Radio Giant Cumulus Files for Bankruptcy, Citing $600M Debt & Growth of Digital Streaming

Radio giant Cumulus Media filed for bankruptcy Thursday (March 5) to eliminate $600 million in debt, citing “persistent industry-wide declines” in revenue and listeners moving to digital streaming services like Spotify.

The company, which owns 394 stations in 84 markets across the country, filed the Chapter 11 case as part of a so-called pre-packaged deal with its lenders in return for giving them equity in the reorganized company, according to court documents obtained by Billboard.

This marks the second time Cumulus has filed for bankruptcy in the past decade, following a similar effort in 2018. In the court filings, the company said it emerged from that earlier crisis with a strategy for success, but succumbed to “accelerating industry-wide declines in broadcast radio,” fueled by growing preference for on-demand streaming services.

“Intensifying competition from digital audio and streaming platforms, a shift toward programmatic and performance-based ad buying, and the continuation of negative secular changes in listener behavior …have placed sustained industry-wide pressure on advertising demand and core broadcast revenues,” Cumulus CFO Francisco J. Lopez-Balboa wrote in court filings.

Streaming is popular “particularly among younger audiences,” Lopez-Balboa wrote, and newer model cars have seen “widespread smartphone integration with in-car systems that facilitate streaming over AM/FM.” He added that the COVID-19 pandemic saw a “sharp drop in commuting activity” that has never fully returned thanks to hybrid work.

“Despite some bounce-back in radio listenership driven by return-to-office trends, annual declines have persisted, and radio listenership remains well below pre-pandemic levels, particularly in the large markets where the Company operates,” the Cumulus exec continued in court filings.

The company also cited ad dollars diverted to “alternative media and technology channels,” as well as “persistent inflation” that has driven up wages and content production costs.

In a statement announcing the move, Cumulus president and CEO Mary G. Berner said the company had “outperformed the market” but couldn’t outrun “unrelenting” economic and industry trends.

“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,” Berner said.

Though a pre-packaged bankruptcy deal will likely face a smoother path than a typical insolvency, the move will still need to be approved by a federal bankruptcy judge and the Federal Communications Commission.