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Cumulus Media Inc. (CMLS) Message Board

  • longtimefollower longtimefollower Apr 8, 2010 12:01 AM Flag

    Partnership is a HUGE deal.

    Not sure how dramatic it will be for CMLS shareholders (how much does CMP generate for CMLS), but it is certainly a PLUS. Really, though, MORE significantly is the inherent VALIDATION OF THE VALUE IN THE RADIO SPACE that a $1 billion investment (cash from Crestview plus expected debt) represents. This, in my view, in one fell swoop, INCREASES valuations out there. Just or example, will or would there be enough time for this new venture to step in and OUTBID Oaktree and company for the assets of Regent Broadcasting? (This is just one more reason why the judge in that case truly NEEDS to delay that case; there is MORE value to be had for ALL holders by just letting the ad revenue come back for a couple more months, and letting the private equity money FLOW LIKE WATER.)

    Again, I am more excited about the effect this may have on overall valuations (including of the other public companies), than anything here.

    Will we see a big nice rally in the entire industry tomorrow? I think we certainly should!

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    • With their leverage up to 1B, they actually can take CMLS private at around 8X after paying off the debt (Of cause the CEO family need to contribute some of their shares). Wonder why they didn't choose to do that...

      It seems that CMLS hasn't make big money from CMP (around 1M per quarter in the past and sometimes even take a loss). So I am not very excited about this new CRI thing.

      • 1 Reply to heth247
      • CMP was a dud because they paid high prices to buy stations at the top of a market heading into a recession.

        In my opinion, this new deal gives them the opportunity to buy stations at very low prices, heading out of a monster recession.

        No margin of safety in the Susquehanna/CMP price, big margin of safety at current prices.

    • What kind of op income multiple would a radio station be bought for in this environment? 6-8x? At that price, and given the 2x leverage added by Crestview's debt financing, this could be a great deal for CMLS. It will be an even better deal for Crestview, which goes to longtime's point of attracting private equity interest.

      Of course, we don't know the details of how CMLS gets paid beyond a base fee, plus incentives. Still it is all upside, no downside. In fact, it sounds like a much better timed version of the CMP deal a few years back.

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