Cumulus will continue operating both stations until April 30, 2018 with the ability for two mutually agreed three month extensions with Cumulus reimbursing Merlin Media up to $15,000 per station per month for reasonable costs and expenses in connection with the operation of the stations beginning on February 1, 2018. Upon completion of the LMA, Cumulus at its sole discretion will choose which employees will be transferred back to Merlin and which will stay with the company. The settlement also terminates Cumulus’ $50 million purchase of the two stations.
The deal is setup to allow Merlin Media time to plan to take back operations of the stations or to find a new buyer. Merlin may enter into an agreement with a third party to sell or transfer its interests in one or both of the stations as long as it notifies Cumulus in writing within 24 hours of executing an agreement.
Merlin filed to the court on Monday that it is in the “process of working with the Debtors on a negotiated resolution of all business and legal issues between Merlin and the Debtors related to the agreements, including a cooperative, interim agreement facilitating transition of the Stations back to Merlin and/or a new owner. The remainder of the hearing as it relates to the Talent Agreement with WLUP Morning Host Mancow Muller has been adjourned to February 8 at 2:00pm.
The court has approved Cumulus’ termination of 14 other contracts including the broadcast rights for the Chicago Bulls (who have already agreed to move to Entercom’s WSCR) and White Sox along with suite agreements for both franchises, tower site leases in Buna TX, Oregon OH, and Vinton LA, an office lease in Santa Clarita CA, two outdoor advertising agreements, a separation agreement with former Westwood One President Bill Battison, money owed to the Buffalo Bills, and a national rights agreement with the Seattle Seahawks.
Cumulus Media Inc. (PINK:CMLSQ) (the “Company,” “we,” “us,” or “our”) today announced that it has reached an agreement with Merlin Media (“Merlin”) regarding the operation and sale of WKQX-FM and WLUP-FM in Chicago. Under the terms of the agreement, Cumulus will no longer be required to acquire the Chicago stations for approximately $50 million, and Cumulus and Merlin will temporarily extend the local marketing agreement under which Cumulus has been operating the stations while Merlin conducts a sale process for the stations. Cumulus expects operations at the stations to continue uninterrupted during the sale process.
“We’re pleased to reach this mutual agreement, which establishes a clear path forward for these stations and our employees in Chicago following months of negotiations with Merlin,” said Mary G. Berner, President and Chief Executive Officer of Cumulus Media Inc. “We continue to be interested in permanently acquiring these stations on economic terms that make sense for our business. In the meantime, as we have for the past several years, Cumulus will continue to operate WKQX-FM and WLUP-FM while Merlin seeks a new owner. Importantly, nothing is changing in the near-term. It is business as usual for team members, advertisers and partners, and we look forward to achieving a favorable outcome for all parties involved.”
The agreement with Merlin provides for an approximately three month extension of the local marketing agreement with additional extensions thereafter, exercisable upon mutual agreement by Cumulus and Merlin.