Cumulus makes its move
Story
Cumulus (the Dickey family) is entering into an agreement with another private equity firm – one headed by a former Goldman Sachs executive(!) to spend up to $1 billion to acquire “Premium” radio company properties.
$1 billion won’t buy you even a big chunk of Clear Channel. But it might buy you the former ABC Radio stations from Citadel’s bankruptcy. Citadel has been stalling on presenting its plan for how it will reorganize itself. For now, it’s just a theory.
Cumulus does not have major market stations. Those that it has are in the Cumulus Media Partners entity. CBS and Clear Channel cannot buy most of the ABC stations due to FCC ownership limits. Cumulus would not have a problem with that. Cumulus Owner Profile
Extending my theory about Citadel and Clear Channel parting ways…. (at least the ABC radio part)…. if this new entity acquired the former ABC stations, the issue of the contracts with Clear Channel has to be addressed. Would Lou Dickey want to own major market stations carrying Rush Limbaugh, Glenn Beck and Sean Hannity? – or would he insist that Citadel break (or renegotiate) the contracts before he buys the stations?
This is highly speculative, but unlike Rush, I don’t think “If” is for children. I think “If” is what thinking adults do all the time.
On the stations Cumulus currently owns, do any of them carry Premiere’s programming? Time to hit the database…
Cumulus stations that carry Rush Limbaugh (that stream)
Cumulus stations that carry Hannity
Cumulus stations that carry Glenn Beck
As noted before, no former ABC radio station carries Beck.
Wow, um… Cumulus? I read your little profile on the company and they seem to be in almost as bad of shape as Citadel. It’s almost like the ABC cluster is going to become a massive hot potato going from owner to owner.
Well, I should do some 2009 updates – the profiles are getting stale.
Cumulus isn’t exactly breaking out the party hats, but they have done an agressive job at cutting costs and improving their ad revenue. Nobody in radio is doing well. If it is structured like Cumulus Media Partners, Mr Dickey would get a percentage of ownership, and paid a fee for running the stations, but the P/E firm would technically have majority control.
It could be the motivation here is to mitigate the writeoffs for someone. While $2 billion sounds like a lot of money (the Citadel loans in bankruptcy), in the big scheme of global banking that’s still chump change. This could be a way to dump off the Citadel problem to someone who knows American radio and wash their hands of it…
If it is bigger than that, and the idea was to dump (or merge in) all of Citadel, I did a preliminary look to see if that would cause issues with the FCC for ownership caps in the smaller markets. The answer seems to be “Not as much as you would think”. Typically, either Citadel or Cumulus is in a market, but not both. Nashville TN and Harrisburg PA are the only markets I see so far that would have ownership cap problems, and I’m not even positive of that. The rules are very technical and complex.