US Talk Radio is Still Popular, but as a Business Model, it’s Melting Down

Cumulus Media, the owner of several hundred radio stations and the distributor of several big-name conservative talk shows, is facing financial difficulties as its larger industry is contracting. This is happening not long after Cumulus’ rival iHeartMedia, formerly  known as Clear Channel and syndicator of both Rush Limbaugh’s and Sean Hannity’s radio shows, told the U.S. Securities and Exchange Commission it may be close to bankruptcy.

Both companies are carrying immense loads of debt. Since late February, Cumulus’ stock has traded at less than $1 a share. As recently as 2012, its share price was close to $8. One of Cumulus’ largest shareholders, hedge fund Renaissance Technologies, recently divested a significant portion of its stock in the company.

Renaissance Technologies is the investment vehicle of conservative mega-donor Robert Mercer, who is known as a supporter and patron of President Donald Trump as well as his senior adviser, Steve Bannon.

The hedge fund’s pullout may have happened because Cumulus recently adopted a “poison pill” stock structure designed to dilute the value of the company’s stock in the event that any single investor purchases 4.9 percent of the company on the public market. That strategy was likely intended to fend off bottom-feeding capital groups that specialize in purchasing companies and selling off their assets for a profit. Bain Capital, the former employer of the Republican Party’s 2012 nominee, Mitt Romney, is a large stakeholder in iHeartMedia.

Cumulus owns several of the nation’s largest radio stations, including KABC in Los Angeles and WABC in New York. That large asset portfolio, coupled with the company’s low stock price, could well make it an attractive target to such predatory capitalists.

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