Cumulus Media Inc. (CMLS)
Q4 2012 Earnings Call
March 18, 2013 11:00 a.m. ET
Lewis Dickey - Chairman, President & Chief Executive Officer
Joseph Hannan - Senior Vice President, Treasurer & Chief Financial Officer
Lance Vitanza - CRT Capital Group
Michael Kupinski - Noble Financial
Aaron Watts - Deutsche Bank
Davis Hebert - Wells Fargo Securities
Amy Young - Macquarie
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I would now like to introduce Mr. Lew Dickey, Chairman and CEO of Cumulus Media. Sir, you may proceed.
Thank you, operator, good morning everybody. Appreciate everyone taking the time to join us today for four fourth quarter and full year 2012 update. Also joining with me today is our CFO, JP Hannan. Today we are going to update you on our operating performance for the fourth quarter full year and share some pacing for information for the fourth quarter and into the early second quarter for 2013.
As you may recall 2012 was our first full year of operations following the two transformative acquisitions we closed towards the end of 2011. Before we discuss the current results, I thinks it's instructive to take a brief look at what's been accomplished over the last year are so and in essence frames where the company is today. It's good context for the things that we have in place that we are going to be discussing.
In August 2011, we closed on the acquisition of the 85% of CMP or Cumulus Media Partners that we did not already own and immediately following in September, we closed on the merger of Citadel Broadcasting. This grew Cumulus from 330 stations and 57 markets to 572 stations and 120 markets. Additionally we entered into the Radio Network's businesses, the result of the Citadel merger, acquisition what was the former ABC Radio Network.
As a part of this process we also full recapitalized the company with $475 million of new equity and about $3 billion of new credit facilities with long-date maturities and very attractive pricing. In October of '11, we begin the integration of these newly acquired assets and focused on delivering what we told the Street was $51.9 million of expense synergies that we promised to both lenders and investors. By the end of the year on 2011, just 100 days into the process, we had implemented all these synergies, successfully enabling us to realize by the end of 2012, 20% greater than that or about $63 million was the total synergies realized by the end of 2012.
And again this process is not over as we continually develop new strategies and technology to continue to optimize the business, particularly on the fixed cost side and run it more efficiently. Now with the synergy implementation and the systems integration well underway, by the middle of this past year we turned our focus to developing revenue initiatives using our newly acquired platform. Throughout the year we announced a series of new strategic and content partnerships that will enable our companies to grow revenue in future years beyond the core radio advertising marketplace.
One of the things we did was invigorate the Radio Networks division, adding a number of new talents that are lined up, launching shows with Governor Mike Huckabee, Geraldo Rivera, Sanjay Gupta and Michael Savage as well as some other initiatives that we have focused on. We also announced the launch of importantly the CBS Sports Radio network in collaboration with CBS, and the launch of Right Now Traffic in partnership with Radiate Media. These now give us strong ownership positions going forward into two key verticals, sports and traffic. Both of those show an essence we have created two solid new entrants into respective other than $50 million markets, sports and traffic.
On the digital front, we enhanced two existing internet initiatives with the announcement of a strategic alliance with Clear Channel, where we became -- or excuse me, they became new affiliate of our SweetJack mobile commerce platform and we add our radio stations streaming content to their iHeartRadio content aggregation platform. In addition to being the second largest radio broadcasting company, we are now also third most listened to internet radio company as a result of our 2012 investments in our streaming platform and the exposure gained through iHeart.
So again, we went from about ninth to number three in terms of the largest streaming platform. And we are now currently making important investments in software and systems to enable us to monetize this increase in traffic because we now have critical mass in that area. We have also hired more than 100 new sellers in to the company and restructured our national sales force to recapture the share of the marketplace. We recently announced the hiring of Steve Shaw, who was the former President of Katz, to come in and head that national effort for us. In fact, today is Steve's first day on the job.
We also launched our corporate brand solutions group to offer integrated marketing solutions to largest and national advertisers, making it highly efficient for them to access the entire platform of our assets in a one stop shop. So platform sales in increasingly important to offer customized solutions to the large national advertisers and through the formation of the brand solutions group and the communication amongst the platforms, be it network, national, digital, local spot NTR, we now have the coordination point to enable us to go to the client in a single point of connection and offer those solutions. Again, another investment to help us grow our revenue base going forward.