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http://today.reuters.com/investing/...0032_RTRIDST_0_MEDIA-CUMULUS-ABC-UPDATE-3.XML
UPDATE 3-Cumulus out of ABC Radio sale after $2.6 bln bid
Wed Dec 7, 2005 5:35 PM ET
(Adds detail on Entercom, Citadel and KKR)
By Julie MacIntosh
NEW YORK, Dec 7 (Reuters) - Cumulus Media Inc. (CMLS.O: Quote, Profile, Research) bid $2.6 billion for Walt Disney Co.'s (DIS.N: Quote, Profile, Research) ABC Radio, but Disney said the offer was too low and has dropped Cumulus from the auction process, the company's top executive said on Wednesday.
"We were told we were hundreds of millions of dollars off and we are out of the process," Cumulus Chairman and Chief Executive Lew Dickey Jr. said. "It doesn't look good for us on that one."
Entercom Communications Corp. (ETM.N: Quote, Profile, Research), Citadel Broadcasting Corp. (CDL.N: Quote, Profile, Research) and private equity firm Kohlberg Kravis Roberts & Co. are still in the running, media industry sources have said. Emmis Communications Corp. (EMMS.O: Quote, Profile, Research), which had been involved in the auction, has now dropped out, several sources have said.
Dickey told Reuters on the sidelines of a media conference in New York that while his $2.6 billion bid proved unsuccessful, he still thinks Disney will find a buyer for the assets because it has moved so far along in the sale process.
The potential price and structure of a deal with Disney have complicated the ABC Radio sale process, which started on an informal basis this summer.
Disney is looking for at least $2.8 billion, sources say, a hefty price tag for radio industry buyers who are struggling to stanch negative growth and the loss of advertising dollars.
Disney also wants the deal to be structured as a "reverse Morris Trust," where it would spin off the radio assets and merge them into the winning bidder's company, giving Disney shareholders a half-stake in the new company to make the deal tax-efficient.
No. 2 U.S. radio operator Cumulus and a group of private equity firms in October agreed to purchase the radio broadcasting business of Susquehanna Pfaltzgraff Co., the largest privately-held U.S. radio broadcaster, for about $1.2 billion. Cumulus partnered with Blackstone Group, Thomas H. Lee Partners and Bain Capital on that deal.
Because Cumulus was interested in both radio businesses, Disney slowed its sale process and waited for Cumulus to wrap up Susquehanna to create a more robust auction, sources have said.
Dickey acknowledged on Wednesday that he "went full-bore" in pursuit of ABC Radio the day the Susquehanna deal was announced, and felt Cumulus and its backers had an excellent chance at winning.
"We viewed ourselves as the highest-synergy buyer," he said.
Now radio industry rivals Entercom and Citadel are left to fight for that title. Citadel, which is mostly owned by investment firm Forstmann Little & Co., has been hanging around the ABC Radio sale process since the start but hadn't been viewed as a potential lead bidder until more recently, sources said.
Buyout group KKR, which entered the process later, could have a hard time justifying the price Disney is asking, Cumulus' Dickey said.
Cumulus shares rallied slightly on the news in late-afternoon trade and closed 3.4 percent higher, up 41 cents at $12.44, on the Nasdaq. Shares of Disney closed 15 cents higher, up 0.6 percent, at $25.67.
UPDATE 3-Cumulus out of ABC Radio sale after $2.6 bln bid
Wed Dec 7, 2005 5:35 PM ET
(Adds detail on Entercom, Citadel and KKR)
By Julie MacIntosh
NEW YORK, Dec 7 (Reuters) - Cumulus Media Inc. (CMLS.O: Quote, Profile, Research) bid $2.6 billion for Walt Disney Co.'s (DIS.N: Quote, Profile, Research) ABC Radio, but Disney said the offer was too low and has dropped Cumulus from the auction process, the company's top executive said on Wednesday.
"We were told we were hundreds of millions of dollars off and we are out of the process," Cumulus Chairman and Chief Executive Lew Dickey Jr. said. "It doesn't look good for us on that one."
Entercom Communications Corp. (ETM.N: Quote, Profile, Research), Citadel Broadcasting Corp. (CDL.N: Quote, Profile, Research) and private equity firm Kohlberg Kravis Roberts & Co. are still in the running, media industry sources have said. Emmis Communications Corp. (EMMS.O: Quote, Profile, Research), which had been involved in the auction, has now dropped out, several sources have said.
Dickey told Reuters on the sidelines of a media conference in New York that while his $2.6 billion bid proved unsuccessful, he still thinks Disney will find a buyer for the assets because it has moved so far along in the sale process.
The potential price and structure of a deal with Disney have complicated the ABC Radio sale process, which started on an informal basis this summer.
Disney is looking for at least $2.8 billion, sources say, a hefty price tag for radio industry buyers who are struggling to stanch negative growth and the loss of advertising dollars.
Disney also wants the deal to be structured as a "reverse Morris Trust," where it would spin off the radio assets and merge them into the winning bidder's company, giving Disney shareholders a half-stake in the new company to make the deal tax-efficient.
No. 2 U.S. radio operator Cumulus and a group of private equity firms in October agreed to purchase the radio broadcasting business of Susquehanna Pfaltzgraff Co., the largest privately-held U.S. radio broadcaster, for about $1.2 billion. Cumulus partnered with Blackstone Group, Thomas H. Lee Partners and Bain Capital on that deal.
Because Cumulus was interested in both radio businesses, Disney slowed its sale process and waited for Cumulus to wrap up Susquehanna to create a more robust auction, sources have said.
Dickey acknowledged on Wednesday that he "went full-bore" in pursuit of ABC Radio the day the Susquehanna deal was announced, and felt Cumulus and its backers had an excellent chance at winning.
"We viewed ourselves as the highest-synergy buyer," he said.
Now radio industry rivals Entercom and Citadel are left to fight for that title. Citadel, which is mostly owned by investment firm Forstmann Little & Co., has been hanging around the ABC Radio sale process since the start but hadn't been viewed as a potential lead bidder until more recently, sources said.
Buyout group KKR, which entered the process later, could have a hard time justifying the price Disney is asking, Cumulus' Dickey said.
Cumulus shares rallied slightly on the news in late-afternoon trade and closed 3.4 percent higher, up 41 cents at $12.44, on the Nasdaq. Shares of Disney closed 15 cents higher, up 0.6 percent, at $25.67.