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.