The Federal Communications Commission Wednesday gave a green light to Atlanta-based Cumulus Media’s $2.5 billion merger with Citadel, paving the way for the deal to be completed this week.
This will make Cumulus the second largest U.S. radio corporation only behind Clear Channel in both revenue and number of stations. Combined, Cumulus will own more than 500 stations.
The final step is approval by Citadel shareholders, which is expected today. If that does happen, the two companies will become one as of Friday, Sept. 16. [UPDATE 9/15/11: Citadel shareholders Thursday morning approved the merger. It's now effectively a done deal.]
The Department of Justice signed off on the merger, saying the companies only had to sell off three stations in two markets: Flint, Mich. and Harrisburg, Penn. The FCC noted that the two companies do not compete directly in many markets (though they do in Atlanta.)
This is the feather in the cap of the ambitious Lew Dickey. My former colleague Margaret Newkirk in April wrote a piece about how this merger came about. As she noted, Las Vegas-based Citadel owns stations in several major markets Cumulus was not in.
While the industry has only started to recover, it remains a $15 billion business and Cumulus will now take an even bigger slice of that pie. (At its peak, radio pulled in $21 billion in revenue in 2007.)
What effect will this have on the local radio scene in terms of programming? Hard to say.
Locally, Cumulus will own top 40 station Q100, 80s/90s hits station Journey 97.9, alternative rock 99X, Rock 100.5, country station Kicks 101.5 and 106.7/Atlanta’s Greatest Hits. Citadel had owned Kicks and Atlanta’s Greatest Hits. I can’t see Cumulus touching Kicks 101.5 It’s the long-standing dominant country station in town and still generates good cash flow. Atlanta’s Greatest Hits, since it focused more on the 1970s, is skewing younger and could remain viable though I have no idea how well it’s doing on the revenue side.
Cumulus has been aggressive grabbing 250-watt “translator” signals, enabling them to add Journey to the mix and return 99X on the air. These signals aren’t terribly strong but they help the Atlanta group add incremental revenues at relatively low costs. (”Translators” allow radio companies to take an existing signal, often on an HD signal, and place it on another signal with 250 watts the maximum power. The FCC made it easier starting in 2009 to create translators.)
The merger reduces the number of competitors in Atlanta but there are still plenty of radio operators in town, including Radio One (Hot 107.9, Majic 107.5/97.5, Praise 102.5), Salem (Fish 104.7, 920/WGKA-AM), CBS (Dave FM, V-103), Cox (B98.5, Kiss 104.1, AM750 and 95.5FM news/talk WSB, 97.1/The River), Lincoln Financial (790/The Zone, Star 94) and Clear Channel (94.9/The Bull, Wild 105.7/96.7, Project 9-6-1, 640/WGST-AM). Then there is Dickey Broadcasting, which is not directly owned by Cumulus but runs 680/The Fan. (Why they’ve kept that separate all these years, I have no idea.)