Atlanta-based radio giant Cumulus Media sealed its $2.4 billion acquisition of Citadel Broadcasting early Thursday, after wooing the Las Vegas company for four months and a frenzied final 19 days of negotiations.
Cumulus -- parent of local FM rock station 99X among others -- becomes the nation's biggest pure play radio company. Executives said few changes are expected at stations owned by either company, and that neither listeners nor most employees will notice much difference.
The merger is a welcome sign of life in the battered radio industry, according to analysts and to Cumulus CEO Lew Dickey, who said he ended "weeks of no sleep" with a "very thorough, very buttoned-up transaction.”
"It's like `Yes, Virginia, there is (merger and acqusition activity) in media," said Bishop Cheen, an analyst with Wells Fargo Securities. "It's literally been three years since we've seen any meaningful activity."
Cumulus will pay $37 a share for Citadel, in a combination of cash and Cumulus stock. The company is funding the acquisition with up to $500 million equity financing.
The acquisition still needs approval from shareholders and regulators.
The combined company nearly doubles Cumulus' size. The company will have 572 stations across 120 markets, including 8 of the top 10, and will reach 60 million people a week.
The merged company will have several local stations. Cumulus, headquartered in Buckhead, operates 99X (WWWQ-HD2), Rock 100.5 (WNNX-FM) and top 40 station Q100 (WWWQ-FM). Citadel operates country station Kicks 101.5 (WKHX-FM) and oldies station Atlanta's Greatest Hits 106.7 (WYAY-FM)
Citadel also has stations in Detroit, Washington, New York, San Francisco, Los Angeles, Dallas and Chicago, among other cities. Cumulus's large markets include San Francisco, Dallas, Houston, Indianapolis, Kansas City and Cincinnati.
Listeners, advertisers and most employees won't notice a difference, Dickey said: "If you are an employee in a Citadel station, the name on your paycheck is going to change and very little else."
He said some of the behind-the-scenes operations, such as information processing and accounting, will be consolidated.
"But what the listeners hear won't change," he said. "And whom the advertisers see on the sales staff won't change."
Dickey told a broadcasters' convention nearly a year ago it was time to begin consolidating radio companies, and that he could put the capital together to do it, said Cheen, of Wells Fargo.
At the time, radio companies were struggling with the meltdown in advertising from both automobile and mortgage companies.
"Lew was early out of the gate," Cheen said. "This was a very bold statement to be making in April, 2010. More than a few people looked at him like he was crazy."
Cumulus first signaled its interest in Citadel at the end of last year, when it made public an earlier offer that the Nevada station had rebuffed.
"He’s been stalking Citadel for four months," Cheen said. "He's had to inch up the offer, but he got his target."
Dickey had support from big Citadel shareholders, the largest of which publicly chastised the company's management and board for refusing to deal with Cumulus.
Citadel emerged from bankruptcy in June, owned by former creditors more interested in liquidity than in holding on to stock.
Dickey said the new Cumulus will have the scale to support an evolving business model, where "we become an integrated marketing solutions provider that uses on air to inspire and online to inform. "
"That's a tremendously powerful one-two punch."
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