Cumulus buying Merlin Media’s WLUP, WIQI


Cumulus Media is buying two of Merlin Media’s last trio of stations in the Chicago market. They include Classic Rock WLUP-FM (“The Loop”) and Adult Hits WIQI-FM (i101). Cumulus also owns Classic Hits WLS-FM and Talk WLS-AM in Chicago. The moves gives Cumulus a much stronger position there and three good Class Bs in the market. So it’s a heck of a cluster now in a major market.

Cumulus CEO Lew Dickey tells RBR-TVBR: “This is an important transaction for us as we continue to gain scale in major markets through the acquisition of premium brands.”

Before the deal is done and approved by the FCC, Cumulus will LMA the stations. The third station, which Merlin operates in an LMA, WKQX-LP (Q87.7), will move its Alternative format to 101.1 mHz next week. The two will simulcast for 45 days. i101 will be retired and WLUP will keep its format. Since WKQX is actually owned by a hedge fund manager in LA, Merlin will likely find someone to take the LMA of that station over, we’re told. They will then “repurpose” it. Either way, per FCC rules, that frequency will be retired across the nation in 2015.

No immediate moves to bring a NASH FM Country station onto one of these frequencies. At this stage, Cumulus just launched NASH in Detroit, so they are taking it slow–for at least six months.

We spoke to Lew about moving WIQI/WKQX to more of an Indie Rock brand to gather younger demos and to provide more music discovery than a tight, typical Alternative playlist. We have heard Cumulus will be creating a curated Indie Channel on Rdio. The two might be able to work in tandem as a radio-internet play that could revolutionize radio in Chicago–and beyond. If anyone can innovate, it will be the Dickey brothers.

RBR-TVBR observation: The Dickeys are now darlings of Wall Street for the radio industry–and that helps bring much-needed investment into the medium. In 2013, Cumulus created $1.2 billion of shareholder value. That is considerably more than all of the other public radio companies combined. It’s a large liquid cap market cap play now for the company. With the refi Cumulus just completed, out of 250 media/telco companies operating in the industry, the company is in the Top 10% or in the Top 25 on the list in terms of weighted average cost of debt among large and mid-cap companies. So the balance sheet at Cumulus is looking good.
Now, as to Randy Michaels and Merlin Media’s demise. Is this about small media companies like Merlin battling unsuccessfully to compete in large markets?  Maybe, maybe not. Randy could have done something far more predictably successful and made the economics work. While a bigger company might have been able to buy 3 major markets and hang in longer, we can’t necessarily say Randy sold his stations in NYC, Philly and Chicago is out because Merlin is a small company. We’re big fans of Randy but maybe there was too much bravado in taking on too much risk: Three major markets and innovative formats in a weak economy.