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Cumulus Group: Overview

Overview

This profile looks at the US Cumulus radio chain and associate Cumulus Media Partners.


It covers -

  • introduction
  • the group
  • Susquehanna
  • studies

Introduction

The US Cumulus Media group is an AM/FM radio station chain in competition with Clear, Viacom's Infinity subsidiary and Entercom among other bodies profiled on this site.

Its corporate site is here.

The group

By number of stations Cumulus is the second largest US radio chain in the US (behind Clear Channel) with some 310 stations serving about 61 midsize and small markets. (As a frame of reference there are around 8,285 FM and 4,727 AM stations in the US). It is believed to rank around eighth by revenue.

It is controlled by the family of co-founder Lewis Dickey (with a small stake in overall equity but dominance in voting shares). He had earlier established Stratford Research, a broadcast sector market research and consulting firm.

Since establishment in 1997 - with the loosening of ownership restrictions under federal communications legislation - it has has been expanding aggressively. It has also moved into the Caribbean. It went public in 1998 and appears to have concentrated on growth rather than profitability, losing money since its establishment (eg losses of US$92 million on revenue of US$252 million in 2002) before making a small first profit in 2003.

In 2001 it settled a class-action lawsuit by stockholders who had claimed Cumulus misreported advertising sales in 1999.The lawsuit had seen the resignation of co-founder Richard Weening. (In 2003 the SEC assessed no fines or penalties against Cumulus regarding the claims and it was not required to admit to any violations of the US securities regime.)

In 2005 Cumulus announced formation of Cumulus Media Partners, LLC (a private partnership with Bain Capital, The Blackstone Group and Thomas H Lee Partners) to acquire the radio broadcasting business of Susquehanna Pfaltzgraff Co for US$1.2 billion.

The Cumulus model is built around shared services (content, administration, sales) for a cluster of stations in each location. Each station concentrates on a different market sector, such as jazz, rock or talk. Regional and local advertising accounts for around 90% of the group's revenue.

Susquehanna

Susquehanna Pfaltzgraff traced its origins to a pottery established by Johann George Pfaltzgraff in Pennsylvania during the early 1800s. The Pfaltzgraff Co (sold to Lifetime Brands Inc in 2005) claims to be the oldest continuously operating pottery manufacturer in the US.

Johann's great-granddaughter Helen Pfaltzgraff married Louis Appell Sr in 1922. Appell acquired control of the company in 1935 and established WSBA-AM in York, Pennsylvania in 1942. His father, Nathan Appell (1869-1928), had been active in property development and theatre management in Pennsylvania. The family's Nathan Appell Enterprises was sold to Warner Brothers.

At the time of the sale Susquehanna Radio was the US's largest privately owned radio broadcaster (75% held by the extended family, 25% by employees through an employee stock ownership plan), owning and/or operating 33 AM and FM radio stations nationwide.

The group's cable television and broadband arm, Susquehanna Communications (SusCom), was formed in 1993, absorbing a cable tv arm established in 1966. It was sold to Comcast in 2005 for US$540 million. At that time it ranked among the top 20 cable and broadband operators in the US, with 230,000 cable subscribers in six states. Comcast had previously held a 30% stake.

Studies

There are no major studies of Cumulus or its founders.