Citadel Purchases Most Of ABC/Disney's Radio Assets
February 6, 2006 at 1:44 PM (PT)
The WALT DISNEY CO. and CITADEL BROADCASTING have approved a definitive agreement to combine ABC RADIO -- which includes 22 radio stations and the ABC RADIO NETWORKS -- with CITADEL BROADCASTING. The newly-combined company, to be named CITADEL COMMUNICATIONS, will be the third largest radio group in the U.S.
"Our ABC RADIO business represents a premier set of assets that have been exceptionally well-managed. ABC RADIO and CITADEL are a strong strategic fit that will create one of the country's largest radio station groups," said DISNEY CO. Pres. and CEO ROBERT IGER. "With this merger we have a unique opportunity to offer DISNEY shareholders ownership in a new radio leader that will be well positioned for long-term success."
a strong strategic fit that will create one of the country's largest radio station groups
CITADEL CEO FARID SULEMAN will be CEO and lead the management team of the new company.
"By joining forces to form CITADEL COMMUNICATIONS, our new company can continue to deliver on CITADEL's impressive record of success as well as pursue many exciting growth initiatives in the future," said SULEMAN. "We look forward to welcoming our talented new colleagues at ABC RADIO who have a long history of strong market performance, and are eager to work together to integrate ABC's top-notch assets into our new strategically enhanced radio group."
As mentioned, the merger includes the ABC RADIO NETWORKS, which create and distribute programming to more than 4,000 affiliates. The programming includes syndicated radio programs such as PAUL HARVEY NEWS AND COMMENT, THE SEAN HANNITY SHOW, and THE TOM JOYNER MORNING SHOW, as well as 24/7 music formats.
Additionally, through an exclusive 10-year licensing agreement, CITADEL COMMUNICATIONS will deliver ABC NEWS RADIO programming to terrestrial radio stations. DISNEY will continue to retain rights to deliver ABC News content in other formats such as broadband, wireless and satellite.
After the transaction, CITADEL COMMUNICATIONS will be comprised of 177 FM stations and 66 AM stations, in addition to the ABC RADIO NETWORKS. As part of the transaction, 14 FM and 8 AM ABC radio stations in nine major markets, including NEW YORK, LOS ANGELES, CHICAGO, SAN FRANCISCO and DALLAS, will join CITADEL COMMUNICATIONS.
ESPN RADIO and RADIO DISNEY are not included in the transaction.
Following the completion of the merger, DISNEY shareholders will own approximately 52% of CITADEL COMMUNICATIONS, and DISNEY will retain $1.4 to $1.65 billion in cash depending on the market price of CITADEL BROADCASTING at the time of closing. CITADEL shareholders will own the remaining 48% of the combined company. Valued at approximately $2.7 billion, the deal is expected to be completed by the end of the year, subject to regulatory approvals.
Meanwhile, DISNEY posted an increase in quarterly profit for fiscal first quarter, rising from last year's $686 million to $734 million (33 to 37 cents/share), handily beating WALL STREET expectations. The company cited growth in its parks and resortsm media networks, and consumer products divisions for the boost, offset by a drop at the Studio ENtertainment division. Revenues rose 2% overall to $8.854 billion; the Media Networks division, which includes radio, showed a 6% rise in revenues to $3.674 billion. A 9% increase in broadcasting revenues (radio and TV) to $1.809 billion, credited mostly to ABC television, boosted the division's results and outpaced the cable networks segment.