Bankruptcy: Cumulus Wants To Cancel Contracts

Cumulus Media Inc. today announced that it has filed motions with the United States Bankruptcy Court for the Southern District of New York requesting authority to reject a handful of extremely unprofitable contracts, including those with the Chicago White Sox and the Chicago Bulls.

Cumulus is also seeking to reject its agreements with Merlin Media, as the Company has determined that the legacy terms to acquire WKQX-FM and WLUP-FM in Chicago for approximately $50 million is significantly in excess of the stations’ market value. In total, the Company is seeking to reject fewer than 20 contracts out of more than 15,000 agreements.

According to Cumulus, the company operating the stations formerly owned by Randy Michaels, WLUP-FM and WKQX-FM in Chicago have lost $8.4 Million since 2014. Cumulus says the two stations, net of LMA fees to Michaels, lost $1.5 million in 2014, $800,000 in 2015, $1.1 million in 2016 and $5.1 million in 2017. The LMA fee Cumulus was paying to Merlin was $600,000 per month.

The Court is scheduled to rule on the Company’s motions at a hearing on February 1, 2018.

Mary Berner

Mary G. Berner, President and Chief Executive Officer of Cumulus Media Inc., said, “As part of our operational turnaround, we have been focused on taking proactive steps to address unprofitable areas of our business. We are taking this action because the economic terms of these legacy contracts guarantee that we lose money and, as such, continuing them in their current form is not in Cumulus’s best interests.  In many of these situations, we have been engaged in discussions with the counterparties to these agreements for months and have not been able to arrive at revised terms that work for both Cumulus and the counterparty. We will continue to take the necessary steps to strengthen our competitiveness and position Cumulus for continued profitability.”

Berner continued, “These contracts represent only a tiny fraction of the thousands of contracts that Cumulus has, and our relationships with the vast majority of our partners remain strong. We look forward to continuing to deliver premium content choices to the 245 million people we reach each week across our collection of stations and Westwood One affiliates."