Cumulus is selling KLOS-FM in L.A. to Meruelo Media for $43 million in cash. Cumulus has also entered into a swap agreement with Connoisseur Media whereby Cumulus will obtain four stations in and around Allentown, PA, in exchange for two Cumulus stations in Southern Connecticut.
Cumulus CEO Mary Berner said, “These transactions are part of the continued execution of our portfolio optimization strategy. Both transactions are accretive, and the sale of KLOS-FM to Meruelo Media at an attractive multiple allows us to generate substantial cash, which can be used to further pay down debt and invest in high-potential business opportunities. The Connoisseur Media swap significantly strengthens our presence in Allentown and the Lehigh Valley.”
Meruelo will begin programming KLOS-FM under a Local Marketing Agreement on April 16, 2019.
Cumulus will receive WODE-FM, WWYY-FM, WEEX-AM, and WTKZ-AM in and around Allentown, and Connoisseur will receive WEBE-FM in Westport, CT, and WICC-AM in Bridgeport, CT. The parties will begin programming each other’s respective stations under Local Marketing Agreements on May 1, 2019.
Moelis & Company LLC represented Cumulus as financial advisor in the sale of KLOS-FM to Meruelo Media. MVP Capital represented Cumulus as financial advisor in the swap with Connoisseur Media. Jones Day represented Cumulus as legal counsel on both transactions.
Cumulus expects to complete both transactions in the third quarter of 2019.
KLOS just celebrated 50 years — a half-century! — of rock programming in the huge radio market #2, Los Angeles. And, now, Cumulus continues its unloading of legendary and historic radio stations in some very big places, with big audiences.
Meanwhile, the buyer, Meruelo, is a truly local media company that continues to grow in L.A., with its purchase of KLOS. Meruelo is what ‘local radio’ is supposed to be all about, even in the major towns like Los Angeles.
But, it all makes sense. A standalone station, like KLOS, is difficult to maintain in the post-Telecom Act environment, where bulking up to the maximum number of stations is the key to survival. A bankrupt company like Cumulus, and CEO Mary Berner, understands the need to tighten up its business model by shedding sole properties like KLOS.
Here in Texas, and among many in the radio industry, we are watching with bated breath to see what happens with another Cumulus standalone FM, KRBE, in Houston. I don’t really see things in Houston going in the other direction, with Cumulus finding stations in that market to bulk up on, along with KRBE. The other major radio players in the market — iHeart, Entercom, Radio One, Univision and Liberman — are not likely to sell. I can’t see any compelling reason why they would.
KLOS has (had) a sister station in KABC-AM. Granted, it’s not a ratings or revenue juggernaut but it’s there.