Radio Companies | Principles & Practices

At its start, ABC Radio was one of two radio networks owned by RCA – then known as NBC Blue Network. The network was sold in 1943 to Edward J. Nobles, who re-branded the network as simply “The Blue Network,” and was renamed the American Broadcasting Company in 1945. Thus, ABC Radio was born. In 1996, ABC Radio became a part of the Walt Disney Company when Disney acquired the entirety of ABC in a $19 billion deal. Despite the purchase, ABC Radio remained its own entity, with its holdings remaining ABC Radio holdings. As recently as 2007, ABC Radio included multiple large-market radio stations as well as Radio Disney and ESPN Radio. In 2007, however Disney released a statement stating:

“The Walt Disney Company and Citadel Broadcasting Corporation announced the completion today of Disney’s spin-off of its wholly-owned subsidiary ABC Radio Holdings, Inc. and its subsequent merger with a wholly-owned subsidiary of Citadel. Prior to the spin-off, Disney transferred to ABC Radio Holdings its ABC Radio Business consisting of 22 large-market radio stations and the ABC Radio Network. The transaction did not include Disney’s ESPN Radio or Radio Disney network and station businesses.” [1][2]

This marked an end to the cohesiveness of ABC Radio. It was no longer one network, with set holdings. Instead, ESPN Radio and Radio Disney were in the ownership of The Disney Corporation while the majority of ABC Radio’s holdings became a “wholly-owned subsidiary of Citadel” by 2009.

Citadel’s ownership of the ABC Radio holdings did not last long, however. The company itself did not last long past the purchase. In 2011, Citadel crumbled to debt, to be bought out by Cumulus Media for 2.5 million, including its debt. The deal was struck March 2011, and the transition was completed by September the same year. [3]

Currently, ABC Radio’s holdings are split between The Disney Corporation and Cumulus Radio and consist of ABC News Radio, ESPN Radio, Radio Disney, 22 large market radio stations and some other radio stations located in minor markets.

Citadel’s Debt and Losses:

Citadel Broadcasting Company had been facing financial struggles as early as 2009, when Citadel Broadcasting and its subsidiaries filed for bankruptcy. The Company’s bankruptcy plan was approved by the United States Bankruptcy court the next year, in May 2010. The Merger with Cumulus was announced shortly before Citadel’s plan was approved – March 2010. The merger was approved by the FCC September 14, 2011 and by stockholders the very next day. [4][5]

Financial Impact of Citadel Acquisition on Cumulus:

The sale of ABC Radio’s various holdings within the Citadel transaction has had a resonating impact on Cumulus. On March 12, 2011, Cumulus Media released it’s 4th Quarter earnings report – which included the acquisition of Citadel for $2.5 million. As a result, Cumulus reported a $13.1 million loss – 14 cents per share. Additionally, the citadel acquisition resulted in an increased number of shares. Despite the inevitable loss of revenue that occured in the acquisition, the companies new holdings have been active. However, the true financial impact cannot be fully measured until Cumulus releases it’s 1st quarter report for 2012 on May 7. [6]

Disney’s Holdings

Despite the merger, The Disney Corporation did maintain some holdings that once belonged to ABC Radio – Radio Disney and ESPN Radio.

“Radio Disney is a 24/7 radio network for kids, tweens and families. Radio Disney is available on 34 terrestrial radio stations, 31 of which we own, and on RadioDisney.com, SiriusXM satellite radio, iTunes Radio Tuner, XM/DIRECTV and mobile phones. Radio Disney programming can be downloaded via the iTunes Music Store. Radio Disney is also available throughout most of South America via a separate Spanish language terrestrial broadcast.” – Disney’s 2011 Annual Report [7]

Since the merger, Radio Disney has maintained it’s success in it’s taget demographic with various events and releases. Most notably, the exclusive premiere and radio play of Justin Bieber’s lastest hit “Boyfriend,” released March 25, 2012, accompanied by an in-studio interview. [8]

In addition to media attractions, Radio Disney has undergone a recent management change – Phil Guerini was named Vice President and General Manager of Radio Disney in a February 2, 2012 press release stating: “As the leader of Radio Disney, Guerini’s new responsibilities will include strategic direction and daily management of the network, which is available nationally via 31 owned terrestrial radio stations and via RadioDisney.com, Sirius and XM satellite radio, iTunes Radio Tuner, mobile phones, the Radio Disney iPhone and Android Apps and Radio Disney’s Facebook page.” [9][10]

The Disney Company also maintained possesion of popular sports radio network, ESPN Radio. The network is “carried on more than 750 stations, making it the largest sports radio network in the United States.” of which ESPN owns 4, and 355 are operated full-time. – Disney’s 2011 Annual Report [7]

ESPN Radio has made major developments this year, including a growing trend toward FM broadcasting, most notably in the New York City market. The station made the transition to 98.7 FM in the market. Dave Roberts, Vice President and General Manager commented on the switch: “By combining the FM reach with our wide variety of digital offerings from ESPN AUDIO, we are uniquely positioned to provide coverage of all of New York’s sports.” [11]

New York City is not he only market station making the jump. April 30th also marked an announcement that ESPN Radio will be simulcast on 106.7 FM in Fort Wayan, IN come June of 2012. [12]

ESPN Radio is also growing in the form of ESPN Deportes and ESPN mobile. For example, SiriusXM satellite radio is launching an App for Droid users that will include both English-language ESPN and the Spanish – language ESPN Deportes. [13]

Cumulus Media Holdings

Cumulus Media is “America’s second largest owner of radio stations and the premier local marketing company in 68 cities across the US.” In the merger, Cumulus got the bulk of ABC Radio’s holdings, including over 20 stations in major markets and popular news source ABC News Radio. [14] [15]

Like ESPN Radio, ABC Radio is also reaching out to the digital sphere, particularly in advertising. The network is incorporating TargetSpot advertising, both visual and audio, that will air in-stream on their various digital platforms – including ABC News Radio online and on mobile devices. [16]

Overall, Cumulus’s new acquisition is predominantly individual stations throughout the United States and have integrated into the already thriving corporation.

[Outside Links]

[1] http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/1995/08/01/MN58745.DTL

[2] http://www.intercot.com/discussion/showthread.php?t=107353

[3] http://dealbook.nytimes.com/2011/03/10/cumulus-strikes-2-5-billion-deal-for-citadel/

[4] http://www.businesswire.com/news/home/20110815005214/en/Citadel-Broadcasting-Corporation-Reports-2011-Quarter-Results

[5] http://www.deadline.com/2011/09/fcc-oks-cumulus-citadel-merger/

[6] http://www.docstoc.com/docs/119894088/Cumulus-Media-Inc-Announces-First-Quarter-2012-Earnings-Conference-Call

[7] http://cdn.media.ir.thewaltdisneycompany.com/2011/annual/WDC-10kwrap-2011.pdf

[8] http://www.radiodisneymedianet.com/web/homepage/default.aspx

[9] http://www.radiodisneymedianet.com/web/bios/display_bios.aspx?bio_type=executives&bio_id=326

[10] http://radiodisneymedianet.com/DNR/2012/rd_guerini_020212.doc

[11] http://www.allaccess.com/net-news/archive/story/105283/espn-radio-moving-to-98-7-fm-in-new-york