The Rush Limbaugh effect is very real and the backlash from his attack on Sandra Fluke has seen his first place position evaporate and his audience decrease by nearly 50 percent, according to the Daily Kos. The Rush Limbaugh Show is syndicated by privately-held Premiere Networks, which is owned by Clear Channel (connected to Mitt Romney via Bain Capital). Equally important and bears some attention is the fact that Cumulus Media and Dial Global, which play a role in distributing the show to 600 radio stations, are both slowly imploding, possibly as a result of the backlash against Limbaugh. Dial Global took an enormous financial hit on Friday, November 16, 2012, when it voluntarily de-listed from NASDAQ. The stock price nose-dived nearly 77 percent. Dial Global identified three causes for its headaches, including “advertisers’ response to the controversial statements by a certain nationally syndicated talk radio personality March 2012” contributed to financial troubles that raise “substantial doubt about the Company’s ability to continue as a going concern.” Fill in the blanks. You know exactly who they are referring to — Rush Limbaugh.
Deadline Hollywood: But Limbaugh appears to be the least of Dial’s problems: Its stock is down nearly 77% today, to about 47 cents, after it said that it may not be able to meet its debt covenants and will voluntarily leave NASDAQ to just trade over the counter. The company reported a Q3 net loss of $71.2M, up from a $5.2M loss in the period last year, on revenues of $58.2M, +132.7%. In addition to the Limbaugh controversy, Dial attributes its losses to late cancellations of ad buys (which it says were due to “the election and renewed economic uncertainty”), and growing competition from digital ad platforms and major radio companies.
Cumulus seems to be a dire straits too and has publicly blamed Rush Limbaugh for its woes. The company had been outperforming the S&P 500 prior to Rush Limbaugh’s disgusting attack on Sandra Fluke after she appeared on Capitol Hill to testify about contraceptive rights, calling her a slut. The advertiser backlash was fierce and swift. Cumulus has underperformed ever since:
Morning Star: Cumulus Media is the eighth-largest terrestrial radio operator in the United States by revenue and the second-largest in terms of number of stations owned. The company operates 314 stations in 59 markets, primarily in small to midsize cities. Through its private-equity partnership, the company operates an additional 33 stations in larger cities such as Atlanta and San Francisco. Local and regional advertising accounts for 90% of company revenue.
Here’s Cumulus stock chart from March 1, 2012 to November 16, 2012. It shows a steady and steep decline over nine months:
The company received more bad news when it was downgraded by Moody’s Investor Service, though it received some favorable news on this 3rd Quarter:
Moody’s Investor Service: Moody’s Investors Service likes a lot of what Cumulus is doing to reduce leverage, but says uncertainties associated with the radio business as a whole and the acknowledged difficulties the company is encountering turning around 10 key stations are cause for caution, and a downgrade.Moody’s Investors Service changed the rating outlook of Cumulus Media Inc. (“Cumulus”) to negative from stable following the company’s 3rd quarter 2012 earnings call. The negative outlook reflects the potential for delays in achieving the collective turnaround of 10 underperforming stations and weakened liquidity given limited access to its revolver facility. Moody’s affirmed the B1 Corporate Family Rating and Probability of Default Rating, but downgraded the Speculative Grade Liquidity (SGL) Rating to SGL — 3 from SGL — 2 to reflect reduced liquidity.
Clear Channel, which is the parent company of Premiere Networks is $21 billion in debt and quietly trimming its staff. Here’s an excerpt from the Toledo Blade:
Clear Channel has been strategically firing employees in small numbers so it doesn’t appear that the company is undergoing large-scale layoffs, he said, adding that it would have looked bad for Mr. Romney if his former company fired Clear Channel’s workers en masse.
It’s not clear how much money Premiere Networks lost in revenue as a result of the advertising backlash, but one thing is clear, there is strength in numbers when people let their voices be heard. The same grassroots movement can force companies threatening to cut their employees’ hours and impose a surcharge on diners as in the case of Denny’s, to rethink their positions.