Plans purchase of Quincy. The $925 million acquisition fits nicely with the company’s strategy of smaller market TV stations that have leading market positions. The company plans to divest stations with markets that it currently overlaps, in order for a quick regulatory approval. The planned station sales are some of Quincy’s largest and more valuable markets, including Tucson, Madison, Paducah and Cedar Rapids. Management expects to close the transaction in Q2 or Q3 2021.

Attractive purchase price.  The company expects to achieve $23 million in synergies and indicated that the purchase price is a compelling 6.9 times blended 2019/2020 cash flow, with synergies. We believe that the purchase price is reasonable for smaller market TV stations …

NobleCon 17 Highlights. This report highlights a fireside chat discussion with Frank Lopez-Balboa, CFO of Cumulus Media. A rebroadcast of that conversation may be obtained by clicking here. Topics that were discussed included improving revenue trends, revenue visibility, growth businesses, thoughts on getting back to 2019 revenue levels and debt.

Revenue improving, but lacks visibility.  Trends at the end of the year were better, but first quarter 2021 will be a tough comp given 10 weeks absent Covid a year earlier and the NCAA dispute. Notably, management indicated that advertising is being booked later and very close to air time, which provides poor revenue visibility …

NobleCon 17 highlights. This report provides highlights from a fireside chat conversation with Terry Jimenez, the CEO, at Noble’s 17th annual conference last week. A rebroadcast of that conversation may be obtained by clicking here. Topics that were discussed included the company’s digital transition, improving margin outlook, and the offer by its largest shareholder to buy the remaining shares it does not own.

Improving margin outlook.  Management provided guidance for 2021 which indicated that adj. EBITDA margins should improve from 11.3% in 2020 to 15.5% in 2021. Importantly, management indicated that it expects margins to continue to improve beyond 2021 …

NobleCon 17 Highlights. This report highlights comments by Christopher Young, the CFO, which were made at Noble’s 17th annual conference last week. The presentation can be accessed by clicking here. Some key highlights include that television moved to positive pacings in core advertising in Q4, fueled by Auto advertising; Radio core is down slightly, but improving significantly; and, Digital revenue growth is expected to be strong, up 250%, boosted by a recent acquisition.

Robust Digital presence.  Its Digital businesses include Digital Marketing Solutions, Audio Content, which includes Podcasts, Video Advertising and Data Management, and, Programmatic & Mobile App Performance. Industry revenue growth is expected to be strong 13% to 23% for each segment. As such, we believe that its Digital segment will be a key revenue and cash flow growth driver …

NobleCon 17 highlights. This report highlights a presentation made by Bill Wilson, the CEO, and an informative Q&A session. A rebroadcast of the presentation may be obtained by clicking here. The presentation touched on the following topics: favorable momentum for its Digital businesses, expanding its Digital footprint (opening a West Coast office), improving Broadcast advertising trends, utilizing its Charlotte sales team to sell Ignite, and ability to ramp its Entertainment business, post Covid.

Removes stock overhang.  The company recently announced an agreement to purchase 12.5 million of its shares from Oaktree Capital Management at $6.40 per share, by purchasing at least 10 million shares now and the remainder 15 months following the closing of the repurchase. Oaktree needed to sell the shares given that its holdings were beyond the fund’s life. As such, the repurchase represents …

NobleCon 17 Highlights. This report highlights comments by Evan Masyr, the CFO, made at Noble’s 17th annual conference last week. The presentation (which can be accessed by clicking here) highlighted why the company is different from other radio broadcasters and provided insights on some of its growth drivers, including Salem Surround, SalemNow, its new Podcast Network. We believe that investors have not fully appreciated the company’s Digital businesses, which we believe is worth more than the current market cap of the company, discussed later in this report.

Salem Surround provides compelling growth.  Management state that Salem Surround, its digital ad agency, has about 3,000 customers, some of which have been radio customers. The business grew 40% in revenues in the third quarter and was up in the 50% range in 2019. Management believes that the future is quite significant for this business and it continues to invest resources to build it …