Price for WFME-FM: It’s complicated


CumulusThe paperwork has finally been posted at the FCC for the sale of WFME-FM from Family Stations to Cumulus. It turns out it’s not just a sale, it’s a swap with cash attached, and there are contingencies which can raise the price by millions of dollars.

The basic deal is this: Cumlus gets WFME. Family Stations gets $40M, as reported by Crain’s New York Business, and it also gets WDVY-FM Mount Kisco, an upstate Class A that puts a signal over the Stamford-Norwalk CT market but does not get into New York City.

But wait – there’s more.

If Cumlus is successful in moving WFME into any one of the five boroughs comprising the Big Apple as a Class A or B1, then Family gets an additional $8.5M.

If Cumulus moves it into one of the five boroughs with better than Class-B1 status, the bonus paid to Family Stations jumps to $10M.

Meanwhile, of Family Stations strikes a deal to sell WDVY, it can reduce the bonus payment owed by Cumulus in the event it’s able to move WFME into the city. An example included in the contract posited a WDVY resale price of $2.5M, which would knock $1M off whichever bonus is applicable.

The deal provides for each party to retain rights to the call letters involved – in other words, WFME stays with Family and WDVY stays with Cumulus.

RBR-TVBR observation: This is one of those odd situations where the answer to the question “which price prediction was right” is sorta kinda “yes – they’re all right.” But RBR-TVBR was arguably “righter” than a mainstream news outlet.

We noted Crain’s $40M report. If the $2.5M price for WDVY suggested in the contract pans out, and Cumulus is successful moving the Newark stick into the Apple as a B1 pans out and pays Family $7.5M, that would put the value of the deal at $50M – exactly with RBR-TVBR predicted.
If all this happens with the exception that Cumulus gets a Class B move approved, the price would be $52.5M, smack between RBR’s prediction and the $55M predicted by Hoffman Schutz exec David Schutz.

We thought the Crain’s price seemed a little low – but if WFME remains stuck in Newark, it will be the winner of this price prediction exercise.