Lew Goes Digital

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After decades in the radio business former Cumulus CEO Lew Dickey is turning to digital. The UK-based streaming company Akazoo claims to have a library of 40 million songs but is not yet available in the United States. Unlike other music streamers Akazoo is making money. It was announced Thursday that Dickey’s Modern Media Acquisition and Akazoo would be merging. Here are all the details.

Lew Dickey was pushed out of radio by the Cumulus Board of Directors in September of 2015 while on his honeymoon. He founded the company in 1997, hatched from an idea while on a plane, and grew Cumulus into the second largest company in radio. It was also burdened with massive debt.

In the first two years after Dickey left Cumulus, he wrote a 70,000-word book on the future of media, then partnered up again with his friends at Macquarie Capital and spent 10 months raising a couple of hundred million dollars of capital to build Modern Media Acquisition informed from the findings in his manuscript. The plan with Modern Media Acquisition was to either purchase or merge with another media company. One rumor floating around was that Dickey was kicking the tires at Townsquare, however, most radio executives we spoke to when those rumors came up, said it wasn’t going to be a radio deal. They turned out to be correct.

In 2017 while researching companies to buy or merge with, Dickey emphasized the importance of the shift to mobile, in a 2017 Radio Ink cover story. It was clear that’s where he wanted to be when he made a deal. “The primary objective is to identify companies and sectors that benefit from the accelerating shift to a mobile culture. The goal is to build a company (or companies) that are well-positioned to take advantage of the trends I discuss in the book. So in media, it will be multi-platform rather than a singularly focused play like radio. This “modern media” approach is a very different strategy from the one I used to build Cumulus over two decades. Today, consumers and marketers no longer view either media or advertising as siloed, but rather as a seamless experience across connected devices.”

Akazoo is a music streaming company that was founded in 2010. Akazoo’s Premium service provides subscribers with unlimited online and offline streaming access to over 45 million songs on a commercial-free basis. Akazoo’s free, ad-supported radio service consists of over 100,000 stations. Akazoo is now in 25 countries, the United States is not one of them. If you try to register for the service on their website you get the following message, “We would really like to be here. For now, though, our service is not available in your country. Please check back, you never know.”

As a result of the merger Dickey becomes the chairman of the combined company, which would be valued at approximately $469 million. Akazoo’s leadership, including founder and CEO Apostolos N. Zervos, are staying. Dickey said Akazoo is a terrific company with strong management led by Zervos. “As one of the pioneering companies in the space, they have spent the last decade building a profitable business model with a strong competitive moat in emerging markets.” Dickey says music streaming is one of the best secular growth stories in global media and entertainment.

Akazoo says it has 37 million registered users and 4.3 million premium subscribers as of September 30, 2018. Akazoo directly licenses music from thousands of labels and provides both online and offline listening platforms, social media integration, and a patented, AI-driven new music recommendation engine.

MMDM and Akazoo will combine under a new holding company called “Holdco,” with a home base in Luxembourg. The company will eventually be listed on the Nasdaq under the symbol “SONG.”

2 COMMENTS

  1. I’ve been told foreign music royalties are less expensive and less cumbersome than those in the US. We’ll see if he choses to do business here.

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