Cumulus Media Inc. (CMLS), based in Atlanta, Georgia, is the second largest radio broadcasting company based on the number of stations and the third largest based on revenue. We expect the company to miss revenue guidance when it reports quarterly results on November 6, as the decline in ad revenues accelerates industry-wide.

More concerning, however, is near industry-high leverage, which presents the risk of violating bank covenants if cash flow shrinks faster than we expect. Management increased leverage and returned free cash flow to shareholders in a massive buyback as the stock price continued to fall a tactic that in hindsight was ill-timed.

Nevertheless, we think the company will again seek to go private when the economy and credit markets improve. The stock is trading at 10x depressed 2008E EBITDA, well below the former buyout multiple of 14x, although we don't expect to see those lofty valuations again in light of the industry's secular decline. We see no near-term catalysts for CMLS shares to outperform, other than a rebound in the broader economy, which won't likely materialize for several quarters. We keep our Hold recommendation with a six- month target price $2.25.