Citadel now owns ABC Radio


After months and months of preparation and waiting for regulatory approvals, the 2.5 billion bucks acquisition of ABC Radio by Citadel Broadcasting was apparently uneventful. Disney and Citadel finally confirmed in a joint announcement about 6:30 pm ET yesterday that the deal had been closed, but RBR had begun getting subscription changes hours earlier from ABC Radio folks switching to their new Citadel email addresses. Farid Suleman is now CEO of the third highest billing US radio company, with ABC's 22 big market stations (plus its network) now added to what had been primarily a middle market group.

This was a stock-swap merger, but some cash was moving around. As ABC Radio Holdings departed the former mother ship yesterday, it left behind 1.35 billion in cash in the Disney coffers and carried its new debt to Citadel. Meanwhile, pre-merger Citadel shareholders are in line for a one-time dividend of 2.46 for each share of stock they own. That was to adjust the balance between the two companies so that Disney shareholders now own about 58% of Citadel – 151,707,199 newly minted shares, to be precise. It was essential that they ended up with a majority of the merged company to make the transaction tax-free.

ESPN Radio and its O&O stations remain at Disney, as do Radio Disney and its O&Os.

RBR observation: Some readers have asked what the relationship will be post-merger between Disney and Citadel, since Disney shareholders now own more than half of Citadel. Not much. Disney itself has no ownership stake at all in Citadel. All of the new Citadel shares are being distributed to individual Disney shareholders. For each share of Disney stock, you still own that stock, but you also receive 0.0768 shares (the final, official calculation) of Citadel to do with as you wish – hold, sell, or buy more. So, if you own 100 Disney shares, you now also own seven Citadel shares, plus 68% of another Citadel share. According to yesterday's announcement, fractional shares are going to be sold in the open market by the Wall Street distribution agent and the cash proceeds delivered to the shareholders who would have received those fractional shares. Citadel has rights to use the ABC Radio name and radio rights to some ABC News content. Otherwise, the companies are completely separate.