The sale includes 22 Disney stations and its network-radio business but not Radio Disney or ESPN Radio. Disney had gone out seeking $3 billion for the assets, but today’s repot indicates the final selling price would be closer to $2.7 billion.
The deal would make Citadel the third-largest radio group, behind Clear Channel and CBS (formerly Infinity). Citadel CEO Farid Suleman is a former Infinity executive who grew up in the business with Mel Karmazin, now CEO of Sirius Satellite Radio.
Citadel and ABC Radio don’t share markets, eliminating the opportunity to amortize costs on the market level, but the ABC stations give Citadel a presence in larger and more lucrative markets. Citadel’s 200 stations are mostly concentrated in midsize markets, while ABC has several FM stations in large markets, such as New York, San Francisco, Dallas and Atlanta.
While radio has fallen out of favor with Wall Street, due to it slow growth prospects, its terrific margins remain. News of the impending deal didn’t appear to have much effect on stock prices this morning. Citadel shares were up 5 cents to $12.01, and Disney’s had risen 10 cents to $25.11.