Monday, November 10, 2014

Westwood One Drives Cumulus Media 3Q Revenue Increases

Cumulus Media today announced operating results for the three and nine months ended September 30, 2014.

Operating highlights are as follows (in thousands, except percentages):

Net Revenue


These increases were primarily attributable to the addition of the operations of WestwoodOne.

The increases were partially offset by decreases in local spot and national spot revenue. The increase in political advertising revenue was due to additional activity associated with mid-term and gubernatorial elections in the current period.

On a pro forma basis, net revenues for the three months ended September 30, 2014 decreased $0.1 million, or 0.0%, to $313.9 million, from $314.0 million for the three months ended September 30, 2013.

Content Costs

Content costs consist of all costs related to the licensing, acquisition and development of programming including local and national talent costs and music license fees.

On an actual basis, content costs for the three months ended September 30, 2014 increased $41.0 million, or 62.6%, to $106.6 million, compared to $65.6 million for the three months ended September 30, 2013. This increase was primarily attributable to the addition of the operations of WestwoodOne.

On a pro forma basis, content costs for the three months ended September 30, 2014 increased $14.5 million, or 15.7%, from $92.1 million for the three months ended September 30, 2013. This increase was primarily attributable to investments in proprietary content to replace expiring third-party producer relationships at WestwoodOne. Several new radio stations being operated under local marketing agreements ("LMAs") in Chicago, Dallas and San Jose also contributed to year over year expense growth, as did the launch of a newly owned and operated station in the New York market. Previously contracted increases in sports rights and local talent bonuses for ratings growth in several large radio markets also contributed to year over year increases. Partially offsetting these expense increases were expense savings resulting from our ongoing integration of WestwoodOne.

Other Direct Operating Expenses

Other direct operating expenses consist of expenses related to the distribution and monetization of content across our platform and overhead expenses.

On an actual basis, other direct operating expenses for the three months ended September 30, 2014 increased $20.7 million, or 20.8%, to $119.9 million, compared to $99.2 million for the three months ended September 30, 2013. This increase was primarily attributable to the addition of the operations of WestwoodOne and the LMAs in the Chicago, Dallas and San Jose markets.

On a pro forma basis, other direct operating expenses for the three months ended September 30, 2014 increased $4.9 million, or 4.3%, from $114.9 million for the three months ended September 30, 2013. This increase was due to ongoing investments in our radio market sales efforts, including items related to the extension of our national representation agreement with Katz Media. Cumulus also recorded additional one-time marketing expenditures related to the launch of our new radio station in the New York market and related to the rollout of our NASH Country brand across the platform. Timing of healthcare claims also increased expenses for the quarter, on a year over year comparison. Partially offsetting these expense increases were expense savings resulting from our ongoing integration of WestwoodOne.

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