Monday, February 13, 2012

Lew Dickey's Wish List

When it comes to high finance, some things are beyond my comprehension.  I do know that if I didn't pay my bills, I would be in trouble.  Banks would not extend a lot more credit to me.

That seems to hold true for most companies.  For example, Citadel and Regent had to file for bankruptcy when they could not service their debt.  Yet somehow, Cumulus seems to be exempt from all of that.

In 2005, Susquehanna, one of radio's most revered companies, put its stations up for sale.  Many observers thought a Susquehanna employee group, led by President David Kennedy, would win the stations, and the company would continue its greatness.  After all, the group had bid $900 million, about what the properties were judged to be worth.

Cumulus, up until then limited to small and medium markets, offered $1.2 billion for Susquehanna with assistance from two holding companies.  One had to wonder whether overpaying to the point where the operator could not afford to breathe was at all related to ego.

Cumulus, weighed down by debt, lost money and employees for the next several years.  Then in 2011, the company obtained financing to purchase Citadel, including the collection of once-classy ABC-owned stations, which had just emerged from bankruptcy.  In the bankruptcy process, Citadel had shed its once enormous debt and owed virtually nothing.  By purchasing the debt-free group with good cash flow, Cumulus reduced its debt to a smaller percentage of its assets.

Cumulus became a profitable and growing company, and now finds itself a darling of Wall Street.  CEO Lew Dickey is reported to have a goal of owning more stations than Clear Channel, even more than the number of women in his cell phone's address book.

Lincoln Financial Media is one of the last great radio companies.  LFM has outstanding people from top to bottom, starting with CEO Don Benson.  Its stations are live and local, and tend to be near the top of the ratings.  Two weeks ago, LFM's Miami stations were hit with a major layoff, and unconfirmed smaller cutbacks were said to have occurred in Atlanta and Denver.  Miami's 101.5 Lite FM, a market leader for years, dropped local programming in evenings for John Tesh's syndicated show.

In 2006, after picking up the media properties through its acquisition of Jefferson-Pilot, Lincoln Financial attempted to sell them.  The company did sell its three TV stations and TV production division.  On the radio side, however, LFM sold only its Charlotte stations, including former JP flagship WBT-AM.  LFM's other markets, including Atlanta, were put on hold.

I love reading Jerry Del Colliano's column, Inside Music Media.  Jerry is a great writer.  He's also a real radio guy who bemoans what has happened to the industry.  And he has a good pulse on the business.  Sometimes, however, I wonder whether he runs with juicy stories without knowing their accuracy.

A month ago, Jerry reported that Cumulus was preparing to acquire Lincoln Financial Media.  Now, that would be truly depressing.  Following the cutbacks 2 weeks ago, Jerry wrote that LFM had trimmed its sails for the acquisition.  Back to the subject of ego, LFM's Star 94 (WSTR-FM) has been Cumulus' arch enemy for the past 7 years; taking over that station would create one of life's magic moments for the Dickey's.  (Yes, Cumulus probably would have to divest itself of 100.5.)

So is the LFM rumor true?  Hopefully it's just the usual scuttlebutt that permeates the radio business.  Jerry could be correct regarding the layoffs.  On the other hand, they were mostly (if not entirely) done in Miami and could have been just a function of that market's P&L.  Jerry has also predicted that Cumulus will acquire Townsquare Media, Clear Channel stations in smaller markets and possibly some CBS properties in lesser cities.

It must be nice to have a wish list of radio companies.  My list is pretty much limited to cars that I wish I owned.

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Link to Rodney Ho's AJC Radio & TV blog:

1 comment:

  1. Cumulus divest 100.5? Hmmm....does Dickey Broadcasting pick it really cheap, as in free, for WCNN FM? And what becomes of WQXI? ESPN 790 run by Cumulus, thus giving it a monopoly on sports radio in Atlanta.

    Does WSTR become WNNX 94Rock?

    Cox is tapped out. Clear Channel is too stupid to see the value of another big stick FM. CBS could also be interested.

    Time will tell.