The reason these stations are underperforming is not because of ownership, but because of what's on the air.
I disagree; it's due to a combination of the two.
Big difference: KSWD is an inferior signal, with low power despite being on Mt Wilson. A better reference would be the recent KXOS and KPWR sales, putting a parity signal in LA at the $80 million level.
I used KSWD as a reference point because, in that instance, the existing format was being flushed by the purchaser. Because of the format/programming issues you noted, I presume an acquirer would flush WLUP's existing format at a minimum and perhaps both formats. It takes time to build a new format and sustain ratings & billing momentum. If one uses a discounted cash flow model, dings cash flow pretty hard in the first couple years, and assumes a three to five year period to reach stabilized cash flow, I think a price in the mid $40's can be comfortably supported.
There is certainly a decent chance that in a non-distressed sale scenario, a buyer might be willing to pay more. Say, closer to $60 million for the two stations. However, it is clear to the entire universe that Merlin Media is desperate to sell. As such, they are not going to receive top dollar.
I also do not see how 5400 watts omnidirectional from 889 meters HAAT can be an inferior signal to 4000 watts from 425 meters HAAT unless engineering problems are present. True, much of KKLQ's signal goes into the mountains. However, much of WLUP's signal (and WKQX's signal) goes into Lake Michigan. How many people live within the 65 dBu of KKLQ (the former KSWD) compared to WLUP & WKQX? And how does the per capita income (or if you prefer, total consumer retail spending) within KKLQ's range compare to that of WLUP & WKQX?
The First Amendment to LMA (minus the annexes) can be read here:
http://document.epiq11.com/document...11&projectCode=CUI&docketNumber=396&source=DM
Key points:
--The $15,000 monthly LMA fee is not a flat fee; the $15,000 figure is actually a cap as to Reimbursement Obligations that Cumulus must pay Merlin. If Merlin's reimbursable out-of-pocket expenses are less than that amount, then Cumulus is only obligated to pay Merlin that lower amount. (So, the trade press' reporting on this point was not entirely accurate. Shocking, right?)
--It is unclear what is included within the Reimbursement Obligations; the Annex II where such obligations are defined was not included in the document filed with the court.
--If either side defaults under the terms of the LMA, a 10-day cure period shall be afforded.
--Licensee (Merlin) can terminate the agreement with 10-days' advance written notice should it enter into an agreement to sell the stations
--If Merlin does sell the stations to another party (or decides to keep the stations for itself), Cumulus will have the final say as to which employees stay with Cumulus.
--If Merlin intends to sell or assign the stations to a third-party, then Merlin needs to provide 24 hours' advance notice to Cumulus prior to execution of such transaction. (Presumably, this effectively gives Cumulus a chance to make a counteroffer.)
--Of note, in the event Merlin does sell the stations to a third party (or chooses to LMA them to a party other than Cumulus or in the highly unlikely event Merlin chooses to keep & program the stations itself), nothing in the First Amendment to LMA prevents any buyer or successor programmer from putting on a format that directly competes with any remaining Cumulus station.
By the way, I really liked Rex Radio's post before mine; he makes some great points. Kudos.
