Chicago Radio: Cumulus Wants Merlin Deal Cancelled

With bankrupt Cumulus Media looking to pull out of a $50 million deal to buy WLUP 97.9 FM and WKQX 101.1 FM after four years at the helm, the Chicago rock stations could soon revert to their owner: Randy Michaels’ Merlin Media.

According to The Chicago Tribune, Michaelssaid Friday he is ready to take over the stations, if necessary, and promised listeners they would continue with their current rock formats, at least in the near term.

Randy Michaels

We are fully prepared to step in and operate the stations essentially as is,” Michaels said. “There are no changes being planned right now, other than behind the scenes.”

A bankruptcy judge is scheduled to rule Feb. 1 on motions filed Thursday by Atlanta-based Cumulus to reject a handful of “extremely unprofitable” contracts, including agreements to air Chicago Bulls and White Sox broadcasts on WLS-AM 890 and the deal to buy WLUP and WKQX from Merlin.

Cumulus has been operating WLUP and WKQX since January 2014 under a local marketing agreement with Merlin that included an option to transfer ownership of the stations. Cumulus paid Merlin a fee that escalated from $300,000 to $600,000 a month over four years, totaling more than $20 million since its inception.

In its filing Thursday, Cumulus said the stations have lost more than $8.4 million to date because expenses — including the monthly fees — exceeded revenues.

Merlin executed the option to sell the stations for about $50 million, based on a formula agreed upon in the 2014 contract, and filed a transfer application with the Federal Communications Commission on Oct. 24. Cumulus filed for Chapter 11 bankruptcy protection Nov. 29.

Michaels said he has no intention of withdrawing the FCC transfer application, which would require Cumulus to pay Merlin within five days of approval.

“That thing could pop any day,” Michaels said. “No one has opposed the application.”

Cumulus and Merlin have been engaged in discussions, but they have “not been able to arrive at revised terms,” Mary Berner, Cumulus’ CEO, said Thursday in a news release. Cumulus executives declined further comment.

On Friday, a source familiar with the situation said Cumulus would have to pay the $50 million to take ownership of the stations and has no intention of doing so.

Michaels said Cumulus has “not made a reasonable counterproposal,” but he did not rule out the possibility that the two sides could strike a revised deal before Feb. 1.