This is a bit of a bombshell in the hallways at Cumulus today. Robert Feder reports...
Struggling to emerge from bankruptcy, Cumulus Media announced plans Thursday to drop its money-losing multiyear contracts to broadcast White Sox baseball and Bulls basketball on news/talk WLS AM 890. The company also moved to cancel its deal with Merlin Media to acquire alternative rock WKQX FM 101.1 and classic rock WLUP FM 97.9. Cumulus has been operating the two stations since 2014 under a local marketing agreement. “As part of our operational turnaround, we have been focused on taking proactive steps to address unprofitable areas of our business,” Mary Berner, president and chief executive officer of Cumulus Media, said in a statement. “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.” U.S. Bankruptcy Court is scheduled to rule February 1 on the company’s plan to reject the contracts. It’s not known where the White Sox and Bulls will go or who will operate 101 WKQX and The Loop after Cumulus.
Radio Ink has more information about this situation...
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.
In a Cumulus court filing Thursday, the company says “The Merlin agreements are economically detrimental to the Debtors’ estates and operating the Merlin Stations, net of the LMA Fee, has proved unprofitable for the Debtors since the LMA’s execution.” Cumulus has asked the court to nullify the agreements.
In 2017, Cumulus announced it would be purchasing the stations for approximately $50 million. That was obviously before the company decided to file for bankruptcy protection.
We asked Michaels if this would lead to him getting the stations back and his answer was “yes.”
