State Champ Radio

by DJ Frosty

Current track

Title

Artist

Current show
blank

State Champ Radio Mix

8:00 pm 12:00 am

Current show
blank

State Champ Radio Mix

8:00 pm 12:00 am


stock market

Music stocks were off sharply this week as global markets were roiled by worries about the health of the U.S. economy and Friday’s disappointing jobs report.  
K-pop stocks suffered big declines this week as a major Korean stock market index had its biggest one-day decline ever. South Korea’s KOSPI composite index fell 8.8% on Monday as investors were gripped with fear about a U.S. recession. The market improved the following day, but the KOSPI ended the week down 4.9% to 2,544.81.

South Korean music companies were unfortunate casualties during the week of upheaval. The four main K-pop companies fell an average of 10.8% and their average year-to-date loss increased to 40.9%. HYBE fell 10.2% to 165,000 won ($123.25), bringing its year-to-date loss to 29.1%. YG Entertainment slipped 9.8% to 30,800 won ($23.01). SM Entertainment fell 10.4% to 56,300 won ($42.05). JYP Entertainment fared the worst, dipping 13.0% to 44,450 ($33.20) and bringing its year-to-date loss to 56.1%. 

Trending on Billboard

The Billboard Global Music Index fell 4.8% to 1,744.64, reducing the year-to-date gain to 13.7% and marking the index’s worst week since it fell 5.1% in the week ended Feb. 24, 2023. The broader stock market had a miserable week. In the United States, the Nasdaq composite fell 5.8% and the S&P 500 slipped 4.2%. In the United Kingdom, the FTSE 100 lost 2.3%. China’s Shanghai Composite Index fell 2.7%.

Just three of the BGMI’s 20 stocks finished the week in positive territory, and two of the three winners are among the index’s smallest contributors. The top stock, Believe, which gained 3.7% to 15.06 euros ($16.69), has a float of less than 4% after a consortium led by CEO Denis Ladegaillerie acquired nearly the entire share capital. 

The second-best performer, Anghami, has the smallest market capitalization of all index companies at $23 million. The Abu Dhabi-based music streamer gained 2.3% to $0.90 after announcing Thursday (Sept. 5) that its video streaming subscriptions increased 18% since the majority investment by OSN Group, owner of MENA-based video-on-demand streaming platform OSN+, in April.  

Live Nation fell 5.0% to $92.81 despite two positive analyst opinions this week. BofA Securities initiated coverage of Live Nation this week with a $125 price target and a “buy” rating. Oppenheimer, which dropped its Live Nation price target from $120 to $110 in May, raised it back to $120 on Friday. 

Sphere Entertainment Co. dropped 7.1% to $43.27 after Benchmark downgraded Sphere shares to “sell” with a $40 price target, well below the prior day’s $46.60 closing price. Benchmark analyst cited concerns about “scalability, high production costs, and a potentially underwhelming profitability outlook” for the $2.3 billion Las Vegas venue. 

The week’s largest decline came from SiriusXM, which fell 17.0% to $2.73. On Wednesday (Sept. 4), SiriusXM and Liberty Media announced the final exchange ratio for the pending merger of SiriusXM’s and Liberty Media’s tracking stock, Liberty SiriusXM Holdings. On Monday (Sept. 9), Liberty Media will redeem each outstanding share of Liberty SiriusXM common stock for 0.8375 shares of the new SiriusXM stock. SiriusXM shareholders will receive 0.1 shares of the new SiriusXM stock, which will trade under the same SIRI ticker as the current SiriusXM stock. Following the merger, former holders of Liberty SiriusXM stock will own roughly 81% of the new shares.

The BGMI’s most valuable component, Spotify, fell 5.9% to $322.75. Another major stock on the index, Universal Music Group (UMG), dropped 3.0% to 22.93 euros ($25.42). UMG will host investors and analysts at its Capital Markets Day on Tuesday (Sept. 10). 

Radio companies, suffering from sluggish radio advertising and underwhelming stock prices, might be starting to see the light. B Riley Securities analyst Daniel Day expects national advertising to pick up in the second half of 2023. That hint of optimism, along with Cumulus Media’s better-than-expected second-quarter earnings released Friday, sent radio stock prices soaring over the last few days.

Cumulus’s net revenue of $210.1 million was down 11% year over year and 25% below the same quarter in pre-pandemic 2019, the company announced Friday. Earnings before interest, taxes, depreciation and amortization (EBITDA) of $30.7 million was down 32.6% from the prior-year period, but was helped by wringing out $12 million of cost reductions. Revenue was in line with the company’s expectations while EBITDA exceeded expectations. Adjusted EBTIDA of $28.7 million was 32% above the estimate of Noble Capital Markets analysts.

That was good news for some investors. Shares of Cumulus climbed 14.5% to $5.54 on Friday and rose another 14.4% to $6.34 on Monday. Even after Cumulus gave back some of those gains on Tuesday (Aug. 1) and dropped 11.7% to $5.60, its share price was more than 2.5 times above the 52-week low of $2.57 from May 9. On Monday, B Riley upped its Cumulus price target from $10 to $11 — implying 96% upside from Tuesday’s closing price — and maintained its “buy” rating.

The trends could portend good news for other radio companies. On Monday, shares of iHeartMedia rose 12.4% to $4.73. Even after dropping 3.2% to $4.58 on Tuesday, iHeartMedia’s stock stood at more than double its 52-week low of $2.21 set on May 26. iHeartMedia will report second-quarter earnings on Aug. 8.

For Cumulus, the quarter was all about optimizing what it can control while mitigating the downside of what it cannot control, said president and CEO Mary Lerner during Friday’s earnings call. “This proven skill set is serving us well as we make the best of the current tough ad environment,” said Lerner.

Cumulus cut $5 million of fixed costs, repurchased $5.7 million of its common stock in the second quarter, bringing the total repurchases to $39 million, and retired about $32 million of bonds at an average discount of 26%. It also announced the sale of WDRQ-FM for $10 million that is expected to close this quarter. Digital revenue of $37.5 million was down just 0.7% from the prior-year period. Cumulus’ digital marketing services businesses were up 21% year over year while its podcast audience was up 19%.

What Cumulus cannot control is the willingness of brands to buy advertising. A weak national advertising environment since late 2022 “remained the main factor driving a decline in total revenue,” said Frank Lopez-Balboa, Cumulus executive vp, treasurer and chief financial officer. Local spot advertising revenue — which accounts for 80% of Cumulus’s total stock revenue — was down 7% while soft national advertising caused total broadcast radio revenue to fall 16.5%.

A third music-focused electronic-traded fund — or ETF — is set to debut on the New York Stock Exchange on Friday (June 30). The aptly named MUSQ Global Music Industry ETF, trading under the ticker MUSQIX, has 48 stocks representative of the modern music business, including Universal Music Group, Spotify and Live Nation.  

To MUSQ’s founder, David Schulhof, the fast-growing ETF market is primed for an index that allows investors to easily buy into the global music business’s growth story. “It’s been hard to invest in music for the last 25 years,” he says. “You had to be a [limited partner] at KKR or Blackstone or Apollo. And it was really hard to get liquidity.”

Schulhof, most recently the president of music publishing at LiveOne, invested in music assets as the co-founder and CEO of Evergreen Copyrights, which was acquired by BMG Rights Management in 2010, but everyday investors weren’t able to participate in music’s growing popularity as an asset class. “There were a lot of other private equity-backed companies, but it was hard for investors to get exposure” to music, he says. 

With MUSQ, Schulhof says he’s giving “the Robinhood investor” a liquid investment to participate in the music business. MUSQ has 48 companies spanning the music content and distribution (including Warner Music Group, Believe), digital music (Spotify, Tencent Music Entertainment), live music and ticketing (Live Nation, Madison Square Garden, Vivid Seats), satellite and broadcast radio (iHeartMedia, SiriusXM, Townsquare Media) and music equipment and technology (Dolby, Sonos). U.S.-based stocks account for 45% of the index’s value; the remaining 55% coming primarily from South Korea, Japan and China. 

MUSQ avoids video streaming and other digital entertainment stocks that may rise and fall with music but aren’t dedicated to music. Still, not all of the fund’s companies generate most or all of their value from music. MUSQ’s three largest companies are Apple, Amazon and Alphabet. The next-largest company by weight, Sony Group Corp., owns film, gaming and electronics divisions in addition to Sony Music Entertainment. According to the index’s criteria, a company can be considered for inclusion if it derives at least 50% of its annual revenues from the global music business, is a top five company, or have at least 10% of the global market share in one of the five segments of the music business the index covers.

“I had to include them,” says Schulman, “and I couldn’t ignore them. But I created, I think, a fair, balanced approach, which was to cap their market share on the index at 7%.”

To be eligible for the index, a company must have a minimum market capitalization or assets under management $100 million and a minimum average daily trading volume of $200,000 over the previous six months. Some small companies, such as music streamers Deezer and Anghami, and the newly public Alliance Entertainment, didn’t make the cut. But many other small, unheralded companies are among the index’s 48 stocks, including Stingray, a Canadian streaming company that services cable television networks, and Cliq Digital, a German provider of streaming services that bundle music, movies, audiobooks and other content. 

MUSQ is part of a trend of music-focused funds attempting to tap into the booming ETF business. KPOP, which focuses on South Korean companies that create music and video content, launched in 2022. TUNE, another music-focused ETF, launched on June 22. Investors increasingly favor the simplicity of ETFs built around themes such as music, battery technology and sustainability. ETF’s asset under management ballooned from $3.4 trillion in 2016 to $10 trillion in 2021, according to EPFR. PwC believes ETFs will grow to $20 trillion by 2026.

“I have to believe that some amount of that money is going to be interested in music,” says Schulhof.

Shares of iHeartMedia jumped 30.5% to $3.12 this week, making the radio giant the best-performing stock on the Billboard Global Music Index. The company gained 25.3% on Friday (June 2) without any clear signal — such as an SEC filing or earnings release — to drive such a sharp movement. On Thursday, CEO Bob Pittman […]