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Cumulus and Univision Speculation? Plus Cox

M

Mediafrog+

Looks like speculation is flying about Cumulus acquiring some or all of the Univision Radio stations (won't provide links to keep the mods happy, but Google is your friend.)

One of the spotlights is on Houston, where Cumulus has standalone KRBE, but Univision has four FMs. A combination would fit the market cap quite nicely. Sure would be a turnaround from all the predictions of Cumulus exiting the market and KRBE going to either Entercom or Cox.

Speaking of Cox, I'm sure everyone has seen the news about the Cox TV group. Nothing currently involving the radio properties, but you gotta wonder, especially with four Cox FMs in town.

Thoughts on either of these?
 
One thing I don't expect is for Cumulus to go into more debt again to buy radio stations. There's no question that bankruptcy is not fun, and I doubt they went through it just to come out an acquire more debt. However, as a result of the bankruptcy, the newly reformed Cumulus Board has someone from Univision on it. So that's partly where this rumor is coming from. Yes, the companies fit well together, yes Univision has its own financial problems, yes it's just more traditional media, but there may be a way for the companies to share management and finances without an actual sale taking place. So that may be what's in the works, and yes, Houston is a market that would fit very well.

As for the Cox story, it's very vague. To read what the CEO says, he's looking for some kind of strategic partnership to help grow the company. The media business has changed with companies like Comcast and AT&T now owning some traditional media like TV networks and cable channels. Cox has a problem that is similar to CBS, in that it has owned its properties for a very long time, and would have to pay some crushing capital gains taxes on any sale. So they're looking for some creative way to merge or partner without actually selling anything. You could see the famous Reverse Morris Trust again (CBS used it with Entercom). Or you may simply see a traditional merger with a bigger, more diversified company.
 
Speculation about a Cumulus/Univision deal began about six weeks ago as Cumulus was exiting bankruptcy. I would’ve thought you were on something and would’ve been upset you didn’t share any with me if you'd told me that in early June. It seems more plausible now.

Cumulus has occasionally operated Spanish-language stations, usually on AM and with programming outsourced to other providers. However, Cumulus also no longer runs every station’s programming through corporate. Local markets make their own decisions and only go to corporate if necessary. That’s a lot more conducive to taking on programming you’re not familiar with.
 
TheBigA said:
However, as a result of the bankruptcy, the newly reformed Cumulus Board has someone from Univision on it. So that's partly where this rumor is coming from. Yes, the companies fit well together, yes Univision has its own financial problems, yes it's just more traditional media, but there may be a way for the companies to share management and finances without an actual sale taking place. So that may be what's in the works, and yes, Houston is a market that would fit very well.
Click to expand...

Andy Hobson is not "from Univision" as he has not been there for over 3 years; he's a partner at Innovatus Capital Partners, a private equity firm.

I can see, though, how people would make a connection. But the fact is that Andy, a very competent finance guy, is not per se a Spanish language radio operator... he was not involved in the product or sales.

The problem with the Cumulus speculation is that, unless they take almost all the radio division of Univision, taking only the biggest signals in select markets would leave the rest of the Univision group significantly damaged and not competitive.
 
DavidEduardo said:
I can see, though, how people would make a connection. But the fact is that Andy, a very competent finance guy, is not per se a Spanish language radio operator... he was not involved in the product or sales.
Click to expand...


My take on this is it's all financial. What Cumulus needs is more scale, more audience, more inventory to sell. They have the programming and sales people. They don't need Andy for that. They just want access to the facilities and the markets for inventory, and have the Cumulus people handle the content and sales. IF this rumor is true. Because in my opinion, Cumulus doesn't want to actually buy anything. They just want to manage it.
 
The current turmoil going on with the Univision staff doesn't look bright. Although this is all speculation and not sufficient facts yet. Rather than Univision selling stations while Cumulus buying these stations and flipping them to English formats.

Realistically, I see more Cumulus aiming into the Hispanic market and expand their target audience by opening up a "Hispanic" division group. Some of the talents that currently work with Univision Communications will likely move over to Cumulus. It is rather more of a smarter move, just how iHeartMedia Latino operates their Spanish-language stations. Cumulus can also do the same.
 
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