A long-rumored deal appears to have come to fruition this week: The second-largest radio station owner in the country, Cumulus Media, has agreed to acquire the third-largest, Citadel Media, owner of Portland's prominent radio stations WCYY, WBLM, WJBQ, and WHOM, in a $2.4 billion transaction. The result will be a conglomerate that owns 572 radio stations in 120 markets, but still sits in second place behind Clear Channel's 850 stations.
What does this mean for Maine? For one thing, the combined company (should the deal close as expected) will tie Blueberry Broadcasting in possessing the most radio licenses in the state (at 14). Citadel's stations in Portland, Augusta, and Presque Isle will combine with the five stations that Cumulus operates in Bangor.
However, one long-time observer of the broadcasting landscape doesn't believe the merger will change much locally. "Generally, these kinds of deals don't make too much difference in terms of local management," says Suzanne Goucher, president and CEO of the Maine Association of Broadcasters. "It's been very rare that we've seen a deal like this go down and have the new company come in and clean house."
That should be good news for fans of WCYY and WBLM, which are known for a larger-than-normal amount of locally created music. Curdo and the Captain and Charlie Gaylord are likely to stay put. As long as the stations stay in the black, it's doubtful Cumulus will pay their programming much mind.
Goucher says, also, that Cumulus has a good reputation in Bangor as participating well in the local community. "They're good corporate citizens," she says. "They live up to the terms of their licenses, which is to serve the public interest. They're good operators. I have no doubts on that score."
What's working against this rosy-for-us outcome? What the business world calls "synergies." The reason one big company buys another is because the combined company can create more profit together than the two could create separately — just one CEO to lavish with an absurd salary, just 15 VPs instead of 30, etc. "Synergies" translates roughly to "people you can shitcan and offices you can close."
Cumulus has promised its investors — the ones from whom it's borrowing some $500 million to finance this deal — it will realize "estimated synergies of at least $50 million." However, many of these synergies are likely to come from Cumulus's own operations and Citadel corporate HQ. Citadel just emerged last year from bankruptcy proceedings and just about all of the fat has already been cleaved from the bones of outposts like the Maine operations.
The folks at One City Center already had their parking passes pulled.
This is something of a last-ditch play for radio. It's a bet the radio industry's revenue woes of the past couple years are due primarily to the crap economy, and not due to the rise in personal media players, satellite radio, and the fact that much of the music on the radio sucks (cough, JBQ, cough). Don't expect new investment from a new sugar daddy. Belts will remain tight. Competition for advertising dollars will be ever fiercer.
That can be good news for local music, though. If it's as good as we think it is, and it really will draw people to those stations that play it, those stations will be rewarded with good ratings, more ad dollars, and more love and affection from the home office. If it's all just a bunch of feel-good provincial bullshit, no one will listen, the ratings will blow, and you can kiss Spinout and GFAC 207 goodbye.
That's capitalism at its finest. Guys who do $2.4 billion deals know it well.
