Lewis W. Dickey Jr. is perhaps one of the most polarizing individuals in the broadcast radio business. Yet, the co-founder of the second-largest radio company by number of stations, Cumulus Media, has officially been out of the industry since March 23.
Is Dickey plotting a return to AM and FM station ownership? Speculation is running high among media brokers and high-placed industry observers who spoke with RBR+TVBR that Dickey’s newest entity, Modern Media Acquisition Corp., was designed expressly for a methodical merger.
And, Cumulus has been at the center of the speculation, leading to a variety of strong reactions as to what this would mean for the company that’s just embarked on a long road to recovery, and for the entire broadcast radio industry.
Until this week, Dickey remained largely off of the media industry’s radar. His Modern Media Acquisition Corp. was certainly busy, however—even though its website URL points to a GoDaddy holding page and is not yet live.
Then, on May 17, Modern Media made a big revelation: It completed an Initial Public Offering of 20.7 million units, priced at $10 a share. Now trading on Nasdaq as “MMDMU,” Modern Media is a company with $207 million in gross IPO proceeds looking for a party to merge with. In fact, that’s the only purpose Modern Media exists.
In its own words, Modern Media “is a blank check company formed for the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, reorganization, recapitalization or other similar business combination with a target company.”
Furthermore, Modern Media “intends to seek a target company with an enterprise value of approximately $500 million to $1.5 billion.”
For one industry insider who requested anonymity, Cumulus is Modern Media’s No. 1 acquisition target.
“I’m hearing this from reputable sources, and none are within Cumulus or within Lew’s inner circle,” the source notes. “The tea leaves seem to indicate that, yes, Cumulus is in Lew’s sights. You do this sort of thing to do a takeover, buy out debt, or a reorganization.”
The word “reorganization,” one that Modern Media uses, is key fuel for industry conversations occurring across the C-Suites.
“There’s an opportunity here … if you can flush out the debt,” says George Reed, Managing Partner at Media Services Group. At the same time, Reed expresses doubt that Modern Media’s primary purpose for its existence is to get Dickey back in charge of a company with myriad challenges that many credit him for.
“It would surprise me if Lew planned to reenter the radio business,” he says. “That said, the timing of the SPAC is curious.”
A SPAC, or special purpose acquisition company (SPAC), is a type of investment fund that allows public stock market investors to invest in private equity type transactions, particularly leveraged buyouts.
Reed continues, “Cumulus’ equity value is next to nothing, and Lew literally has a blank check.”
Another high-level media broker says he’s spoken to Dickey, and notes that “everything is possible.” But, he focuses on the word possible and has his doubts about a Cumulus deal.
“Lew’s partners in Modern Media know print, but these partners know all sorts of stuff,” the media broker says.
Should Modern Media swoop in and capture Cumulus, one should not think that such a move would “save” Cumulus, this broker asserts.
“It would refresh the company, with a fresh balance sheet,” he says. “This would happen with billions of dollars of debt flushed, leading to a very poor outcome for the lenders.”
Another high-placed industry observer can confirm that key broadcast radio executives have heard, and are talking, about Dickey’s next move. Cumulus is widely regarded among these C-Suiters as his top target.
This observer, however, believes his return to Cumulus would have devastating consequences.
“It’s one of the dumbest things I’ve ever heard,” this observer notes on the grounds of anonymity. “It would be the worst thing for everyone and terrible for the radio industry.”
Why? Cumulus has “toxic assets,” the industry observer believes. “The mega-market assets are under water, and Lew had delusions of grandeur. He was obsessed with them, and then took his eye off the ball of Cumulus’ smaller markets. In doing so, he tanked the company. My fear is that this is true … there’s too much smoke for there not to be a fire.”
Attempts to reach Dickey by RBR+TVBR prior to Friday’s editorial deadline were unsuccessful; his personal email, telephone number and home address were revealed on an ICANN WhoIs internet search.
Thus, there’s only hearsay as the man who helped launch Cumulus two decades ago resurfaces in headlines seen across the radio industry’s trade publications.
The chatter isn’t all negative.
Frank C. Kalil, founder of leading media brokerage Kalil & Co., has been in the media brokerage business for over 40 years. Asked if he believed Dickey was ready to capture Cumulus, Kalil spoke fondly of Dickey.
“I became a strong admirer of the character of Lew Dickey when, years ago, recognizing that an impending marriage was not the right thing for anyone, he had the courage to call it off the night before the wedding,” Kalil says. “Now, as an ardent admirer of his business acumen, my belief is confirmed in that he put forth an IPO in a company which has as his only asset, cash. And now, the stock in Modern Media Acquisition Corp. is selling for more than its net worth! It would appear that I’m not the only admirer of integrity and ability.”
It’s been an interesting two years for Dickey. In late September 2015, with radio industry leaders gathered for the first day of the 2015 Radio Show in Atlanta, word spread like wildfire among attendees that Lew Dickey and his brother, EVP/Content & Programming John Dickey, had been “forced out” and “fired.”
Lew Dickey was replaced by current CEO Mary Berner but remained a key shareholder and Cumulus board member, with 13.5% of the company’s voting control as Cumulus’ vice chairman.
That changed on March 20, 2017, when Dickey made a quiet and official departure from Cumulus’ board. In a form 8-K filing with Securities and Exchange Commission, Dickey notified Cumulus that he was resigning from the board “to pursue other professional interests.”
It’s now loud and clear that those interests could see him once again at the helm of a rebooted Cumulus.
Wall Street investors seem to think so. At 2:17pm Eastern on Friday (5/19), Cumulus shares had surged by nearly 21%, to 47 cents, as Modern Media shares were up 0.1%, at $10.15. At 2:43pm Eastern, CMLS propelled ahead 34.5%, to 52 cents.
While Cumulus’ Q1 results indicate the company is embarking on a long but positive turnaround, the sharp jump only fuels talk that Modern Media is ready to start talking.
Meanwhile, while Lew Dickey’s exit marks the end of his involvement with the company, the Dickey family retains a strong relationship with Cumulus. John Dickey succeeded him on the company’s board.
A Sept. 2011 stockholders agreement codified by Cumulus, the Dickeys and Crestview Radio Investors — made in connection with the completion of Cumulus’ acquisition of Citadel Broadcasting — allows one member of the Dickey family to hold a seat on the board of directors.
If rumors become reality, the Dickey family could soon reemerge as the leaders of a company it founded and, as many will say, floundered. Veteran Chicago media industry journalist Robert Feder in October 2015 penned a column with the headline “Can Cumulus Media overcome the Dickeys?” A country music publication led its coverage of Lew Dickey’s ouster as Cumulus CEO by calling him “embattled and polarizing.” The New York Times stated in the headline for its story on his departure as Cumulus CEO that Dickey’s exit came with the company’s stock price down 80%.
In the 12 months that passed since those difficult day, Lew Dickey reemerged in September 2016 — as an author.
His work? “The New Modern Media: Remaking Media for a Mobile Culture,” available exclusively through Amazon.
In an interview with Streamline Publishing co-owned publication Radio INK, Dickey said, “It’s a comprehensive look at disruption, strategy, threats and opportunities. It was written for anyone who works, invests or covers media and advertising.”
Could it also point to what Modern Media, the company, is up to?
It appears that’s in Dickey’s next chapter, which is just about to be written.
RBR + TVBR
Radio + Televison Business Report values editorial sources across the broadcast media industry. Anonymous sources are infrequently used in RBR+TVBR reporting and only done so when entrusted in conversations with key individuals highly active in the radio or television industries.