New York, November 16, 2012 -- 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. All debt instrument ratings were affirmed with updated loss given default (LGD) point estimates, as outlined below.

Affirmed: ..Issuer: Cumulus Media Inc..Corporate Family Rating (CFR): Affirmed B1

.....Probability of Default Rating (PDR): Affirmed B1

..Issuer: Cumulus Media Holdings Inc.

$300 million 1st lien sr secured revolver due September 2016: Affirmed Ba2, LGD2 -- 22% (from LGD2 -- 20%)

1st lien sr secured term loan ($1,314 million outstanding) due September 2018: Affirmed Ba2, LGD 2 -- 22% (from LGD2-20%)

...$790 million 2nd lien sr secured term loan due September 2019: Affirmed B2, LGD4 -- 66% (from LGD5 -- 70%)

$610 million 7.75% sr notes due May 2019: Affirmed B3, LGD5 -- 89% (from LGD6 -- 93%)

Downgraded: ..Issuer: Cumulus Media Inc..Speculative Grade Liquidity (SGL) Rating: Downgraded to SGL -- 3 from SGL -- 2

Outlook Actions:

..Issuer: Cumulus Media Inc.

.Outlook, Changed to Negative from Stable

SUMMARY RATING RATIONALE

The company's B1 corporate family rating is forward looking and reflects Moody's expectation that management will continue to reduce debt balances with free cash flow resulting in net debt-to-EBITDA ratios of less than 6.0x (including Moody's standard adjustments, and treating preferred shares as 75% debt) over the rating horizon, with further improvement thereafter consistent with management's 4.0x reported leverage target. Debt-to-EBITDA leverage of 6.7x estimated for December 31, 2012 falls outside the rating category, but reflects improvement compared to 7.4x for LTM March 31, 2012. Management took actions to reduce leverage by selling non-core stations in exchange for larger market stations plus $115 million in cash which was used to reduce debt balances. In total, roughly $260 million of debt and preferred shares have been repaid. Cumulus also completed steps to realize $52 million of targeted synergies and has eliminated most of the uncertainties related to assimilating significant acquisitions which closed in the second half of 2011. Ratings incorporate the cyclical nature of radio advertising demand evidenced by the revenue declines suffered by radio broadcasters during the past recession and by the sluggish growth witnessed following the downturn. Ratings are pressured by challenges related to turning around weaker than expected operating performance, more recently from 10 stations in eight of its larger markets, in the face of increasing competition for listenership from existing and new media. The company's national scale, geographic and market size diversity as well as expected run rate EBITDA margins greater than 38% (including Moody's standard adjustments) support ratings. Looking forward, Cumulus is expected to generate more than $200 million of annual free cash flow, or 7% - 8% of debt balances, from its well-clustered radio station portfolio that is effectively diversified by programming formats and audience demographics. Although revenue growth is expected to be flat in 2013 due in part to the absence of significant political advertising, expected incremental expense reductions provide some cushion to the extent revenues decline.

The outlook was changed to negative from stable due to the potential for delays in achieving the collective turnaround of 10 underperforming stations and due to weakened liquidity as a result of limited access to its revolver facility, absent an amendment to the net leverage ratio test which steps down to 5.50x by December 31, 2013. The outlook incorporates Moody's expectations for generally flat advertising revenue growth for the radio industry in 2013 combined with challenges related to Cumulus' ability to generate incremental EBITDA from new revenue streams as planned. Ratings could be downgraded if Moody's believes that debt-to-EBITDA ratios will be sustained above 6.0x (including Moody's standard adjustments) beyond the rating horizon due to deterioration in performance as a result of increased competition in key markets, the inability to turn around underperforming stations, an economic downturn, or audience and advertising revenue migration to competing media platforms. Ratings could also be downgraded if leveraging events such as debt financed acquisitions result in debt-to-EBITDA ratios being sustained above 6.0x or if there is further deterioration in liquidity. The outlook could be revised to stable if we are assured that leverage will track management's plan improving to less than 6.0x and if liquidity is enhanced with good access to a revolver facility in an acceptable amount or good levels of excess cash.

Recent Events

In October 2012, Cumulus signed a definitive agreement to purchase WFME-FM with an upfront payment of $40 million, providing the company with a third station in the New York City area. The transaction is expected to close in the fourth quarter of 2012. Cumulus could pay an additional $10 million if it decides to move the signal to Manhattan from West Orange, NJ.

The principal methodology used in rating Cumulus was the Broadcast and Advertising Industry Methodology published in May 2012. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

Headquartered in Atlanta, GA, Cumulus Media Inc. is the largest pure-play radio broadcaster in the U.S. with approximately 525 stations in 110 markets and nationwide radio networks serving over 4,000 stations. Cumulus is publicly traded with Crestview Radio Investors, LLC owning an estimated 27.5% interest adjusted for the exercise of penny warrants. The Dickey family owns 8.2% with Canyon Capital Advisors LLC owning roughly 11%, and the remainder being widely held. Net revenues pro forma for acquisitions and divestitures totaled approximately $1.1 billion for LTM September 30, 2012.

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