings, revenue and EBITDA declines, create a culture that fosters motivated and engaged employees, and build an operational foundation to support the kind of performance we believe Cumulus is capable of delivering. As we have demonstrated in many measurable ways – including increased ratings, revenue market share gains, improved employee satisfaction, reduced employee turnover and, over the last several quarters, our return to year-over-year EBITDA and revenue growth – that turnaround has not only been successful but is continuing. However, as we have noted consistently, the debt overhang left by previous years of underperformance remains a significant financial challenge that we must overcome for our operational turnaround to proceed.”
“The actions we are taking today to address our balance sheet are a critical step forward for Cumulus," Berner added. "We will use this restructuring process to relieve the financial constraints on our continued progress, allowing us to focus our resources on investing in our business and people to strengthen our competitiveness and ultimately drive growth. We have ample cash to support our operations and service our advertisers, vendors and affiliates during this period, and we look forward to becoming an even stronger partner to all of them when we complete this important phase of our turnaround strategy.”
