It’s a potentially monumental deal for the radio industry, and one that could herald a new era for broadcasters some 25 years after the IPO boom put AMs and FMs at the mercy of investors rather than programming and sales wizards.
Cumulus Media has received an unsolicited privatization bid from a consortium led by the founder and CEO of Connoisseur Media.
The company led by Mary Berner has commented on the offer. And, it is reviewing the proposal.
WARSHAW PACT
At 3:28pm Eastern on Thursday, all seemed like just another ordinary trading day on the Nasdaq for Cumulus Media stock. Then, all of a sudden, shares surged in value.
By the Closing Bell, an incredible 39.9% jump in price was seen. What happened?
Investors got a hold of a Reuters report linking the head of Connoisseur Media to a buyout bid of the audio media content creation and distribution company that includes Westwood One.
On average, CMLS’s trading volume is just 39,237 shares. On April 14, it jumped to 764,223 — all based on a report distributed at 3:30pm Eastern from Reuters written by contributors Greg Roumeliotis and Dawn Chmielewski.
According to the two reporters, “A consortium led by U.S. radio station industry veteran Jeff Warshaw has offered to acquire Cumulus Media for close to $1.2 billion, including debt.” They cited people familiar with the matter.
RBR+TVBR contacted Warshaw for comment one hour after the report first surfaced. “I can’t comment. I’m sorry,” he said via text communication.
The Warshaw-led consortium would take Cumulus private at a per-share value between $15 and $17.
That’s a nice premium, and explains the big jump at the end of Thursday’s session.
In a statement e-mailed to RBR+TVBR, a Cumulus Media spokesperson confirmed receipt of “a letter with respect to an unsolicited, non-binding, highly conditional indication of interest. Consistent with its fiduciary duties and in consultation with its financial and legal advisors, the Cumulus Board of Directors is reviewing the letter.”
As the head of Connoisseur Media, Warshaw oversees a more compact radio broadcasting company than in recent years, with stations in Maryland, New York and Connecticut. In years past, other markets included Billings, Montana.
The Cumulus buyout offer is particularly intriguing, as the company led by CEO Mary Berner in April 2019 engineered a deal involving a swap with Connoisseur Media. It involved four stations in the Lehigh Valley of Pennsylvania and two Cumulus stations in Southern Connecticut.
That transaction saw Connoisseur Media shed 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 got 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.
MVP Capital represented Cumulus as financial advisor in that swap with Connoisseur Media.
Now, FORCE CUMULUS has its eyes on MVP Capital’s new parent, Houilhan Lokey, and brokers Bill Fanning and Elliot Evers as Berner, CFO Frank López-Balboa and the Cumulus C-Suite ponder what could be a major deal just in time for the NAB Show — bringing a new spark to AM and FM in Las Vegas.
A Cumulus Media spokesperson confirmed receipt of “a letter with respect to an unsolicited, non-binding, highly conditional indication of interest. Consistent with its fiduciary duties and in consultation with its financial and legal advisors, the Cumulus Board of Directors is reviewing the letter.”
The 2019 swap wasn’t the first to involve Warshaw, or Cumulus. Today’s Connoisseur Media is the second incarnation of the radio broadcasting company. In October 2000, the original Connoisseur completed the sale of 35 stations in nine markets to Cumulus Media — then-headed by Lew Dickey Jr. — for $257.8 million in cash. The deal took 10 1/2 months to complete, based on the original transactions filing date with the Commission.
As reported by Radio & Records in October 2000, Cumulus’ closing of the Connoisseur deal wasn’t easy. To facilitate the transaction’s completion, Cumulus received $68.9 million from iHeartMedia predecessor company Clear Channel Communications as part of a previously announced 30-station transfer.
Financial markets are closed in observance of Good Friday and, informally, the Passover holiday which begins at sundown. In after-hours trading CMLS at 10:07am Eastern was up another 2.7%, to $14.60. That puts Cumulus shares at their highest value since late 2019.
