During the past several years radio groups in markets big and small have struck deals to sell their tower sites. Companies including Vertical Bridge and American Tower have paid millions to secure facilities to satiate market demand for wireless connectivity. Broadcasters, in exchange, typically lease back their antenna space. Now Cumulus Media is considering following suit.
CEO Mary Berner said last week the company is “considering strategic alternatives” for the Cumulus tower portfolio, which includes more than 250 sites across 32 states. Even though a radio station can’t operate without a tower, Berner, like other executives, has concluded that owning those sites isn’t core to the broadcast business.
During a conference call Friday with analysts, CFO John Abbot noted that Cumulus is the last big radio group to own such a sprawling network of towers across the country. “We're at a very early stage in our exploration, and we expect to be working through the possibilities over the next couple of quarters.” He didn’t say how much Cumulus hopes to bring in through such a sale, but Abbot said the multiples being paid as the tower industry gears up for 5G wireless are “well in excess” of the 6- to 8-times multiples that are now commonplace for radio station sales. “We may be able to take advantage of a sale-leaseback opportunity that could be beneficial to us,” said Abbot, who didn’t offer any timeframe for when such a deal could be struck. “We’re at a very early stage in our exploration, and we expect to be working through the possibilities over the next couple of quarters,” he said.
Cumulus has been shedding assets as part of its post-bankruptcy strategy. The company has so far paid down $275 million of debt since it emerged from chapter 11 in June 2018. Most notable was its decision to sell six FMs to Educational Media Foundation for $103.5 million, followed by the pending $12.5 million sale of talk WABC New York (770). “We remain very interested and open to swaps or other M&A where the opportunity presents itself for us to bolster our position in any of our markets,” said Berner.
In the meantime, additional land sales are in the works. Berner said the company is currently “working on ways to monetize” some land it owns in the Nashville market. The city, where Cumulus owns five stations, has been quickly growing, making such real estate more valuable than ever.
“Given that we currently have multiple locations in Nashville, we see an opportunity to possibly consolidate our operations there, freeing up that property for sale which would generate more value for the company than we'd realize from continuing to use it as we do today,” said Abbot. He said they’re still in the “early stages” of a Nashville sale.
One other sale that’s been in works for five years may also be finally advancing. Cumulus inked a $75 million deal to sell a Washington market tower site in 2015 to the real estate development company Toll Brothers. But the developer’s plans for the suburban Bethesda, MD site ran into opposition from community organizations, who have repeatedly appealed any approvals the developer received. The delays had Cumulus warning last year they were beginning to consider other options for the land. But that backup plan may no longer be needed.
Abbot said Toll Brothers has successfully won two rounds of appeals in court and the community groups opposing the development plan have said they don’t plan to continue their courthouse effort.
“This is a great outcome for us, as these two approvals were the most significant remaining hurdles to solidifying a deal with Toll,” said Abbot. He told analysts that Cumulus is now optimistic it will be able to finalize the deal “in the relatively near future.” Abbot said he expected the terms of the sale will be revised, but didn’t indicate whether that will mean Cumulus will get more or less for the 75-acre site that’s been home to the sports “ESPN 630” WSBN transmitter and tower for decades. In addition to the sports station, Cumulus also owns news/talk WMAL-FM (105.9) in the Washington market.