Why Does Cumulus Prefer Indianapolis Over New York?

As we know, Cumulus traded WNSH 94.7, along with a couple of stations in Massachusetts to Entercom, in exchange for 3 of their stations in Indianapolis. This helps them become the dominant cluster in the Indy market.
My question is, why would Cumulus greatly diminish their presence in the #1 market, and instead build up their holdings in a much smaller one?

Cumulus/Indianapolis: http://www.insideradio.com/free/cum...cle_cdb977a4-5cf6-11e9-a419-6b385e5a6c48.html

Barry said:

As we know, Cumulus traded WNSH 94.7, along with a couple of stations in Massachusetts to Entercom, in exchange for 3 of their stations in Indianapolis. This helps them become the dominant cluster in the Indy market.
My question is, why would Cumulus greatly diminish their presence in the #1 market, and instead build up their holdings in a much smaller one?

Cumulus/Indianapolis: http://www.insideradio.com/free/cum...cle_cdb977a4-5cf6-11e9-a419-6b385e5a6c48.html

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You should seriously get in contact with somebody from Cumulus and ask them this question, as how should we know and I don't know if any of their staff members are on these boards, or even pay attention to them.

So, can we conclude it was a mistake for Cumulus to acquire WPLJ, and 94.7? Or did they have no choice, as part of the dealing they did when they were expanding?

WPLJ was part of ABC Radio, which merged with Citadel. Cumulus bought Citadel. They probably could have divested it, but instead decided to purchase 94.7 from Family Radio to try and improve their NYC cluster and expand their NASH strategy.

Barry said:

So, can we conclude it was a mistake for Cumulus to acquire WPLJ, and 94.7? Or did they have no choice, as part of the dealing they did when they were expanding?

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Keep in mind the company's CEO at the time of the acquisition of WPLJ and 94.7 was replaced by the company's board of directors. So the board didn't approve of the direction the company was going in at that time. In the bankruptcy process, there were a few decisions made by that previous CEO that were canceled. But its pretty obvious that the $2 billion acquisition of the previously-bankrupt Citadel (which included the purchase of ABC Radio) created the debt that pushed Cumulus into its own bankruptcy. Most of the stations spun off to EMF, including WPLJ, were previously part of ABC Radio. In addition, there are rumors the company is in talks to sell another former ABC station KLOS in LA. However, none of the sales will make up for the $2 billion the company spent buying those stations.

Here in Houston we are still keeping a sharp eye on Cumulus stand-alone KRBE. The station is a solid performer with its CHR format, but has no market siblings. Several other groups in town have cap room for another signal, so this could be a possible divestiture. There would be virtually no chance of a format change in those scenarios.

However if Cumulus was to sell KRBE to EMF, that would be an earthquake far beyond any Californian’s San Andreas nightmare...

Mediafrog+ said:

However if Cumulus was to sell KRBE to EMF, that would be an earthquake far beyond any Californian’s San Andreas nightmare...

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I wonder if the metric EMF uses would actually undervalue the license, given what you say. They only pay for potential audience, not revenue.

The other factor is real estate. Where is the KRBE tower, and do they own the land? Same with the studio.

In NYC, Cumulus kept the studio. So far they haven't sold the WABC tower land.

TheBigA said:

I wonder if the metric EMF uses would actually undervalue the license, given what you say. They only pay for potential audience, not revenue.

The other factor is real estate. Where is the KRBE tower, and do they own the land? Same with the studio.

In NYC, Cumulus kept the studio. So far they haven't sold the WABC tower land.

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It is a very interesting time to see the EMF climb, while Cumulus continues to try to tighten up a sinking ship. I wonder what the total amount of all of these bankrupt companies/corps would add up to in actual dollars lost at this point since the Telecom Act that allowed for the feeding frenzy. How could so many companies miss all of the signs of market changes and still keep pushing these companies off the cliff?

Tibbs4 said:

How could so many companies miss all of the signs of market changes and still keep pushing these companies off the cliff?

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You think it's just broadcasting? I run a business. We all try to be optimistic about our business. No one planed for the Titanic sinking. No one. When it happened, everyone pointed fingers. The trials and lawsuits went on for years.

Lots of investors lost money in 2008. Heck I lost money in two failed radio investments in 2008. Yes even I missed the signs of market change. Now I learn every day. Fortunately I also profited on other companies that boomed. That made up for the losses. That's how the big investment companies survive. Diversification.

But the tech industry destroyed a lot of businesses, from brick & mortar retail to radio to newspapers to the recording industry. Now the ducks are about to come home to roost. Congress is looking at regulating tech. Some politicians are demanding breakups of the big companies. Shades of Standard Oil at the turn of the last century. We'll see who profits on the next big thing. We may be in the last days of the bull market. Will we see the signs of market change? You tell me.

TheBigA said:

Now the ducks are about to come home to roost.

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Not if the chickens have anything to say about it.
Regards,
The Mixed Metaphor Police

CTListener said:

Not if the chickens have anything to say about it.
Regards,
The Mixed Metaphor Police

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Hahaha! Thanks for that!

Mediafrog+ said:

Here in Houston we are still keeping a sharp eye on Cumulus stand-alone KRBE. The station is a solid performer with its CHR format, but has no market siblings. Several other groups in town have cap room for another signal, so this could be a possible divestiture. There would be virtually no chance of a format change in those scenarios.

However if Cumulus was to sell KRBE to EMF, that would be an earthquake far beyond any Californian’s San Andreas nightmare...

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Although a sale to EMF is possible, I think Cumulus might swap KRBE for another group of stations in a smaller market, just like they did with Indianapolis and NYC. They would strengthen their portfolio (or they could opt to pay down debt with a sale to EMF)

TheBigA said:

Lots of investors lost money in 2008. Heck I lost money in two failed radio investments in 2008. Yes even I missed the signs of market change. Now I learn every day. Fortunately I also profited on other companies that boomed. That made up for the losses. That's how the big investment companies survive. Diversification.

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That is the lesson. Few could have seen 2008 coming since the government required the banks to make loans to people with excrement creditworthiness. The banks then hid the excrement loans in 'derivatives' which were themselves excrement. Eventually, the number of suckers willing to buy the derivatives ran out and the house of cards collapsed bringing just about everything down with it. Of course, much of radio was already way overextended by then, so it killed them.

Everyone needs a plan to deal with the reality that this will happen again. Those excrement loans are being made again, albeit on a smaller basis. There will always be political pressure to make excrement loans. So the message for everybody - businesses and individuals building for retirement - diversify and don't overextend. Learn from 2008.

The withdrawal of Cumulus from this area, in favor of smaller markets continues. Today we have the news that it is swapping A/C powerhouse WEBE 108, in nearby Bridgeport (along with WICC 600 AM) with Connoisseur Media, In return
Cumulus will be acquiring 4 stations from them in the Allentown PA market.
I hear lots of radios playing WEBE when I visit southern CT. Its huge signal reaches large swathes of the New York market.

DavidEduardo said:

Stamford-Norwalk is ranked 151 in population, and lower than #200 in revenue.

Even combined with Bridgeport, WEBE is in a smaller market in population and revenue. The problem is that the station serves four separate markets, New Haven, Dridgeport, Stamford-Norwalk and Danbury and each of those markets is viewed separately.

WEBE does not meet the minimum numbers to show in the NYC market. And its revenue has been on a steep decline.

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This surprises me. I know that Connecticut's cities are desperately poor, but figured that all that buying power in the affluent suburbs made stations like WEBE perennial cash cows. So why is WEBE struggling to bring in ad dollars? The decline of local stores? Reluctance of advertisers in the Danbury and New Haven markets to use WEBE because it doesn't cover their entire markets?

Interesting that Cumulus is only really getting TWO stations in Allentown, and two bottom dwellers. The two strong stations are pretty strong: An AM sports station and an FM classic rock. But the other two are stuck in the basement.

Connoisseur already owns Hot A/C WEZN, Star 99.9, in the Bridgeport area. I wonder whether their sound is sufficiently different from A/C WEBE 108 that both stations will be able to continue without significant changes.