As part of its ongoing bankruptcy proceedings Cumulus Media has asked the United States Bankruptcy Court for permission to walk away from fourteen contracts at its February 1 hearing.
The contracts include a handful of tower and building leases, advertising agreemnts, owed money to the NFL’s Buffalo Bills and former Westwood One President Bill Battison, and Westwood One agreements to carry programming nationally from CNBC and the NFL’s Seattle Seahawks. The three contracts with the biggest impact will be felt in Chicago.
At the start of 2014, Cumulus began operating Merlin Media’s Classic Rock “97.9 The Loop” WLUP and Alternative 101.1 WKQX Chicago via LMA. Cumulus paid Merlin on average $600,000 per month to lease the two stations and claims to have suffered losses of $1.5 million in 2014, $800K in 2015, $1.1 million in 2016, and $5.1 million in 2017. The deal also included a Put and Call Agreement that gave Cumulus the right to purchase the stations until 10/5/2017 for the greater of $70 million minus the LMA fees paid or $50 million. Should Cumulus not have exercised that agreement by that date, Merlin had a ten day window to exercise its option to require the sale be filed which it did on October 6. Cumulus lawyers state that the contract is above fair market value for the stations. The company also seeks to walk away from a “talent agreement” with American Patriot LLC to provide programming for the stations, which in this case would be WLUP morning host Erich ‘Mancow’ Muller.
Cumulus also seeks to be freed from its obligations for News/Talk 890 WLS to carry the play-by-play of MLB’s Chicago White Sox and the NBA’s Chicago Bulls. Cumulus entered into a reported six year agreement in July 2015 to carry the two co-owned franchises starting with the 2016 seasons.
Should the motions by Cumulus be granted by the judge overseeing their bankruptcy at the scheduled February 1 hearing or soon after the contracts would be nullified immediately leaving Merlin Media to once again operate WKQX and WLUP and the Bulls in need of a station to broadcast their games in the middle of the NBA season.
Eric Jon Magnuson 
Nathan Obral
I may be misreading Tom Taylor’s coverage of this (at https://us6.campaign-archive.com/?u=78b390ff9f5b002e3f050238c&id=43b9681514), but it looks like the judge has essentially accepted the requests; even if the official decision would have to wait until Feb. 1st, it might be a foregone conclusion now.
Also, I wonder who would want to pick up CNBC’s distribution.
iHeart/Premiere would be an option for CNBC, especially with the existing NBC News Radio service under iHR control.
That did cross my mind. However, the current, 24/7 News-based version of NBC might not be as good of a complement to CNBC’s reports as a “more traditional” network would be. Also, if Cumulus/Westwood was having financial issues with its current deal, I’m thinking that CNBC shouldn’t expect something that’d be very similar from anyone else.
That second reason is also why I’m not sure how much interest Skyview would have–especially if it’d need to absorb more responsibilities than it does for ABC or CBS (and to do so pretty quickly). Compass might be interested, if it could effectively offer it alongside (or even combine it with) its current Business offerings: Ron Insana’s daily features, and the remnants of WSJ Radio.
How’d you like to be the private equity backers of Merlin Media who now have to find another buyer for WLUP/WKQX so the company can finally pass into the ether.
And who could buy those two stations? Hubbard’s the only possible buyer I can think of.
(And no, I’m not even considering soon-to-be WGN/720 owner Sinclair.)