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Citadel closing in on ABC

K

kinetic

Looks like Citadel has the inside track on the ABC radio network, having upped the ante to a near $3-billion deal that's pushed aside other interested parties (like Entercom).

Wire services began carrying the story this morning after an overnight investing tracker broke the news.

No word on how this will effect KGO if the deal goes through. The loss of ABC News and it's correspondants? The end of synergy between radio and television O&Os?

Personally, I would've preferred Entercom, which runs a very good ship at many market levels. If the deal goes through, this makes Citadel a big player.

Thoughts, cynical or otherwise?

Don't know if this thread will get much response but we can at least be assured there won't be calls to bring back the Doghouse or give the Bay Area a real CHR station.
 
PJ,

To be honest, I don't quite get the deal, just like I didn't really get it when the Cumulus conglomerate did the Susquehanna deal. It feels much more like a big pissing contest rather than a smart deal.

The premium that the Cumulus group paid for cash flow with Susquehanna (and that I'm sure Citadel will pay for with ABC) was significant. The ABC radio group, to my knowledge, is pretty well-operated (I'd love to hear if others feel differently) just like Susquehanna's is, so there isn't necessarily a whole lot of growth opportunity out in the investment. So if you're paying a high premium for cash flow and there is not a whole lot of growth, where is the return on investment? Since when are Citadel or the Cumulus Group specialists in major market property operations and growth? Both companies focus on small and medium markets as their whole value proposition. So it sounds to me like all of the companies between #3 and #10 or so (i.e. Entercom, Cumulus, Citadel, etc.) are trying to be the third big kahuna (behind Clear Channel and CBS) just to claim the title and it's not clear that it is in the best interests of shareholders.

Contrast this, by the way, to Emmis who has been very smart about not getting too big just to be big -- they got out of the ABC bidding when it became a bad deal for them financially even if it made sense operationally.

Thoughts?


> Looks like Citadel has the inside track on the ABC radio
> network, having upped the ante to a near $3-billion deal
> that's pushed aside other interested parties (like
> Entercom).
>
> Wire services began carrying the story this morning after an
> overnight investing tracker broke the news.
>
> No word on how this will effect KGO if the deal goes
> through. The loss of ABC News and it's correspondants? The
> end of synergy between radio and television O&Os?
>
> Personally, I would've preferred Entercom, which runs a very
> good ship at many market levels. If the deal goes through,
> this makes Citadel a big player.
>


> Thoughts, cynical or otherwise?
>
> Don't know if this thread will get much response but we can
> at least be assured there won't be calls to bring back the
> Doghouse or give the Bay Area a real CHR station.
>
 
> ... Since when are Citadel or the Cumulus
> Group specialists in major market property operations and
> growth? Both companies focus on small and medium markets as
> their whole value proposition.


There has already been speculation on other boards that Citadel would immediately turn around and spin off some of the major market stations, such as KGO in San Francisco, to Clear Channel in order to make back some of the costs from buying the ABC stations ... and that Clear Channel would, in turn, spin off "smaller" stations (like, perhaps, KQKE or KNEW).

Speculation, but interesting nevertheless.

DJ
 
For one thing I don't understand why ABC wants out of radio, & seem to be doing fairly well. I too worry what Citadel would do to KGO.
>
> To be honest, I don't quite get the deal, just like I didn't
> really get it when the Cumulus conglomerate did the
> Susquehanna deal. It feels much more like a big pissing
> contest rather than a smart deal.
>
> The premium that the Cumulus group paid for cash flow with
> Susquehanna (and that I'm sure Citadel will pay for with
> ABC) was significant. The ABC radio group, to my knowledge,
> is pretty well-operated (I'd love to hear if others feel
> differently) just like Susquehanna's is, so there isn't
> necessarily a whole lot of growth opportunity out in the
> investment. So if you're paying a high premium for cash
> flow and there is not a whole lot of growth, where is the
> return on investment? Since when are Citadel or the Cumulus
> Group specialists in major market property operations and
> growth? Both companies focus on small and medium markets as
> their whole value proposition. So it sounds to me like all
> of the companies between #3 and #10 or so (i.e. Entercom,
> Cumulus, Citadel, etc.) are trying to be the third big
> kahuna (behind Clear Channel and CBS) just to claim the
> title and it's not clear that it is in the best interests of
> shareholders.
>
> Contrast this, by the way, to Emmis who has been very smart
> about not getting too big just to be big -- they got out of
> the ABC bidding when it became a bad deal for them
> financially even if it made sense operationally.
>
> Thoughts?
>
>
> > Looks like Citadel has the inside track on the ABC radio
> > network, having upped the ante to a near $3-billion deal
> > that's pushed aside other interested parties (like
> > Entercom).
> >
> > Wire services began carrying the story this morning after
> an
> > overnight investing tracker broke the news.
> >
> > No word on how this will effect KGO if the deal goes
> > through. The loss of ABC News and it's correspondants?
> The
> > end of synergy between radio and television O&Os?
> >
> > Personally, I would've preferred Entercom, which runs a
> very
> > good ship at many market levels. If the deal goes
> through,
> > this makes Citadel a big player.
> >
>
>
> > Thoughts, cynical or otherwise?
> >
> > Don't know if this thread will get much response but we
> can
> > at least be assured there won't be calls to bring back the
>
> > Doghouse or give the Bay Area a real CHR station.
> >
>
 
> PJ,
>
> To be honest, I don't quite get the deal, just like I didn't
> really get it when the Cumulus conglomerate did the
> Susquehanna deal. It feels much more like a big pissing
> contest rather than a smart deal.
>
> The premium that the Cumulus group paid for cash flow with
> Susquehanna (and that I'm sure Citadel will pay for with
> ABC) was significant. The ABC radio group, to my knowledge,
> is pretty well-operated (I'd love to hear if others feel
> differently) just like Susquehanna's is, so there isn't
> necessarily a whole lot of growth opportunity out in the
> investment. So if you're paying a high premium for cash
> flow and there is not a whole lot of growth, where is the
> return on investment? Since when are Citadel or the Cumulus
> Group specialists in major market property operations and
> growth? Both companies focus on small and medium markets as
> their whole value proposition. So it sounds to me like all
> of the companies between #3 and #10 or so (i.e. Entercom,
> Cumulus, Citadel, etc.) are trying to be the third big
> kahuna (behind Clear Channel and CBS) just to claim the
> title and it's not clear that it is in the best interests of
> shareholders.
>
> Contrast this, by the way, to Emmis who has been very smart
> about not getting too big just to be big -- they got out of
> the ABC bidding when it became a bad deal for them
> financially even if it made sense operationally.
>
> Thoughts?
>

In fairness, it's probably too soon to judge the deal (see BossRadioDJ's post below) but my insincts are with you. Clear Channel clearly got into a pissing contest to be the biggest radio owner in the country and their stock has never recovered. It's not that the company is a shambles, but let's just say employees aren't retiring as millionaires by cashing out their shares. If they had to do it again, maybe they would prefer running 600-800 stations --just a guess on my part. (And Clear Channel is brought up as a rumored backdoor player in this potential deal --again, see BossRadioDJs post)

Also, I've always admired Emmis, Susquehanna and Entercom for being much more level-headed about their businesses, so again, sympatico.

As another poster has already suggested, Citadel seems out of their league here and my fear is what tinkering may lie ahead for a station like KGO if another player gets its hands on them. I can't imagine the AEs trying to sell "less is more" on 810. It would be a minor miracle if new ownership were to have the wisdom to leave well enough alone.
 
> As another poster has already suggested, Citadel seems out
> of their league here and my fear is what tinkering may lie
> ahead for a station like KGO if another player gets its
> hands on them. I can't imagine the AEs trying to sell "less
> is more" on 810. It would be a minor miracle if new
> ownership were to have the wisdom to leave well enough
> alone.

You took the words right out of my mouth PJ. Whatever hands end up with KGO will hopefully be smart enough to know to leave it alone. When you mess with a well oiled machine, the results are usually negative.

My example... KFBK in Sacramento. The station is still successful but not like it was 5 years ago under different ownership. Between the total disregard for airborne traffic to cut backs effecting the operation of the station, it has suffered. I would hate to see an operation like KGO suffer a similar fate. What they do there works and has for 25+ years now. That's the bottom line.<P ID="signature">______________
If you put your mind to it, you can accomplish anything...</P>
 
Citadel has a very medicore VP Talk who oversees
markets like Little Rock and Reno. I can't imagine
this guy telling KGO or WABC which way is up.



> As another poster has already suggested, Citadel seems out
>
> > of their league here and my fear is what tinkering may lie
>
> > ahead for a station like KGO if another player gets its
> > hands on them. I can't imagine the AEs trying to sell
> "less
> > is more" on 810. It would be a minor miracle if new
> > ownership were to have the wisdom to leave well enough
> > alone.
>
> You took the words right out of my mouth PJ. Whatever hands
> end up with KGO will hopefully be smart enough to know to
> leave it alone. When you mess with a well oiled machine,
> the results are usually negative.
>
> My example... KFBK in Sacramento. The station is still
> successful but not like it was 5 years ago under different
> ownership. Between the total disregard for airborne traffic
> to cut backs effecting the operation of the station, it has
> suffered. I would hate to see an operation like KGO suffer
> a similar fate. What they do there works and has for 25+
> years now. That's the bottom line.
>
 
> There has already been speculation on other boards that
> Citadel would immediately turn around and spin off some of
> the major market stations, such as KGO in San Francisco, to
> Clear Channel in order to make back some of the costs from
> buying the ABC stations ... and that Clear Channel would, in
> turn, spin off "smaller" stations (like, perhaps, KQKE or
> KNEW).

I think Citadel is looking at ABC so they, themselves, can become a more attractive buy for another group of investors. Forstmann Little have held Citadel for MUCH longer than they usually hold onto things... I think they are spiffing up their portfolio for a turn-around.
 
> > ... Since when are Citadel or the Cumulus
> > Group specialists in major market property operations and
> > growth? Both companies focus on small and medium markets
> as
> > their whole value proposition.
>
>
> There has already been speculation on other boards that
> Citadel would immediately turn around and spin off some of
> the major market stations, such as KGO in San Francisco, to
> Clear Channel in order to make back some of the costs from
> buying the ABC stations ... and that Clear Channel would, in
> turn, spin off "smaller" stations (like, perhaps, KQKE or
> KNEW).
>
> Speculation, but interesting nevertheless.
>
> DJ
>
Curious if Citadel would spin off KSFO and KMKY too?
 
> > There has already been speculation on other boards that
> > Citadel would immediately turn around and spin off some of
>
> > the major market stations, such as KGO in San Francisco,
> to
> > Clear Channel in order to make back some of the costs from
>
> > buying the ABC stations ... and that Clear Channel would,
> in
> > turn, spin off "smaller" stations (like, perhaps, KQKE or
> > KNEW).
>
> I think Citadel is looking at ABC so they, themselves, can
> become a more attractive buy for another group of investors.
> Forstmann Little have held Citadel for MUCH longer than they
> usually hold onto things... I think they are spiffing up
> their portfolio for a turn-around.
>
Remember two things:

The sale is for no more than 50% of the equity in a new venture in which ABC would still own the other half.

KMKY and the rest of the Disney stations are not part of the deal.
 
> > ... Since when are Citadel or the Cumulus
> > Group specialists in major market property operations and
> > growth? Both companies focus on small and medium markets
> as
> > their whole value proposition.
>
>
> There has already been speculation on other boards that
> Citadel would immediately turn around and spin off some of
> the major market stations, such as KGO in San Francisco, to
> Clear Channel in order to make back some of the costs from
> buying the ABC stations ... and that Clear Channel would, in
> turn, spin off "smaller" stations (like, perhaps, KQKE or
> KNEW).
>
> Speculation, but interesting nevertheless.
>
> DJ
>

May I just say inside KGO WE were surprised too. It is the speculation of
the managment at the highest level of the station that they would most likley
break it up to cut their costs. Most of the investment folks don't think it's a very good deal for citadel either. As for the speculation that Disney needs the money for Pixar, Disney can Borrow Billions to do that trust me they are good for it. That's how they bought ABC in the first place.

If Citidel wants to become a player, this will do it for them. BUT YOU NEED TO KEEP THE STATIONS ! ABC has nothing but prime properties. SF, LA, NY, Chi. That is what makes you a player...But they seem very small time operators and all those places are expensive to run. But you must know that right ? I meen you should have done the due dilligance and seen the books.

And the Principal is Fyred Sullimon(sp)Mel Karmizans old partner at Infinity.
Hmmmmm

No matter what happens to the owership of KGO, Ronn has a 7 year deal Play him or pay him, Baxter just re-upped for three years, Burns and Wilson have about 2 more to go on their contracts. Not to mention the just signed AFTRA contract.
So, many people with many years will have to be paid off to leave.

But I'm sure in the hallowed halls of "The Mouse" the only phrase is greed is good, greed works. And why not? Disney gets 3 bil, and 50.1% of the new company.
They get to avoid the Long term Cap Gains by doing a Reverse Morris Trust, and they get a half interset in all of their just sold stations and the Citadel stations too. Nice in America ! KGO has had a long sucessful run, if CC or Citidel get their hand on it, things are gonna change, they always do.
As long as the listeners get their regular guys, no one cares.
But eventully the ratings start to slip, so you start to cut what you have not cut already, and the slid begins...It's a little tough to run a local talk station with a Computer, Just listen to the KQKE or KNEW. They are crap.

After 35 years of doing this for the finest sets of call letters and best mangers in SF I will walk away. Why? Because I'm tired of people who keep lowering the Bar every time they buy a station to accomodate their lack of funds, talent, and ideas...

A year from now it will still be called KGO, it just won't be KGO.

But somthing good will come of it. For instance
The experts on BA Broadcast will have somthing new to bitch about, and maybe
they'll hire the Doghouse to do the KGO Afternoon News so this group can participate too.

ABC Radio, The last Crown Jewel. "Tell it Goodbye"
 
KMKY

KMKY isn't part of this dumb deal. I'm very upset! Another heritage radio station down the tubes. :(






. Since when are Citadel or the Cumulus
> > > Group specialists in major market property operations
> and
> > > growth? Both companies focus on small and medium
> markets
> > as
> > > their whole value proposition.
> >
> >
> > There has already been speculation on other boards that
> > Citadel would immediately turn around and spin off some of
>
> > the major market stations, such as KGO in San Francisco,
> to
> > Clear Channel in order to make back some of the costs from
>
> > buying the ABC stations ... and that Clear Channel would,
> in
> > turn, spin off "smaller" stations (like, perhaps, KQKE or
> > KNEW).
> >
> > Speculation, but interesting nevertheless.
> >
> > DJ
> >
> Curious if Citadel would spin off KSFO and KMKY too?
>
 
> KMKY and the rest of the Disney stations are not part of the
> deal.

Nor are the ABC-owned ESPN Radio affiliates.<P ID="signature">______________


</P>
 
> > KMKY and the rest of the Disney stations are not part of
> the
> > deal.
>
> Nor are the ABC-owned ESPN Radio affiliates.

You are both correct but these outlets don't give Citadel a more attractive portfolio compared to the KGO's and WABC's. Radio Disney and ESPN are more of a benefit to Disney than Citadel (or any other groups really) because they are cross-promoting brands that Disney owns...

Not saying these stations don't make good money, but looking at the big picture for Citadel, the stations they WOULD get are a great asset to their portfolio when you take into consideration the possibility of selling themselves.
 
What about KSFO-560?

What about KSFO-560?
>
>
>
>
>
>
> . Since when are Citadel or the Cumulus
> > > > Group specialists in major market property operations
> > and
> > > > growth? Both companies focus on small and medium
> > markets
> > > as
> > > > their whole value proposition.
> > >
> > >
> > > There has already been speculation on other boards that
> > > Citadel would immediately turn around and spin off some
> of
> >
> > > the major market stations, such as KGO in San Francisco,
>
> > to
> > > Clear Channel in order to make back some of the costs
> from
> >
> > > buying the ABC stations ... and that Clear Channel
> would,
> > in
> > > turn, spin off "smaller" stations (like, perhaps, KQKE
> or
> > > KNEW).
> > >
> > > Speculation, but interesting nevertheless.
> > >
> > > DJ
> > >
> > Curious if Citadel would spin off KSFO and KMKY too?
> >
>
 
Re: KMKY Not Included?

> KMKY isn't part of this dumb deal. I'm very upset! Another
> heritage radio station down the tubes. :(


Are you sure that KMKY isn't included? The way I understood the offering, the Radio Disney *network* (programming, etc.) wasn't for sale because Disney would never give up the trademark rights and control over specific properties (like Mickey Mouse and other characters and properties that it merchandises).

In other words, Disney/ABC is planning to sell the station licenses, but will keep the programming network. They may sell KMKY, but they may also contract to have the programming continue on the station under its new owner.

Same thing with the ESPN Radio Network -- Disney would keep the programming service and the merchandising, but sell the stations.

DJ
 
Re: KMKY Not Included?

> Are you sure that KMKY isn't included? The way I understood
> the offering, the Radio Disney *network* (programming, etc.)
> wasn't for sale because Disney would never give up the
> trademark rights and control over specific properties (like
> Mickey Mouse and other characters and properties that it
> merchandises).
>
> In other words, Disney/ABC is planning to sell the station
> licenses, but will keep the programming network. They may
> sell KMKY, but they may also contract to have the
> programming continue on the station under its new owner.
>
> Same thing with the ESPN Radio Network -- Disney would keep
> the programming service and the merchandising, but sell the
> stations.

You know, I never understood it that way, although that would make GREAT sense.
 
Re: What about KSFO-560?

Who cares? I hope it goes back to MOR.












What about KSFO-560?
>
> >
> >
> >
> >
> >
> >
> > . Since when are Citadel or the Cumulus
> > > > > Group specialists in major market property
> operations
> > > and
> > > > > growth? Both companies focus on small and medium
> > > markets
> > > > as
> > > > > their whole value proposition.
> > > >
> > > >
> > > > There has already been speculation on other boards
> that
> > > > Citadel would immediately turn around and spin off
> some
> > of
> > >
> > > > the major market stations, such as KGO in San
> Francisco,
> >
> > > to
> > > > Clear Channel in order to make back some of the costs
> > from
> > >
> > > > buying the ABC stations ... and that Clear Channel
> > would,
> > > in
> > > > turn, spin off "smaller" stations (like, perhaps, KQKE
>
> > or
> > > > KNEW).
> > > >
> > > > Speculation, but interesting nevertheless.
> > > >
> > > > DJ
> > > >
> > > Curious if Citadel would spin off KSFO and KMKY too?
> > >
> >
>
 
Re: KMKY Not Included?

> > KMKY isn't part of this dumb deal. I'm very upset!
> Another
> > heritage radio station down the tubes. :(
>
>
> Are you sure that KMKY isn't included?

every trade report, as well as Eisner and Iger´s respective statements has said that the brand extensions are not part ot the deal, either the statons or the networks of ESPN and Disney.
 
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