My main rumor source on Cumulus, Jerry Del Colliano says in today’s newsletter that the big money guys have made their move to remove the Dickey brothers.
If I was nominated to be czar of the SEC, the first thing I would push for would be to outlaw “nonproportional ownership”. That’s the change that allows insiders to get 10 votes for every share of stock they own, and the people like us who have been tricked into believing buying stock makes you an owner of a corporation – get one vote per share. This means a person can control the compay maybe only 5% of the oustsanding stock, and has the power to just give themselves more stock for doing a great job as CEO – without putting up any cash of their own. At the appropriate time, they can issue preferred stock and step in line Of the common share stockholders just before they declare bankruptcy, and steal all the equity. I don’t remember this in the Chamber of Commerce version of how free enterprise works and why we needed to go to Vietnam to kill all those godless commies.
It occurs to me that my speculation that the Dickey brothers were intentionally trying to destroy Cumulus might be right – let’s see just how big of a “golden parachute” they are offered to leave. The customers of Westwood One are probably knocking down the doors of the antitrust department of the DOJ and FTC. Last I heard cumulus did not have final approval for their acquisition of Westwood One last year, and if that’s true they just handed the executioner the sword with their actions a week ago.
The conflict is now in wider knowledge within the radio business. Jeff Marcus of Crestview Partnerswho had been the guy who tried to save Westwood One is the biggest investor at Cumulus. He is now on a tour of the country meeting with management in the major market cities.
Marcus ran Chancellor Radio prior to Clear Channel gobbling up his company. He is a solid radio guy.
Cumulus stock lost 12% today, closing at $.96 a share.
This week, Moody’s downgraded the $2.2 billion in debt Cumulus owes, because they expect the mess at Westwood One to hamper Cumulus’s ability to pay the interest or keep paying down the debt.
So far, the Dickeys have destroyed Cumulus Media Partners (Susquehanna Radio), ABC Radio, the former ABC Radio stations, and now Westwood One – people on “Wall Street” appear to have noticed.
Hey, there is always Sweetjack!