While the aftermath of the credit crisis left many industries unable to raise money, Cumulus Media Inc. (CMLS), the country's second largest radio broadcaster, announced earlier this month that it has formed a partnership with a private equity firm to buy radio stations and expand the company's footprint.
In an interview with Radio Ink and RTTNews, Lew Dickey, the chairman, president and CEO of Cumulus, said the time is right to expand, as the company sets itself up to take advantage of radio's inherent strengths during the next stage of economic growth.
On April 7, Cumulus signed a deal with Crestview, a private equity fund that specializes in media investments, that includes a $500 million equity partnership. Dickey also said the company has debt commitments of that much or more, giving Cumulus "a billion dollars worth of firepower" that it intends to use to buy radio stations.
"We believe that the time was right," Dickey stated, noting that assets are far cheaper than they were even three years ago. "The industry is in essence, peak to trough, taken about a 30 percent reset, and so consequently we believe that now is a good time to be in the market looking for good, quality properties."
Dickey outlined a strategy of consolidation that included broadening the company's presence in markets where it already had a footprint, as well as entering new markets through acquisitions. He noted that Cumulus was currently weak in the top fifty markets, giving it "quite a bit of room" to expand. The acquisitions will be targeted to the top 50 and top 100 markets.
Asked about his outlook for the economy and how he was able to convince Crestview to make such a sizable investment, despite the overall caution of many lenders, Dickey said that over the next five years, the economy will see growth, with retail sales and local advertising following suit. Meanwhile, he sees radio as having a good chance to increase its share of local advertising, due, in part, to the dwindling readership in other mediums.
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