Radio buyout a boost for TV stocks
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Another radio company is going private, with Cumulus Media CEO Lew Dickey, his family and Merrill Lynch Global Private Equity teaming up to take the radio company private for 1.3 billion bucks. The deal announced before the market opened yesterday will pay Cumulus shareholders 11.75 per share, a 40.4% premium to Friday's closing price.
According to Bear Stearns analyst Victor Miller, that should be reassuring to shareholders of Nexstar and LIN Television, which have put themselves up for sale. "Last week, LIN and Nexstar stocks decreased by 1.41or 7.4% and 0.49 or 3.7% respectively on fears of the ability to raise the appropriate level of leverage. The ability to lever Cumulus at nine times plus, and with the reality that TV offers more robust revenue streams, retrans, and Internet, this should help support valuations here as well," Miller said in a note to clients after the Cumulus deal was announced.
According to Bear Stearns analyst Victor Miller, that should be reassuring to shareholders of Nexstar and LIN Television, which have put themselves up for sale. "Last week, LIN and Nexstar stocks decreased by 1.41or 7.4% and 0.49 or 3.7% respectively on fears of the ability to raise the appropriate level of leverage. The ability to lever Cumulus at nine times plus, and with the reality that TV offers more robust revenue streams, retrans, and Internet, this should help support valuations here as well," Miller said in a note to clients after the Cumulus deal was announced.
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