Cumulus Media folding CMP into public company


Cumulus Media Partners (CMP) is no longer going to be separate from Cumulus Media, which manages the group of 32 larger market stations already. Cumulus Media announced Monday evening (1/31) that it has cut a deal with its partners to acquire the portion of CMP that it doesn’t already own in an all-stock deal.

Under the deal, the private equity funds that currently own most of CMP’s equity – Bain Capital Partners, The Blackstone Group and Thomas H. Lee Partners – will receive a total of a little over $69.5 million in Cumulus Media stock (at Monday’s closing price of $3.82). The transaction, including $660 million of assumed debt, places an enterprise value of approximately $740 million on the CMP group. The bulk of the stations were acquired from Susquehanna Media for $1.2 billion in a 2005 deal that closed in 2006. The announced multiple on the new deal is 7.8 times CMP’s estimated 2011 station operating income. 

An equity for debt swap in 2009 fixed what had become an over-leveraged balance sheet for CMP, but reduced the equity share of Cumulus Media itself in the big market group. So, Cumulus Media is now going to issue about 9.9 million shares to buy the 75% of CMP that it doesn’t currently own. But it is also going to issue about 8.3 million shares to acquire the outstanding warrants issued in that 2009 refinancing by a CMP subsidiary.

“We are pleased to announce the combination of Cumulus and CMP after having run these two radio groups as essentially one company for the last five years. CMP has long been one of the most coveted sets of assets in the radio industry and we expect it will immediately become an important driver of growth and profitability for the Company,” said Cumulus Media CEO Lew Dickey (pictured) in announcing the deal. He said the combination of the two companies will improve revenue growth, improve operating margins and increase free cash flow.

In his most recent quarterly report to Wall Street, Dickey had noted revenues for CMP, the large market group, grew 6% in Q3 while Cumulus Media, operating in medium and small markets, saw revenue growth of only 3.6%.

RBR-TVBR observation: This is an all-stock deal, so it shouldn’t hinder Dickey from bidding for acquisitions, such as his offer for Citadel Broadcasting. He still has $500 million of dry power from his investment partnership with Jeff Marcus at Crestview Partners.