Do you actually think an organization trying to work a deal to buy another business can give a rats arse about what songs or artists play when? Answer: No, they don't. It's a business transaction.
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Report: Jeff Warshaw Leads Effort To Acquire Cumulus Media
- Thread starter charles1234
- Start date
Speaking of corporate owned stations inside other facilities.
When ABC/WW1 ceased operations on Monfort Drive in Dallas where alot of the 24/7 satellite music networks came from, i was there on the final day and got to wander around the facility.. and get lost a few times.
Back when 620 AM Dallas was Radio Disney KMKI, it's functional local studio was in that building.. no where where it was as all equipment was gone..... but i did find KMKI's public file in a filing cabinet on the 2nd floor.
Depending on the situation, they're either still making money, or doing so reliant on an FM signal or translator. But in all cases, nowhere near what they used to bring in.
Part of what drove Cumulus into bankruptcy was all of the various ABC Radio properties and employees they assumed under the purchase of Citadel. Cumulus already had a building in Dallas with KPLX and another one with TM when they bought Dial Global. How many different buildings do you need? So I think they moved the satellite network operations to Colorado with a small office in the TM building. The radio stations were combined at Victory Plaza. They recently spun off TM to the management.
Exactly. Citadel was just fine until they bought ABC. The purchase of ABC coupled with the 2008 recession sent them to bankruptcy.
Wait, what? Not even referring to that. I'm just commenting on their playlist. Has nothing to do with that.
It did. Plus, Jan Jeffries was sacked almost immediately after Berner took the reigns of the company. Virtually nobody not named Dickey liked him, and those feelings were voiced in a survey Berner conducted after she took over.
While Cumulus doesn’t have the top-down style it used to, far as I know, it doesn’t allow local markets to use outside consultants not already working with the company. So, whether mandated or not, pretty much everybody has the same information.
And Cumulus paid and is still paying for ABC’s decisions that Citadel decided to take on. There were some strong stations, but most of the ABC properties weren’t ratings success stories. KSCS, WBAP, WJR, and WLS-FM seem to be the most successful. ABC did set the ground work for what is now WLS-FM when they flipped it (then WZZN) in 2005.
ABC had some legacy brands on both AM and FM but much of them were quite sick.
I had a PD who worked for the old Connoisseur from the 90’s. He said it was nowhere near as bad as Cumulus under the Dickeys, but it definitely had its way of doing things. He said Warshaw took care of you if you took care of him. If you could do things his way, performance bonuses were quite generous. After Cumulus got Connoisseur, he left largely because Cumulus didn’t want to pay bonuses, let alone as generously as Connoisseur’s.
I wonder who's running things in KC? It seems like it's just been lately that 95.7 has gone in this current direction reminiscent of the dickey era. They also play stuff like I cry by flo rida and a few more dated tracks that remind me of when Jan Jefferies controlled the stations.
Looks like it's Jagger, who also does afternoons on the station. Looking at their playlist, nothing really stands out as problematic,
On the NYC board, some people have noticed that Z-100 is playing their heavies less frequently, and playing more gold. That could be the case here. Someone referenced this article in Billboard
By definition, an LBO means additional debt. You seem to be suggesting this offer might not be of the LBO variety. I think there is only a small chance what you described, David, would actually be the case here. Part of the cash proposed to be infused by the private equity sponsor would almost assuredly come from new debt, and that debt would become part of the acquired company's balance sheet.
Let's assume for the sake of argument you are correct here. Even if that were true, the private equity folks would want to squeeze as much cash flow out of Cumulus in as short of time as practicable to recoup their investment. That potentially means RIFs, reduced cap ex for equipment replacement, etc.
I don’t see those as necessarily an issue. My local CHR, Audacy’s WFBC in Greenville SC has been adding more 2010s stuff lately like “Down”, “TiK ToK”, “Yeah!”, “My Love”, “Good Feeling”, “S&M”, and more newer gold stuff from the mid 2010s on. It’s just the nature of the format right now. Better than hearing “STAY” and “Industry Baby” every hour month after month.
Here's a link to Warshaw's "blank check company" that he's using to make the offer. It lists a $230 million IPO, which isn't enough to cover the amount of his offer. That's why he needs a consortium. So there are strings attached to the money:
Often what we generically call an "LBO" is actually a lightening transaction where the venture capital folks put up a loan amount (leverage) to buy the shares, and then they sell equity shares in the private company to other large investors.
Most LBOs are based on a medium short term, such as seven years, to add value to an enterprise so it can be sold for more, either privately or in a new IPO.
You are correct that PEGs themselves often have lines of credit, and these lines of credit can be used as the funding source (or one of the funding sources) for cash that is paid to selling stakeholders. That said, an LBO means the acquirer borrows from one or more sources, uses some or all of the proceeds from that financing to pay the selling stakeholders, and then that debt becomes an obligation of the acquired company. Depending on the funding source, the financier may or may not be granted a security interest in the assets of the acquired company.
I've approved commercial financing in connection with such transactions and in other cases "exit strategies" on behalf of the senior secured lender. Seven years is a pretty good estimate for a median PEG hold period; I would agree with that.
You've correctly described the investor objective for most such transactions. However, some companies that are acquired by private equity are managed irresponsibly. In other cases, the original investment thesis simply proves to be incorrect.
For a company whose revenue principally comes from a declining industry like AM/FM radio, and who has used chapter 11 bankruptcy plus post-bankruptcy asset divestitures to partially de-lever its balance sheet, "turning back the clock" by adding significant incremental debt (if that is indeed the proposal) strikes me as a dangerous idea on the part of the would-be acquirer. There is very little chance existing Cumulus employees would benefit from such a situation long-term. There is a high probability significant RIFs would occur (otherwise, how would re-leveraging of the balance sheet be justified?). Sure, some folks might conceivably say "podcasting and programmatic selling represent significant revenue growth opportunities." I just do not see any revenue stream that is within reach for Cumulus that would be transformational.
Warshaw has zero experience running a company of Cumulus' scale; in my opinion he wants to sit in Mary Berner's chair. If that scenario were to play out, Cumulus employees should feel some anxiety regarding the company's medium to long-term financial well being.
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Inside Radio has done a pretty detailed analysis of the situation. Admittedly no one knows who Warshaw's partners are. But we know who currently owns the biggest parts of Cumulus stock. According to the article, there are still 9 former debt holders who own 4% stakes in the company. The rest of the stock is owned by hedge funds and institutional investors.
www.insideradio.com
What You Need To Know About The Effort To Acquire Cumulus Media.
The bombshell news that a group of investors led by Connoisseur Media CEO Jeff Warshaw made an offer to acquire Cumulus Media for $15-$17 a share has touched off a
What strikes me is the offer is "an unsolicited, non-binding, highly conditional indication of interest” as per the Inside radio article. It's not "cash on the barrel head." This is far from a done deal.
Every offer usually starts as an unsolicited and non-binding conditional interest. That way the Board of the proposed target can decide whether to open the books to the potential acquirer pending the start of negotiations. Most business deals, especially involving traditional media, aren't like the recent Elon Musk/Twitter buyout offer.
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