Monday, January 06, 2014

The Cumulus/Merlin Deal

This week it was reported that Merlin Media's Chicago radio stations (including the Loop) were going to be purchased by Cumulus (owner of WLS AM/FM in Chicago in addition to hundreds of other stations nationwide). According to Tom Taylor's column today, it's a little more complicated than that.

See if you can follow along...

First, this isn’t a sale, at least not yet. Cumulus says it’s “taken over operations of two Chicago stations through an LMA with option to buy WLUP (97.9 the Loop) and WIQI (101.1), as well as the alternative rock format currently on WKQX-LP (87.7).” So let’s unpack the various stories nested inside the bare facts – because there’s enough drama to keep a “Downton Abbey” fan occupied, including a disappointed suitor. The Chicago Tribune says this is a “four-year local marketing agreement, with a firm option to buy the stations.” Cumulus could exercise its option as soon as next year, and CEO Lew Dickey tells Crain’s Chicago Business that “We’re not in the business of renting things.” Though the LMA is a prudent strategy for now. Cumulus can conserve cash by paying just a monthly fee, which might be credited against the eventual purchase price. In return, it gets the revenue it generates from classic rock “Loop” WLUP and from restoring the alternative rock format to 101.1.

The first thing I thought about when I heard this news was that this put a bit of a crimp in WGN's plans to buy an FM, which GM Jim de Castro has said publicly that he wants to do. (They still have to sell the Chicago Tribune in order for that to happen, but that's another story). Tom Taylor addresses that part of the story too...

Jimmy de Castro’s now running WGN and he once managed The Loop (97.9). But the Cumulus LMA-with purchase option means the Merlin stations are out of circulation. Knowing de Castro – there’s a Plan B. And a Plan C.

I just hope that Cumulus doesn't gut the staffs of the Loop and 101 once they take over. I still have friends working there.