Cumulus CEO Lew Dickey expects to see cost savings from the $260 million deal to acquire Dial Global, as well as the chance to distribute premium, curated content across emerging platforms, including overseas.
Speaking to Wall Street analysts Tuesday, Dickey said the DG deal as well as the one to spinoff noncore Cumulus properties to Townsquare Media to fund the DG buy are capital neutral, and will help deleverage the Cumulus balance sheet. Overall, Cumulus expects to see some $40 million in cost savings from eliminating duplication between DG and Cumulus Media Networks.
But the real beauty of the transactions are the compelling and strategic opportunities they create to help Cumulus play in a larger content distribution pond in the future, especially in the growing sports and talk content areas, according to Dickey. It “creates a platform for content creation, distribution and monetization. This was an interesting way for us to engage in portfolio management and create an upside.”
“Now we can combine efforts to create critical mass and go up against entrenched incumbents” and be competitive on specific ad buys, he says.
Dickey pegs radio sports and talk as a potential $300 million market. While Clear Channel’s Premiere Radio Networks has a lock on talk, the Dial Global deal gives Cumulus “more critical mass to mount a modicum of a challenge,” says Dickey. The transactions also give Cumulus play-by-play content which it didn’t have before, expanding its sports programing for distribution. Cumulus previously made a big investment with CBS Sports. Now, it can offer play-by-play to its affiliates and challenge ESPN, according to the executive.
Overall, the additional content gives Cumulus the ability to create more packages for its advertisers, for both broadcast and digital distribution.
Dickey predicts both the DG and Townsquare Media deals, subject to regulatory approval, will close in November.