Cumulus begins preparations for two big closings


Cumulus Media hasn’t yet set a date for shareholders to vote on the measures necessary to facilitate its acquisitions of both Cumulus Media Partners (CMP) and Citadel Broadcasting, but it has now filed the preliminary proxy with the SEC. The 325 pages are mostly boiler plate, but there is a bit of new information to be gleaned from it.

Primarily we now know more about the financial results of CMP, which is managed by Cumulus Media as a minority partner, but is a private company.

The SEC filing contains this summary:

“Throughout 2010, the disruption in CMP’s advertisers’ buying patterns and turbulence in the overall advertising industry caused by the economic recession in 2008 and 2009 generally subsided. By the second half of 2010, CMP began to see what it believed to be a much more historically normalized operating cycle, and CMP began to experience improvements in certain key operating and liquidity metrics. As further described below, this more stabilized operating environment continued into the three months ended March 31, 2011.

-CMP Station Operating Income grew by 14.2% during 2010 compared to 2009, as a result of successfully growing revenues while containing operating costs across its station platform, and this trend continued with modest CMP Station Operating Income growth of 1.1% during the three months ended March 31, 2011 compared to the prior year period;

– improved CMP Station Operating Income enabled CMPSC [CMP Susquehanna] to pay down approximately $99.0 million and $18.3 million of debt under the CMPSC Credit Facilities during 2010 and the three months ended March 2011, respectively, which reduced CMP’s overall net debt level (total debt less available cash) to $703.6 million at December 31, 2010 and $694.5 million at March 31, 2011, from $744.9 million at December 31, 2009; and

-the combination of these improved operating results and significant reduction in CMP’s debt load enabled CMP to reduce its ‘Total Leverage Ratio’ as defined in the CMPSC Credit Agreement.”

More specifically, net revenues were up 7.3% in 2010 to 188.7 million. For the first quarter of 2011 revenues grew 3.2% to $39.1 million.

Station operating income (SOI) gained 14.2% in 2010 to $85.6 million. For Q1 of this year SOI rose 1.1% to $15.2 million.

The main action required at the yet-to-be-scheduled shareholders meeting will be a vote to approve an increase in the total number of authorized shares at Cumulus Media from 270 million-plus to 300 million to cover the new shares to be issued to current CMP shareholders – with even more to be approved in a second vote for the Citadel transaction. Shareholders will also be asked create a new class of non-voting stock (so some of the new owners won’t have to worry about conflicts with their other holdings at the FCC), to elect four directors, including CEO Lew Dickey, and ratify the company’s independent accounting firm. The board of directors is urging “yes” votes in all cases.

RBR-TVBR observation: 325 pages, with every one of them written by a team of lawyers and reviewed in all likelihood by still more lawyers! And that’s just for the Cumulus Media proxy. Other lawyers also have to draw up the documents for Citadel and CMP. This big radio deal should buy new beachfront vacation homes for several members of the legal profession.