Cumulus Improves Ad Demos With Merlin Stations

Cumulus Media Inc., which owns 465 radio stations across the U.S., is more than doubling its reach in Chicago through a deal under which this week it started operating WLUP-FM “97.9 the Loop” and WIQI-FM, formerly known as Q101, and will likely buy the stations.

According to chicagobusiness.com, Cumulus reached the agreement with Chicago private-equity firm GTCR LLC, majority owner of the two stations by way of its interest in Merlin Media LLC, the company led by former Tribune Co. CEO Randy Michaels.

Cumulus will now reach “several” million homes in the Chicago market, compared with less than half that by owning just WLS-FM and WLS-AM, said Lew Dickey Jr., chairman and CEO of the Atlanta-based media company.

“The name of the game in national advertising is scale, so we're expanding our footprint,” Mr. Dickey said in an interview.

Not only will operating the two additional Chicago stations expand the company's reach with listeners, it also will let Cumulus tap more deeply into the younger, coveted 25-to-54-year-olds market, Dickey said.

Lew Dickey

An industry executive familiar with the pact said it's a four-year agreement that could allow Cumulus to buy the stations as soon as next year.

Industry broker Robert Heymann, who leads the Chicago office of Jacksonville, Fla.-based Media Services Group Inc., says he could see each station attracting a price in the range of $30 million to $40 million. Based on his sale of an FM station back in 2001, he noted that prices have dropped about 80 percent over the past decade, largely due to new Internet radio competition.

Donna Baker, who has been overseeing the WLS stations, will lead all three Cumulus stations as the market manager, Mr. Dickey said.

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