Report: Cumulus To Continue Sell-Off To Reduce Debt

After announcing four deals in two months as part of its “portfolio optimization” strategy, Cumulus Media appears poised to strike more sales or swaps in the coming months, reports InsideRadio.

“Every top 15 market cluster owned by Cumulus, other than Dallas, is on the block,” says one broker who has connections to the company. With four FMs and three AMs, Dallas is the company’s top billing market with a reported $80 million in annual revenue, making it off-limits for potential buyers. But apart from Dallas, “most, if not all, will go in the next six months,” this broker predicts, adding that swaps are preferred, but outright sales that will pay down debt are also being looked at.

Cumulus CEO Mary Berner

Cumulus maintains that it has no plans to exit all of its big markets. A company spokesperson notes that it just invested the majority of its “high impact” dollars into some of its biggest markets, including San Francisco, Houston, Dallas and Washington, DC. Monday’s $43 million sale of heritage rocker KLOS to Meruelo Media was “too good to pass up,” the spokesperson added, because it will bring in “cash in excess of the value we thought the station would deliver over the long term.”

As a standalone FM in one of radio’ most cutthroat markets, KLOS was at a competitive disadvantage to L.A.’s other players which have more fully developed clusters.

Coming two months after February’s bombshell announcement that it will sell six stations – including New York’s WPLJ and Washington, DC’s WRQX – for $103.5 million in cash, Monday’s deal making stoked the rumor mill about what M&A activity lies ahead. Cumulus says it is open to considering any and all opportunities to strengthen its financial and competitive position.

The thinking among the company’s new equity holders, according to a source, is that many of its large market stations don’t contribute a great deal of cash flow and can actually be of greater value by selling them to continue to pay down debt.

To position it for long-term success, Cumulus says its strategy is to strengthen its presence in some markets while selling off others where its sees less of an upside.