Cumulus Stock “Decimated.” How Trouble at NASH Could Spell Trouble for Country
**UPDATE: Lew Dickey Is Out as Cumulus Media CEO Replacement Named
Everywhere you look in country music these days, there is Cumulus Media. From being the second-largest radio station owner in America—and one that’s betting big on country as the radio format of the future—to partnering with Scott Borchetta’s Big Machine Records on the joint venture NASH Icon, to recently taking over the naming rights to the 20-year-old Country Weekly magazine, Cumulus has become a big mover and shaker in the country music space, launching reality TV competitions, and pushing their NASH “lifestyle” brand that among other things has plans for NASH-branded clothing, food, furniture, and even paint.
Cumulus Media’s NASH concept wants to become the one stop shop for corporate country consumers, and the country industry is more than willing to play ball as long as the company spreads its capital around to launch grandiose ventures and continues to play its artists on the radio.
But there’s a problem. A big one.
Cumulus Media’s financial particulars are terrible, and getting worse by the second. For all of their boisterous plans and big ideas, Cumulus is a company with over $2 billion in debt, and with a stock price that is rapidly going down the tubes.
Last Thursday (9-24), Cumulus Media’s stock got “obliterated” in the words of Economic News Daily, losing -15.54% at a trading volume of 19.40M shares to settle at a paltry $0.76 cents per share, down from a starting price of $0.87 cents per share. It was one of the stock market’s biggest losers on a day that saw the rest of the market only down slightly. Even after the huge selloff, Cumulus stock was only able to muster a $0.02 cent recovery on Friday, finishing at $0.78 cents. In the last year, Cumulus stock has stood as high as $4.51.
Part of the reason for the stock selloff was the crowdsourced equity research firm Seeking Alpha evaluating Cumulus stock as a “sell.” The logic from Seeking Alpha was:
” The company has generated very low levels of profits in spite of very high revenue growth over the past few years. In addition, leverage is a significant problem.
” We believe the shares are very optimistically priced, in spite of the poor operating performance.
Moody’s Investors Service also downgraded the company’s Corporate Family Rating on September 15th.
At the last earnings report for Cumulus in May, the company reported revenue of $271.08 million for the first quarter, down 7.2% from the year-ago quarter. It also reported a loss of 5 cents a share. Advertising fell 7% from the year-ago, digital advertising revenue fell 16.4%, and political advertising fell 67.7% (source).
Even worse are some of the reports about Cumulus management being in the midst of turmoil. According to Media Confidential, after Thursday’s stock slide, high-profile Cumulus Executive Vice President of Content and Programming John Dickey was cleaning out his desk. John Dickey is the brother of Cumulus CEO Lew Dickey.
Analysts have questions about Cumulus management. Who’s in charge? Jeff Marcus, currently non-executive Chairman of the Board has been rumored to be making the rounds at many Cumulus stations and unconfirmed reports have EVP of Content and Programming John Dickey cleaning out his office Thursday night. A year ago he stepped away from a Co-COO/EVP operating role shared with Jon Pinch to take the EVP of content position. He’s been a prime mover in Cumulus Media’s country NASH initiative one of the things his brother Lew has been touting as a growth engine for Cumulus.
Part of the problem may be how Cumulus bet big on country music, and the radio ratings for country have been falling in recent months. The ratings for the Cumulus-partnered inaugural American Country Countdown Awards were abysmal. Part of the strategy of the Dickey Brothers has been to move away from the conservative talk radio which kept Cumulus afloat in recent years to focus more on the NASH brand. However ratings remain mild, and country music is not turning into the cash cow some expected it to become during the heyday of Bro-Country.
Last year, Saving Country Music spoke to radio and media insider Jerry Del Colliano, who was suprious of Cumulus Media’s NASH plans, alluding that they were simply “sizzle” to hide the fact that the company’s financial were terrible, and the business was failing.
“Where Cumulus now has a successful country station, [Lew Dickey] is forcing the morning talent out and replacing them with a weak nationally syndicated morning show that is not local,” said Jerry Del Colliano. “Dickey should have no problem keeping big investors on board because they don’t understand the radio industry and probably don’t listen to any kind of country music. They hear the sound of money from a shrewd CEO who is selling sizzle, because if ratings or revenue is a yardstick, he is failing.”
“[Cumulus] throws nickels around like manhole covers they aren’t going to spend ANY money on NASH,” continues Del Colliano. “It is one format for 100 plus stations some day. In other words, they pay for one station and fire everyone else. How is that investing in country? It is hurting country by eliminating the local person center connection that is so unique to country music and artists. NASH is pop radio country style. NASH Icon will be traditional country but in a watered down cheap version. Icons is to be blunt just another format that will allow Cumulus to fire lots of local people and install a money saving 2nd national format. It could be Gregorian Chants for all the Dickeys care. This has little to do with country and lots to do with saving money by syndicating cheap national formats.”
But the risk of a Cumulus implosion is not just one for the company itself. The NASH Icon record label has a roster that includes Reba McEntire, Martina McBride, and the recently-signed Hank Williams Jr. and Ronnie Dunn. But will NASH be able to hold up their end of the bargain? The same question has to be asked about Country Weekly, and the scores of Cumulus-owned country radio stations across the United States.
Over the last 18 months, Cumulus and mainstream country music have become tied at the hip. If Cumulus goes down, it could cause some serious ripples and turmoil for country music as well.
READ: Are Cumulus Media’s NASH Plans Serious, or Just Sizzle?
September 28, 2015 @ 8:42 am
While I hate to cheer for lost jobs and the financial hurt that would likely come with a collapse of the Country industry, it would probably be for the best for the genre at this point. Cumulus and iHeart Media have completely poisoned the well and the best thing that could happen for the genre would be for it and the d-bags like Bobby Bones contaminating it further to completely collapse and (hopefully) allow the genre to be taken back by people who actually care about it.
The people currently running the genre see it as nothing more than 2-3 minute interludes between commercials and only care if the music they are selling will agree with their advertising partners. Maybe the rats scattering from the sinking ship will allow sensible people to right the course and bring some semblance of respectability back to the genre.
September 28, 2015 @ 9:56 am
AMEN Mike . Outside of the obvious job loss issues ( and I’m not ignoring or downplaying the significant impact that would have ) absolutely NOTHING could be worse than where country has gone ( ‘ fake’ music , fake artists , fake TV shows-‘Nashville’ – and a palatable desperation about EVERY artist and their label and management) – whatever follows can only be an improvement in music , mindset and direction and artistry. If you’re business is based solely on trends , you will always lose .
September 28, 2015 @ 12:10 pm
It’s possible that if Cumulus goes under, the stations that pop up to replace closed Cumulus stations could be less centralized and hire more local talent. Thus, possibly creating a net increase in jobs. So it might be a good thing for those in the radio field.
September 28, 2015 @ 2:27 pm
palatable ??? oops …make that ‘tangible’ ….my editor has the year off .
September 28, 2015 @ 9:11 am
I agree with Mike W. The country ship may still sink without Cumulus and iHeart but at least it’ll be rat-free. In any case, as I’ve said before, the real action in country music doesn’t have much to do with Nashville anymore. I get seriously good indie and self-released country music sent from everywhere from Seattle to St Petersburg, San Diego to Portland, Maine, and Cumulus and iHeart going down the toilet won’t affect them in the slightest because none of them are being played on commercial country stations.
September 28, 2015 @ 3:37 pm
I was just in Seattle a couple months ago. Could you tell me about some good indie country stations there? I searched the whole dial but did not find anything.
September 28, 2015 @ 5:47 pm
Eric, I should probably have said Portland, Oregon, rather than Seattle. The only show I know of in Washington state is Americana Music Series, KGHP, Gig Harbor, WA. I haven’t the faintest idea where Gig Harbor is!
September 28, 2015 @ 6:09 pm
Gig Harbor is a suburb of Tacoma. KGHP is a high school radio station for Peninsula High School I think and has a pretty weak signal and they seem to play a pretty diverse selection of musical styles not just Americana.
September 28, 2015 @ 6:57 pm
Pretty impressive that a high school has it’s own radio station. Even more impressive that they play good music.
September 28, 2015 @ 7:14 pm
Gig Harbor is a fairly affluent suburb so I’m sure that is part of why the high school has a radio station. The station even has a Wikipedia page.
Have I been sent to the penalty box for some reason? My comments all seem to await moderation.
September 28, 2015 @ 9:42 pm
Speaking of high school radio stations, Menlo-Atherton High School has a jazz station that plays old big band music with enough signal strength to reach all the way down to San Jose. I wonder how much money it costs these schools to run their own stations.
September 28, 2015 @ 11:27 am
Good.
This is capitalism in motion, you could say. What Cumulus is doing isn’t working anymore, so they’re quickly becoming antiquated, as they should be. People are no longer interested in what they’re trying to sell and it shows in the numbers. It’s unfortunate for those at Cumulus who thought they could cash in on a rising trend like country music, but the entertainment industry is a fickle one and the tides change with little warning or apology. They put all their eggs in one basket that already had a hole in it, and this is the result. Hopefully this creates a little more wriggle room for upcoming independent country artists who are making music for the sake of music.
September 28, 2015 @ 11:59 am
I never like the idea of their management situation.
I can imagine the rest of Music Row (other than Big Machine) trying to give these guys all the rope they need to hang themselves with.
The assets are there, though. I suspect someone will pounce with the cash to avert a bankruptcy?
Then what? As inbred as Nashville is, probably just a different brother fucking this sister.
September 28, 2015 @ 3:46 pm
No surprise here. I’ve been saying since the beginning that this whole Nash branding is putting the cart before the horse. I don’t care how big of a country fan someone is, a consumer isn’t going to get excited about buying a chair that says “Nash” on it.
September 28, 2015 @ 4:14 pm
Finally, this just may be a good thing for the genre. I said 2 yrs. Ago
Bro-Country will eventually fade and this new radio obsession will
Fail. Nash is falling fast. The people that keep the individual radio station
running will find other employment (some ready have).
Guess those in the Bro-County pocket will find their music is no longer
the flavor of the day and will have to seek another form of music Or
dare I say Another way to stay wealthy.
September 28, 2015 @ 9:12 pm
I don’t see how country radio can do well or survive if they continue to play everything except country, selling out to and playing generic copycat pure pop (bro-country and metro-bro) weaker than what the failed rock radio they’ve been chasing played. Is doing the same thing or worse than a failed format did a good plan?
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September 29, 2015 @ 10:27 am
[…] Country Music on trouble at Cumulus Media and its NASH brand and the death of music journalism at the hands of PR […]
September 29, 2015 @ 2:30 pm
And now Lew Dickey has been moved out of the CEO job and his brother is out altogether.