An issue still hanging on from Citadel Broadcasting’s Chapter 11 restructuring was the status of intellectual property and some financial issues stemming from Citadel’s acquisition of ABC Radio from The Walt Disney Company in 2006. That $2.7 billion deal didn’t work out so well for Disney shareholders, whose new Citadel shares were worthless when the company filed bankruptcy in December 2009.
But Disney still had various relationships with Citadel, including various lease assignments for the radio stations, and Disney had filed a $14.2 million claim against the Citadel bankruptcy estate – mostly an $11.2 million working capital claim. At least as far as Disney was concerned, the contracts related to those claims were part of a package with the rights to the intellectual property of the radio stations, including trademarks, Internet URLs and such, which are important to Citadel’s operation of the stations. No doubt they will also be important to Cumulus Media in taking over operation of those stations.
Removing that dispute as an obstacle to the Citadel-Cumulus deal, Citadel has come to terms with Disney. Citadel gets the intellectual property licenses and the contracts related to the ABC Radio sale are officially “deemed rejected” by the bankruptcy court. As for the financial terms, Citadel must hand over $2 million in cash to Disney and make available $1.5 million in advertising on Citadel stations at no charge to Disney. That advertising credit to promote Disney/ABC TV shows, movies and such must be used within a year.