Seconds after Monday’s Closing Bell on Wall Street, Cumulus Media formally revealed what was largely considered the worst-kept secret at the NAB Show in Las Vegas.
Classic Rocker KLOS-FM 95.5 in Los Angeles, once a crown jewel of ABC Radio, is being sold to Meruelo Media.
But wait … there’s another deal that’s just been struck, and this involves a swap with Connoisseur Media involving four stations in the Lehigh Valley of Pennsylvania and two Cumulus stations in Southern Connecticut.
In Southern California, KLOS is being sold to the division of Meruelo Group that also owns KWHY-22 and KBEH-63 and venerable radio stations KPWR-FM “Power 106” and KDAY-FM 93.5 for $43 million.
That’s a bargain compared to what Meruelo paid Emmis Communications for Power 106.
It added radio stations KDAY-FM in Redondo Beach, Calif., and KDEY-FM in Ontario, Calif., in May 2014, acquiring them from Don McCoy’s Magic Broadcasting.
Meruelo is cash-rich. As RBR + TVBR reported in April 2017, Meruelo received $123,474,177 for giving up the spectrum associated with its KWHY-22, which has a channel-sharing arrangement in place. KWHY is the oldest continuously running Spanish-language TV station in the U.S.
SWIFT SOUTHLAND TAKEOVER
Under the terms of the agreement with Meruelo Media, the entity led by President/COO Otto Padron will begin programming KLOS-FM under a Local Marketing Agreement on Tuesday (4/16).
Moelis & Company LLC represented Cumulus as financial advisor in the sale of KLOS-FM to Meruelo Media.
This deal is expected to close in Q3 2019.
For those wondering if KLOS will be changing formats, you have nothing to fear.
In a release distributed Monday afternoon, Meruelo Group Chairman/CEO Alex Meruelo said, “KLOS 95.5 is one of the most iconic Rock stations in the world. We are thrilled to add this legendary brand to our Media Division.”
Padron added, “KLOS will be a crown piece in our strategically curated, L.A.-focused multimedia portfolio. As we’ve done with all our media properties, we will take full advantage of our deep local resources to grow the globally recognized KLOS heritage rock brand for generations to come.”
CONNOISSEUR’S A-B-E FAREWELL
The other big headline to come from Cumulus’ corporate office late Monday sees Connoisseur Media shedding 50kw Class B Classic Hits WODE-FM 99.9 “The Hawk” in Easton; Class A Alternative WWYY-FM 107.1 “Spin Radio” in Belvidere; and Class C WEEX-AM 1230 in Easton and WTKZ-AM 1320 in Allentown, which simulcast as “FOX Sports Lehigh Valley.”
In exchange of these stations, Connoisseur will be getting two prized possessions in its own backyard: 50kw Class B AC WEBE-FM 107.9 in Westport, Conn., and heritage Class B News/Talker WICC-AM 600 in Bridgeport, Conn.
The parties will begin programming each other’s respective stations under Local Marketing Agreements on May 1.
MVP Capital represented Cumulus as financial advisor in the swap with Connoisseur Media. Jones Day represented Cumulus as legal counsel on both this swap and the Meruelo deal.
BERNER EXPLAINS THE DEALS
Why is Cumulus making the swap with Connoisseur, and why is it exiting FM ownership in Los Angeles?
“These transactions are part of the continued execution of our portfolio optimization strategy,” President/CEO Mary G. Berner said. “Both transactions are accretive, and the sale of KLOS-FM to Meruelo Media at an attractive multiple allows us to generate substantial cash, which can be used to further pay down debt and invest in high potential business opportunities.”
Meanwhile, Berner says the Connoisseur Media swap “significantly strengthens our presence in Allentown and the Lehigh Valley.”
Indeed, with Spin Radio and The Hawk, Cumulus now has a powerful quartet of FMs in the Allentown-Bethlehem-Easton area to the north of Philadelphia, as it already owns AC WLEV-FM 100.7 and Country WCTO-FM 96.1. It creates a two-way race for supremacy between Cumulus and iHeartMedia — owner of WAEB-AM & FM and WZZO-FM.
For Warshaw’s group, the Westport-based Connoisseur, the addition of WEBE and WICC is huge, as those stations will join Rocker WPLR-FM 99.1 in New Haven, Bridgeport-based AC WEZN-FM 99.9, Urban WYBC-FM 94.3 in New Haven and Classic Rock WFOX-FM 95.9 in Southport, Conn., making Connoisseur a dominant player in Southern Connecticut.
In an internal memo sent to staffers on Monday, Berner explained, “As you know, portfolio optimization is one of our key strategies to position FORCE CUMULUS for long-term success. This includes strategically evaluating our collection of stations and adding stations where they can strengthen a winning (or potentially winning) market and, conversely, letting go of stations where it is more HABU to do so. In February we announced two value-enhancing station transactions and today, I’m pleased to announce two more.”