The faux fund touted by Cumulus CEO Lew Dicky with Crestview, the company that helped it get upside down by acquiring Susquehanna stations, apparently is bankrupt before it gets started.
According to a Wall Street Journal blog:
"The debt financing that is expected to be half of Cumulus Radio Investors’ war chest has not been officially raised yet but Dickey and (Crestview Partner Jeffrey) Marcus said they have gotten strong interest from banks. There is hard and fast timeline for when Cumulus Radio Investors will start buying up stations."
That’s right -- “strong” interest.
No money.
Notice how there has not been one followup public announcement that anyone at all is putting their investment capital at risk with this strange "investment" partnership?
But thank you all the same.
No hard and fast timeline for when the new fund will start terrorizing the radio industry by buying distressed properties.
Let me ask you this.
Would you tell the world you started a new business before you had any financial backing?
Of course you would -- if the venture is more about show than dough as I believe is the case with Dickey.
Again, it’s Tricky Dickey at his best.
Look, he can’t buy Citadel on that money -- even the $1 billion he alludes to in his fantasy announcement.
Can’t buy Lincoln Financial at a distress sale because their radio properties aren’t distressed.
Could he even buy Regent now that they are out of bankruptcy?
The point is moot.
Cumulus can buy a few things here and there from desperate sellers, but when the trade press makes it seem like this big bad wolf is out there stalking Emmis, Citadel, Lincoln Financial and others, they are missing the point.
You’re being punk’d by Lew Dickey, Jr.
He’s not putting any of his money into this venture. Just hoping to make fees as a radio management company (Stop that laughing right this minute!).
And Crestview hasn’t opened its wallet yet.
Don’t hold your breath.
Mr. Dickey, tear down this wall.
I mean, Mr. Dickey, show me the money.
Debt financing is non-existent for solvent companies begging the question why would Cumulus/Crestview get any?
According to a financial observer:
“They are hoping to 'sniff out' money that might be interested in the sector. At some point, they tell them things are so good in radio, going forward, nobody will sell, but maybe they can find room within their own portfolio. I call that, 'syndicating their losses'. That is exactly what Forstmann did to the ABC holders, in the famous 'Morris Trust', where, thinking they had stuck Citadel with aging radio assets, they ended up owning part of his f****d up company (and by extension, he had less)”.
The radio industry is digging out of its doldrums as the economy improves.
Radio stocks -- even Cumulus -- are reflecting it and there’s nothing surprising about that.
My friend, the late Keith Fawcett who worked for Merrill Lynch back in the glory days of consolidation, used to get on my case when I knocked satellite radio as the second coming of terrestrial radio in Inside Radio. I used to tell Keith that I couldn’t imagine how those stocks were propped up so high when the two monopoly satellite companies hadn’t even launched their first satellite yet.
Then, it hit me.
Today, the Dow is over 11,000.
Unemployment is still rampant with hopes that we’ve seen the worst.
But Wall Street is still broken and no one in Washington in either political party seems to know how to rein in those greedy bastards -- I’m talking about vulture capitalists and hedge funds, banks -- you name them.
The real estate market is still for spit.
Banks have money to loan and won’t loan it.
So, tell me again, what has changed since the start of the recession?
Well, a lot has -- but nothing Wall Street or investment banks would care about.
Apple sat out the recession and grew its company as if it were boom times. Apple is poised to become a major player in mobile ad sales through its app revenue generator iAds. In fact sometimes, Apple looks like it wants to be the Internet.
The next generation is graduating, finding jobs, getting married and having children while we are playing around with the thought that once things get better everything will go back to the way it was.
Radio saw declines in listeners, advertisers and interactive businesses started taking money away from traditional media even during the recession.
Keith was right.
Stocks grow based on futures not on performance. That’s why when Apple is predicted to have higher revenue than anticipated, the share price often goes down upon news that it lived up to its promises -- and as an Apple shareholder, I can confirm that.
Wall Street lives on speculation.
Fantasy.
The future.
Which is why I say, be afraid when Lew Dickey acts like he has acquisition money in a stash somewhere.
Nothing has changed that is good for radio. When Jim Cramer does this moronic pitch for an industry he trashed not long ago and never even mentions the threat from new media as a disincentive to buy radio stocks, you know these thieves are back! (Warning: don’t listen to this Cramer rant on a full stomach).
More competitors.
More consumers spending time on mobile devices, iPhones and iPads.
Advertisers already started leaving for new media during the recession.
Since radio is no longer a company you keep (to borrow a phrase from New York Life), you buy it on future speculation fueled by greedy bastards who don’t care about shareholder value.
And we all know what happened when investors and buyers got wrapped up in the last big radio revolution.
The industry collapsed.
Shareholders found their investments worth nothing or pennies on the dollar.
My message as radio stocks begin to recover from record lows is:
When Cumulus does it impression of Clear Channel, they are messing with you.
The radio companies that will actually perform well over the next 12 to 24 months will speak softly and broadcast locally from a big stick.
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