Chicago Radio: Cumulus, Merlin Reach New Agreement

Cumulus Media Inc. has announced that it has reached an agreement with Merlin Media regarding the operation and sale of WKQX 101.1 FM and WLUP 97.9 FM in Chicago.

Under the terms of the agreement, Cumulus will no longer be required to acquire the Chicago stations for approximately $50 million, and Cumulus and Merlin will temporarily extend the local marketing agreement under which Cumulus has been operating the stations while Merlin conducts a sale process for the stations.

Cumulus expects operations at the stations to continue uninterrupted during the sale process.

“We’re pleased to reach this mutual agreement, which establishes a clear path forward for these stations and our employees in Chicago following months of negotiations with Merlin,” said Mary G. Berner, President and Chief Executive Officer of Cumulus Media Inc.

Mary Berner

“We continue to be interested in permanently acquiring these stations on economic terms that make sense for our business. In the meantime, as we have for the past several years, Cumulus will continue to operate WKQX-FM and WLUP-FM while Merlin seeks a new owner. Importantly, nothing is changing in the near-term. It is business as usual for team members, advertisers and partners, and we look forward to achieving a favorable outcome for all parties involved.”

The agreement with Merlin provides for an approximately three month extension of the local marketing agreement with additional extensions thereafter, exercisable upon mutual agreement by Cumulus and 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.