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Cumulus Media Inc. (NASDAQ:CMLS)

September 03, 2013 11:00 am ET

Executives

Lewis W. Dickey - Chairman, Chief Executive Officer and President

Joseph Patrick Hannan - Chief Financial Officer, Principal Accounting Officer, Senior Vice President and Treasurer

Analysts

Avi Steiner - JP Morgan Chase & Co, Research Division

Stan Meyers - Piper Jaffray Companies, Research Division

Lance W. Vitanza - CRT Capital Group LLC, Research Division

Amy Yong - Macquarie Research

Davis Hebert - Wells Fargo Securities, LLC, Research Division

Operator

Good morning, ladies and gentlemen. As outlined in the press release and presentation released in the Form 8-K on Friday, today's call may contain forward-looking statements pertaining to the recently announced pending Dial Global acquisition, as well as expected earnings, revenues, cost savings, leverage, operations, business trends and other items that are based on current management expectations and estimates or assumptions. These forward-looking statements involve risks and uncertainties that could cause actual results to differ from those predicted in any such forward-looking statements. For additional information, please seek Cumulus' filings with the SEC.

I would now like to turn the call over to Mr. Lew Dickey.

Lewis W. Dickey

Thank you, operator, and good morning, everybody. I'm pleased that everybody's taking the time to join us this morning to discuss the recently announced acquisition of Dial Global. And also, with me today here is our CFO, JP Hannan. We'd like to do this morning is outline a series of transactions that we're pleased to report that altogether, capital neutral, deleveraging and align our strategy of growing our content business and focusing our broadcast distribution in the top 100 markets. We'll walk through the slide presentation here in a couple -- in a moment or 2, which was released in the Form 8-K on Friday and can be found on our website. Then we'll open it up for questions.

Now as a preamble to the slide deck, we believe that audio, like video, is a widening space across radio, mobile and desktop, and that -- and the effect on that really is expanding total consumption. Content will be produced in various forms and delivered with a multiplatform approach, and we're seeing that both obviously in audio, as well this video. Further, advertisers are increasingly demanding custom solutions and are looking for ease of execution and greater transparency. And we believe that the network industry is an attractive vehicle for long-term growth, and that scale is essential for Cumulus to continue to facilitate growth to make the proper investments. We've been investing in network content now and we've highlighted those at the beginning of the year in NASH -- in our initiatives in NASH and CBS sports, as well as our Right Now Traffic business and some other entertainment content. And these investments are now becoming significant growth drivers for our company. So this transaction represents a capital neutral way for us to accelerate our growth -- our investment in growth, I should say, through the sale of some non-core small-market stations to generate the cash to purchase Dial Global. And long-term, we're well positioned to capitalize on the widening of the audio space through the production of exclusive and premium content that can be distributed across a variety of broadcast and digital platforms. And so with that, let's turn to the deck and we'll run through that and then open it up for questions.

Moving to Page 2, on the transaction overview. This is a deleveraging transaction and with this, we solidify our position as a producer of premium content and exclusive content, while reshaping the distribution of our broadcast footprint in the top 100 DMAs. Cumulus is acquiring Dial for approximately $45 million in cash, plus the retirement of approximately $215 million in cash of debt at closing, so total consideration is $260 million. $215 million retires debt and $45 million is for the equity. Purchase price will pay off all Dial Global debt and Cumulus will receive 100% percent of the Dial Global equity.

Now this transaction is substantially capital neutral. We're selling 12 small and midsized markets to Townsquare Media in a separate transaction for $238 million in cash. And there also some monetization of some other small non-core cash flowing assets for a few dollars. Minimal balance sheet cash will be used to fund remainder of the price. We currently have $76 million of unrestricted cash on our balance sheet.

Cumulus is also swapping 2 midsized and small markets with Townsquare in exchange for 5 stations in Fresno, which is DMA 68. It fits within our stated goal of positioning our company in the top 100 DMAs. And with regulatory approval for the SEC for the Townsquare purchase, we expect simultaneous closings on these transactions by the end of the year. We're looking towards November to close these deals.

And moving on to the next page, just as an -- as a structure of the transaction, as you can see from this, we're paying Dial Global $260 million of cash. We're getting on a pro forma basis for the synergies, $66 million of EBITDA coming back into our business. And conversely, we're selling $33 million of EBITDA, which are the 12 radio markets and receiving $238 million of cash coming back in. The implied process multiple of 3.9x versus 7.3x that we're selling the assets for. And then the swap transaction, which is not outlined there, is in essence, we're swapping $9.5 million of revenue with $4 million of broadcast cash flow, which is Poughkeepsie market 163 and Dubuque, which is a nonrated market. For Fresno, which is market 68 and the revenue is $14 million in Fresno, with $4 million of cash flow. So Fresno is performing below the average market margin of a Cumulus radio station, so there's some potential upside there as well, which is not factored into the incremental EBITDA on a pro forma basis.

Moving onto the next page, again, we think this is a very compelling strategic opportunity for us. We're acquiring a leading provider of premium and exclusive content, and it creates an attractive platform for us now for both content creation, distribution and monetization of these various assets. It's about $40 million of estimated cost synergies and substantial incremental revenue growth opportunities, which are not being factored in here on the pro forma. It's deleveraging on the identified cost synergies alone. They say before we look at any incremental revenue growth opportunities of which we believe there will be many.

And further, it maximizes the value. So this was an interesting way for us to engage in some active portfolio management, enable us to do this on a capital neutral basis and create this kind of upside for our company.

Now let's move on to the next page, which is really an overview of Dial Global. And the way to think about the network business and what we're doing is very similar to network television and television syndication. So the model is you have content creation and then you have an O&O platform to distribute content through and then on top of that, is syndication division to distribute content to a myriad of different affiliates. And as you can see here, Westwood One Dial Global, has about 8,200 affiliate radio stations. And obviously, CMN, Cumulus Media Networks, does business with 5,500 radio stations, so there is significant overlap. It's about 10,000 radio stations on an overall basis, which is a significant part of the commercial landscape in the U.S. So this business distributes, produces and syndicates programming and services to 8,200 radio stations. It's 200 news. The programs -- it's about 200 programs that are news, sports, music, talk, entertainment and services, which would be things like production libraries and digital apps. We'll also syndicate 24/7 formats, prep services, jingles and imaging libraries. And in exchange for all of these programming and services, this is the network model now. Dial Global, as does Premiere, as does Cumulus Media Networks, receives commercial airtime from radio stations. This is not a cash basis, very similar to television syndication, this is a barter transaction where the syndicator receives inventory from the radio stations, that we then take to the marketplace. Airtime is aggregated to sell to national advertisers and it provides advertisers a cost-effective way to reach, again, a broad audience, while targeting on a demographic and geographic basis based on the formats and the individual programming that we're selling.

And moving on to the next page, as you can see, content becomes an engine here that drives both broadcast and digital distribution. And so with our -- with the roughly 460 radio stations that we'll have concentrating in the top 100 DMAs, we then have -- we'll then be doing business with 10,000 affiliates to syndicate this program, I mean, across to -- syndicate the programming across to and then monetize it in the network marketplace. And then there's also an opportunity in digital distribution to take this content and distribute it, as we talked about earlier, in a wider way, which is across the digital platform. We really view the digital landscape with respect to audio in 4 primary buckets. You have streaming, which is -- which you have iHeart and TuneIn, and then you have the custom playlist, which is ostensibly Pandora at this stage, and then you have on-demand, which as iTunes, Spotify and RDO, and then you have the curated content, of which is where this really lives, which is the ability to create curated content in the form of podcasts and shows and exclusive content and radio stations, not just custom playlist and distribute those across mobile as well as desktop.

Moving on to the next page, the identifiable cost synergies. As everyone knows, when we did the Citadel merger and obviously, brought CMP in as well in 2011. We identified $51.9 million of cost synergies there and we have since achieved about $65 million and we did so a little bit ahead of time. This is -- this transaction, we're looking at and identifying $40 million of cost synergies. And the way to keep it in perspective, Citadel was, in essence, 56 independent business units that we bought. And so, this is really one business unit that we're buying and it essentially replicates the infrastructure of our network. So we're looking at eliminating 10% of the combined expenses between the 2 businesses -- for 2 businesses that from an infrastructure perspective, do essentially the same thing. So we believe this is highly achievable.

Moving on to the next page, on the sort of pro forma financial snapshot, I won't run through all the numbers but in essence, the way to think about this is through the series of transactions, we're generating an incremental $150 million of revenue and over $30 million of incremental EBITDA, once synergized. So it's a very accretive transaction, both in terms of the top line and obviously, on EBITDA. And then also what we haven't talked about is -- or haven't quantified, I should say, is the ability for this to create interesting revenue growth opportunities for us.

It's a deleveraging transaction, as we go to the next slide. We had stated early on sort of our 2 objectives operationally were to focus on deleveraging the balance sheet and then to focus on positioning the company for future growth, which is what we talked about the key growth initiatives that we invested in, 3 of them were network-based that I outlined earlier. And so with NASH, CBS Sports and Right Now Traffic. And so with this transaction, we, in essence, were able to take big step in terms of helping accomplish both of those. It's deleveraging by about half a turn and it also really positions our company to be a leading provider, producer and syndicator of content, both in broadcast and in the digital world. So it's been an excellent transaction for us, accomplishes both of our key objectives to delever our balance sheet and to position us for future growth.

So looking at the last slide, in terms of in summary. We're acquiring a leading audio content provider. It's going to provide significant growth opportunities for us and we've identified substantial cost synergies, which really only represent 10% of the combined cost base of 2 business units that replicate the same infrastructure. And that's deleveraging transactions, we just discussed by about half a turn. And all this was really done through some good active portfolio management in the business. And so we're able to, in essence, mine some assets inside and help Townsquare accomplish some of their key strategic objectives to gain scale. And in doing so, really do a nice trade for our shareholders here and position ourselves for future growth and to delever our balance sheet.

And so with that, we'll open it up to questions. Operator?

Question-and-Answer Session

Operator

[Operator Instructions] And your first question comes from Avi Steiner with JPMorgan.

Avi Steiner - JP Morgan Chase & Co, Research Division

Let me start off here. Lew, you gave some good detail on number of stations, spring some board in your own station, you have a network business and where the overlap is. But can you kind of size your own network business before the Dial Global acquisition, either on a revenue or EBITDA basis?

Lewis W. Dickey

Yes. Our network business is about $180 million in net revenue, Avi.

Avi Steiner - JP Morgan Chase & Co, Research Division

Okay. So it doubles that. Great. And then on the synergy side, can you break that down a little bit? How much is kind of the easy low-hanging fruit, back office stuff? And how much, perhaps, is just longer-term content opportunities? It looks like you're getting news from a number of different networks? And just how to think about that?

Lewis W. Dickey

Well, look, for competitive reasons, where we were very explicit in terms of the buckets of the Citadel acquisition, suffice it to say, and since this one was a friendly transaction, we had significantly more opportunity to due diligence on this transaction. So suffice it to say, these synergies are extremely buttoned up and very well-researched. But for competitive reasons, we're not going to bucket them in that level of detail. What I would say is the guidance on this is, it's 10% of the combined expense base of the businesses. And think about it as this isn't at incrementally last transaction, 56 new business units that all have to have some level of independence. This is really one business unit that does essentially the same thing as the business unit that we currently own and operate. So there are awful a lot of opportunities to -- for efficiencies and to combine these efforts and do so in such a way that it's accretive to growth the same time.

Avi Steiner - JP Morgan Chase & Co, Research Division

Fair enough. Let me switch gears here and Slide 5, goes over all your content partners. Any contracts, particularly in sports, coming due here? Maybe have a change control and then I think everybody knows the NFL and can you just talk about that?

Lewis W. Dickey

Yes, good question. The NFL contract, obviously, that was a key asset in this transaction and the NFL contract is good for several more years towards the end of the decade. And the NCAA contract runs into the next decade. And so those are key -- 2 key attributes or content assets that were very important for us in this transaction because as you know, we made a big investment in our sports effort through -- with CBS sports. And it was, in essence, we didn't have any -- we literally had no play-by-play, and ESPN has built a terrific business on the other side, with a combination of 24/7, as well as play-by-play. So it's a much better solution for advertisers when you can offer -- the play-by-play is in high demand. It's live programming and it has the highest value out there for advertisers. And so to be able to bring both of those together, will help supercharge the sports effort. I'm proud of what our guys have done. We're well over 300 affiliates in the CBS sports network without the benefit of any play-by-play. So this is going to really help us to be a much stronger competitor against what the great business that ESPN has built across the street with a combination of play-by-play and 24/7.

Avi Steiner - JP Morgan Chase & Co, Research Division

Excellent data points. Two more and then I promise I'm done. I missed it, but just can you give the revenue cash flow again on the swap portion with Townsquare?

Lewis W. Dickey

Yes. We're swapping $9.5 million of revenue with $4 million of cash flow for $14 million of revenue and $4 million of cash flow. And so obviously, we believe there's going to be a margin improvement in that cluster for us.

Avi Steiner - JP Morgan Chase & Co, Research Division

Okay. And then last question I'm throwing out there, even though maybe not the purpose of the call, but what kind of month removed from your last call, any update on just operational business trends at Cumulus?

Lewis W. Dickey

Sure. I mean, look, it's -- we're making good progress. We're executing and we're pleased with what we're seeing out there. And similar to what we talked about on the last call, we expect to be positive for the quarter, including political and nicely positive x political. And that we're building a good head of steam going into fourth quarter. So -- and the network is -- and our network is doing very well. And so I think we feel pretty good about what we're seeing right now.

Operator

And your next question comes from James Marsh with Piper Jaffray.

Stan Meyers - Piper Jaffray Companies, Research Division

This is Stan on behalf of James. Just 2 quick ones. One, do you guys expect any competitive response from Premiere? And how does that change your relationship there? And then in terms of your O&Os, how much of Dial's content is already on O&Os? And is there any way you map out kind of the opportunities for your O&Os with Dial, now being part of your group?

Lewis W. Dickey

Stan, I'm going to kind of take them in reverse order. On -- we do very little business with Dial Global today and so, there is an excellent opportunity for us to distribute more Dial Global content across our window O&O platform. And so I think that's going to be big plus and we talked about there's incremental growth opportunities for revenue, that's certainly one of them. Then in terms of Premiere's competitive response, look, they're great competitors. They run an excellent company and competition is good for everybody. And so as I mentioned at the outset, in the entertainment, talk and information verticals and largely services, Premiere has really had a sort of a clear #1 slot and without any real strong competition. And so, now there's going to be good viable competition. And sports, because nobody was able to muster play-by-play along with good 24/7 across the street combined with this, some key distribution, now we have that to complete against our friends over at ESPN. So again, so there should be some more competition in that content vertical as well. So sports, information, entertainment, talk, and even services, it's going to be a much more competitive marketplace today. And I think that's great for consumers, it's great for the affiliates and it certainly is great for the advertisers looking for more ways to create ad packages to address their needs for good customized solutions. So we think this is a win-win across the board and it really positions our company as a strong content provider and creator and producer here to be able to play both in broadcast and digital distribution.

Operator

And your next question comes from Lance Vitanza with CRT Capital Group.

Lance W. Vitanza - CRT Capital Group LLC, Research Division

A couple of questions, if I could. Just first, I guess, on the housekeeping side. Are these transactions contingent on one another? If God forbid, if one were to fall apart, does that mean the other one doesn't happen?

Lewis W. Dickey

Well, they -- Lance, they are, in terms of the Townsquare as the source of funds for the Dial deal. So the Townsquare is a regular way FCC deal. There's no issues there and they have firm financing commitments to execute that transaction. So obviously, that was a -- these are related deals, but everything has firm-signed financing commitments. And as I say, there's nothing controversial about any of these. And we expect those to close in as soon as 60 days. And so we think this is -- this should move. That is the source of proceeds for the Dial deal.

Lance W. Vitanza - CRT Capital Group LLC, Research Division

Okay, and then can you talk a little bit more about the revenue opportunities beyond the cost savings? I mean, I know you mentioned a couple with CBS Sports and having the play-by-play and just distributing Dial content throughout the rest of your footprint, are there any others that we should be thinking about?

Lewis W. Dickey

Well, sure. There's a number of situations where we've been taking network vehicles to the marketplace. And the network marketplace is over $1.5 billion, and where we've been taking network vehicles to the marketplace that winning impressions, that aren't strong enough to compete against the market leaders. And so if you have 2 different companies that are taking sort of weak groups of impressions to the marketplace and independently, they're not able to really compete for a share of buy and challenge the entrenched incumbents, now we're in a much different position. And so we will be able to combine some efforts to create some critical mass and I'll go compete effectively for a share of advertiser dollars against some entrenched incumbents. So I think that it's really a factor of being competitive now on specific buys and network because vehicles that we worked before. I think there are incremental opportunities to distribute content on our O&O platform that hasn't been there before. I think there's going to be opportunities to take existing Dial relationships, particularly in the smaller markets and take a lot of things that Cumulus has been doing, investments that we've been making in our platform, in systems and training and software and to be able to productize that and distribute that down to midsize and smaller markets where we have -- we're not competing in those markets for broadcast distribution and the ability -- and these are areas where we've got our teeth, we understand the challenges that these broadcasters face and I believe we're going to be in a position to, in essence, productize enterprise solution and distribute them down to the broadcasters to help them improve their bottom line and run with more competitive margins and give them more flexibility. So I think it's a win-win for our affiliate partners as well in that respect because we're going to be able to create interesting new ways to help them improve their business. And then, lastly, along with our software development effort, we're going to be in a position to start to create -- advertisers are looking for easier ways to execute and more transparency. And that's going to be a focus of our development efforts to help do that for our monetization engine, so to create more sort of ad tech or NDM platforms to help the buyers do their job more efficiently, which is to execute and to have a clarity and transparency and sort of ease of operation and expediency. So those are all things that they're looking for that can ultimately help drive our greater share of their dollars. And so this is a kind of -- this creates scale that enables investment, that enables innovation, that enables us to create more products and so I truly look at it from really all across all of our constituencies and feel that this is a positive outcome for all of them.

Lance W. Vitanza - CRT Capital Group LLC, Research Division

Great. And then my last question, not to get too far ahead here, but beyond this transaction, are there other opportunities, I don't expect you to name them, but are there other opportunities to acquire content assets out there?

Lewis W. Dickey

Well, look, there's no various entry on this, so people can create content everyday. And good ideas are being hatched everyday out there. And so there's going to be ways for producers on an independent basis to come to us and work with us to help distribute their content or to help monetize what they have and they can still retain ownership of their content. So we're also open for business that way as well to be a facilitator for independent producers to create content. And then again, the nice thing is we've got a good, we've got a good what we call a sort of a test kitchen with our O&O group that before anything goes out to our affiliate partners, we're able to, in essence, refine it and make sure that it is a solid solution and see-worthy before we take it out to them. So I just think it just gives us a great vertical integration in that respect to be able to produce a better content and better solutions for our partners.

Operator

Your next question comes from Amy Yong with Macquarie.

Amy Yong - Macquarie Research

Lew, can you just help us think through some of the longer-term revenue synergies via digital SweetJack? And then also some of the international growth markets that Dial is in? And then previously, I think you had quantified sports and talk being a $150 million market for you. Can you update us as to what the size of those markets are opposed to transaction?

Lewis W. Dickey

Okay. We said this, we said talk was -- sports and talk, right, was about $150 million in terms of -- but that includes the building for our local broadcast outlets there. We think that the sports market -- so we want to make sure we don't conflict the 2. The sports market itself is well over $150 million, it's part of that $1.5 billion dollar pie. We think that the sports market is well over $300 million that's out there, sports alone. So we'll be in a much more competitive position with this combination to go to -- to provide, in essence, to be more competitive against ESPN and others as we go out to the marketplace for sports. Talk, same thing. Premiere really has the lock on talk and with Hannity, Limbaugh and Beck and they've got a great business. And so this gives us a little more critical mass there, along with our O&O platform to start to mount a modicum of a challenge here in that respect. I think that we think about services, things like TM Century, which is the Tiffany standard here in that business. To be able to take that and to start to add incremental dimensions to that floor to help with ad campaigns and inspect spots, to help provide sales packages for our affiliates to go out and target specific categories and be more successful there as we're doing with our own business. Cumulus has been leading the industry for the last 4 quarters in local sales growth and a lot of these systems and the investments that we've made are the reason for that. And we want to make those available to broadcasters, so they can go out and compete more effectively. So then you mentioned internationally, currently, I should say, we really do little or no business internationally and Dial, as a fledgling international business and what broadcasters are looking for across the globe are solutions today. So the ability is to be able to create good enterprise solutions, be it systems and software and training, particularly in English-speaking countries, it's going to be -- that's sort of a no-brainer to be able to productize that incentive offer and those are cash deals, those aren't bartering, we're not monetizing inventory and Australia and New Zealand or Canada or U.K. And so to be able to sell that content for cash, which is the regular way of doing business there, incremental growth opportunities for us. So those are all areas that we're -- in due time here, we'll be able to start to setup and penetrate those markets more efficiently.

Amy Yong - Macquarie Research

Great. Can I also just ask on what your ad mix will look like post the transaction? How much exposure you have to auto and housing?

Lewis W. Dickey

Well, auto is about 15% of our company's revenue and quite frankly, I'd like it to be a little bit more than that. Television are twice that much. And so I think we've got upside there in auto, particularly in the local dealers. Those are just major retailers in all our markets and it should have -- radio has got a great value proposition for auto and we want to make sure we're capturing that. In terms of housing, it's how you want to parse that. If you look at financial services on the mortgage brokers, that was as high as 5% or 6%, and it's less than 2% today. And so when we think about the ability, but then when you also look at it in terms of home improvement, and then the big-box stores like Home Depot and Lowe's, it starts to take on a greater percentage of our mix. So we are -- radio is definitely tied to housing and auto because those are large consumer segments and we're tied to the consumer, ultimately. So as those continue to turn, we think we're in the sort of the early stages of a longer-term cyclical recovery here. We're nicely exposed to that and we should benefit handsomely from that turn. And the network is just one more extension of it. If you think about pools of revenue out there with national spot and network and local, those are sort of the 3 areas, plus now digital, the 4 areas. The 4 pools of revenue that we're playing for. And this gives us a real opportunity in that $1.5 billion pool of revenue to be much for competitive now and to, I think, will be a great growth driver for our company. And also, again, position us as the media landscape continues to change because I say, the parallel is very close to what you're seeing in video. The fact that you have IP video is not going to put the broadcast television world out of business. It's just incremental consumption of content and more ways to create ad packages and we want to make sure that an audio is widening the same way that video is widening. And if we weren't playing in this area, I think it would put us in a position where we would be -- we would sort of be relegated to one specific stream of revenue going forward, which is really sort of local and national spot and we wouldn't be in a position to play as the space widens. And we think this is what -- this has positioned us very nicely to do here.

Operator

[Operator Instructions] And your next question comes from Davis Hebert with Wells Fargo.

Davis Hebert - Wells Fargo Securities, LLC, Research Division

I wonder if you could provide a little more color on the network revenue streams? As you pointed out, Dial, I believe, is primarily weighted toward barter. Is that the case with the legacy Cumulus network as well?

Lewis W. Dickey

Yes, Davis. The model in the U.S. is, for all the domestic syndication, is barter. And so you're providing product for affiliate stations. In exchange for that, you're receiving inventory. Some of it in program, some of it potentially outside of the program that you're running. And then when, obviously, when you're providing services, there aren't programs such as imaging services or commercial production services or software or even sales training. And when you're doing things like that or market research, you're just getting inventory for it. So -- and then it's taking that inventory and having enough and critical mass to be able to go to the marketplace and provide solutions for advertisers who are looking to reach large groups of consumers. And to be able to do so in such a way that is easy to buy, same thing, again, same model of network television, that's easy to buy, easy to execute, which is sort of the key for the shops today and then also has a lot of transparency and accountability. And that's what I think the scale is going to enable us to do more effectively.

Davis Hebert - Wells Fargo Securities, LLC, Research Division

Okay, great. And then not to focus too much on the near term, but I know you guys had talked about the network start of the year, soft, but it had firmed up in the past couple of quarters. I think Clear Channel had sort of talked about the same sort of trends. If you could talk about, since you had access to the books, is Dial seeing the same sort of trajectory?

Lewis W. Dickey

Dial's fourth quarter is expected to be positive and to move nicely. So Yes, I would say that they are seeing -- and I know Clear Channel mentioned it on their last call, but it was a growth driver for them. So we are all seeing that, yes.

Davis Hebert - Wells Fargo Securities, LLC, Research Division

Okay. And then back to some of the contracts, I believe CBS amended the contract with Dial earlier this year. Does this acquisition change anything on that front?

Lewis W. Dickey

No, not at all. And as you know, we're already partners with CBS on the sports business, so this just further solidifies that partnership.

Davis Hebert - Wells Fargo Securities, LLC, Research Division

Okay. And then JP, on some of the numbers on the pro forma balance sheet, the $15 million of cash, is that expected at closing? Is that the difference between, I guess, the $22 million difference between Townsquare and the Dial deal?

Joseph Patrick Hannan

No. That's just the amount of cash that would be used from the balance sheet to facilitate the transaction, assuming that other non-core asset sales haven't closed by that point.

Davis Hebert - Wells Fargo Securities, LLC, Research Division

Okay. I understand...

Joseph Patrick Hannan

When we put this deck out, that's as of the end of Q2. We actually have about 30 million more on hand now.

Davis Hebert - Wells Fargo Securities, LLC, Research Division

Well, Okay. Got it. And then for the bank-defined leverage, are you allowed to add back the cost synergies from this deal to the pro forma EBITDA?

Joseph Patrick Hannan

That's something we'll have to kind of talk to our lenders about or our agent bank. We do have a mechanism in our current credit agreement to handle that and more to talk about that in the coming earnings call.

Lewis W. Dickey

We appreciate everybody taking the time to join us today and we'll be doing our earnings call at the end of October, and look forward to bring in everybody up to speed at that point. Thank you very much and have a good day.

Operator

And this concludes today's conference call. You may now disconnect.

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Source: Cumulus Media Inc., Dial Global, Inc. - M&A Call
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