Cumulus Calls Dial Global Deal a Deleveraging Event
By now you have all the details on the Cumulus plan to purchase syndicator Dial Global for $260 million (see below under "in case you missed it.") Today at 11:00AM Eastern, Cumulus CEO Lew Dickey will present more details to shareholders about the acquisition. Cumulus executives will tell shareholders this purchase is a "compelling strategic opportunity," and when the deal is closed and the meshing of the two companies complete there will be, "$40+ million of estimated cost synergies and substantial incremental revenue growth opportunities." By acquiring Dial Global, Cumulus CEO believes he would have enough content in his portfolio to challenge Clear Channel owned Premiere Radio Networks.
During the presentation this morning, Dickey will try to convince shareholders this purchase will help the company by "deleveraging on identified cost synergies alone." The $40 million will be slashed, according to Cumulus from combining the network expenses and from eliminating duplicate infrastructure. The company says this provides, "significant synergy opportunities." Those savings are expected to be realized within the first two years with more than 50% generated in the first 12 months after closing. Cumulus will example the Citadel merger, and the cost savings from that deal, when presenting to shareholders today.
Dial Global distributes, produces and syndicates programming and services to more than 8,200 radio stations. The content includes over 200 news, sports, music, talk and entertainment radio programs, services and digital applications. Dial Global also syndicates live events, 24/7 formats, prep services, jingles and imaging libraries. Cumulus CEO Lew Dickey and Dial Global CEO Paul Caine are hopeful the deal will close before the end of 2013. There is also a question yet as to whether this transaction will be looked at by the feds. Several small market operators have said they are concerned this will end competition for the 24-hour music formats. Dickey told Radio Ink last week they should not worry. He says this deal is going to make life better for them not worse.
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