Cumulus is the second biggest radio company in the country, and they have had a very bad run on Wall Street recently. On Friday they may have reached new lows. From Tom Taylor's NOW column...
Cumulus stock falls below the $1 mark. We’ve been chronicling the successive new six-year lows, but Friday crossed an important line – the $1-per-share mark. The 14-cent one-day loss drops “CMLS” to a close of 96 cents a share. Last week’s downgrades by Moody’s Investors Service may have been one precipitating factor, and a Wall Street observer tells NOW that “Moody’s doesn’t usually just whack you with a big downgrade. Once Moody’s gives you one of those, more may be coming.” For now, Moody’s calls Cumulus “stable,” after the downgrade in its “corporate family rating” from B2 to B3, and the secured credit facilities being nicked from B1 to B2. There’s also the spreading story about non-executive Chairman Jeff Marcus making station visits (almost unprecedented for somebody in that position) and newly-named board member Mary Berner having sit-down meetings with internal executives. That kind of contact by a board member with senior executives below the level of CEO/President Lew Dickey and EVP John Dickey is highly unusual. Friday’s strong negative trading in “CMLS” came on more than triple the usual volume – and is almost as bad a day as July 1, 2009 was, during the Great Recession. That day, Cumulus was in free fall, opening at 90 cents, sinking to 45 cents and closing at 63 cents. What will today bring for Cumulus, now at 96 cents? At that level, its market cap is only about 225 million. Just seven months ago, “CMLS” was trading at $4.51 a share.
What does this mean for employees of Cumulus stations? If history is a guide, look for more cuts. It may seem like that's not even possible anymore at this point, but don't underestimate the desperation of a debt-laden company with a low performing stock.
