Cumulus Ejects Out Of 14 Deals
• Cumulus Media, which is currently in Chapter 11 bankruptcy protection, has filed to get out of 14 of its current contracts, not the least of which is its three-year-old “LMA-to-buy” deal with Merlin Media to acquire Alternative WKQX and Classic Rock WLUP/Chicago. In the court filings, Cumulus argues that these deals — which also include broadcast contracts with the Chicago White Sox and Buffalo Bills — are money-losing propositions — pretty much the exact opposite of what a company in bankruptcy needs at this time.
The section that refers specifically to the Merlin Media LMA reads, in part, “In calendar year 2014, the Merlin Stations lost approximately $1.5 million net of the LMA Fee (estimated to be about $600,000 per month). Losses were $0.8 million in 2015, $1.1 million in 2016, and then increased to $5.1 million in 2017. The Merlin Stations’ cumulative losses have totaled approximately $8.4 million to date. Chicago FM has realized these losses because the monthly LMA Fees payable to Merlin, together with the operating costs associated with the Merlin Stations, which include expenses related to employees, as well as selling, general, and administrative expenses, exceed the revenue generated by the Merlin Stations.
“Accordingly, the Debtors have determined that it is in the best interest of their estates to reject the Merlin Agreements pursuant to section 365 of the Bankruptcy Code.” [Special thanks to Tom Taylor for the assist!]
