Atlanta-based Cumulus Media, the nation’s second-largest radio company, is in exclusive negotiations to buy the third largest, Citadel Broadcasting, in a deal valued at $2.4 billion.
Cumulus owns 347 radio stations in 67 markets. Citadel, based in Las Vegas, owns 225 stations in about 50 metro areas. If the deal closes, Cumulus would have 572 radio stations across approximately 120 markets.
The merged company would still trail Texas-based Clear Channel, which has more than 800 stations nationally.
However, the deal would swell Cumulus' presence in big urban markets, giving it a stronger national platform than it has now: Cumulus stations are mostly in small and midsized markets, while Citadel serves some of the biggest metro areas in the U.S.
Both companies have local stations. Cumulus, headquartered in Buckhead, operates rock station 99X (WWWQ-HD2), Rock 100.5 (WNNX-FM) and top 40 station Q100 (WWWQ-FM). Citadel operates country station Kicks 101.5 (WKHX-FM) and oldies station Atlanta’s Greatest Hits 106.7 (WYAY-FM.)
Citadel also has stations in Detroit, Washington, New York, San Francisco, Los Angeles, Dallas and Chicago, among other cities. The largest non-Atlanta markets for Cumulus are Dallas, Houston, Indianapolis, Kansas City and Cincinnati.
The two companies are close in net revenues. In the latest figures available, Cumulus reported $193.5 million in the first three quarters of 2010; Citadel $188.6 million.
In a news release, Cumulus said the merger would give it "a truly national platform that would include eight of the country's top metro markets; the scale necessary to effectively compete and invest in the local digital media marketplace and a network for the syndication of content and technology assets."
Cumulus has offered $37 per share for Citadel's common stock and warrants, paid in cash and Cumulus stock.
Cumulus would fund the cash portion with up to $500 million in equity financing from Crestview Partners and Macquarie Capital, and the remainder through debt financing led by UBS Investment Bank and Macquarie Capital.
Like many radio companies, Cumulus and Citadel struggled during the economic downturn. Citadel filed for Chapter 11 bankruptcy protection, and emerged from it in June.
Cumulus has pursued Citadel since at least last fall, when the Las Vegas company rejected a $1.4 billion, $31 per share Cumulus offer.
