LOS ANGELES (AP) — The Walt Disney Co. said it will sell its 22 ABC Radio stations and network to Citadel Broadcasting Corp. in a cash and stock deal valued at $2.7 billion.
The transaction gives Disney shareholders a roughly 52 percent stake in a new company, called Citadel Communications, which combines Citadel’s stations with Disney’s ABC assets.
The deal does not include Disney’s ESPN Radio and Radio Disney networks.
The transaction gives Citadel 177 FM stations and 66 AM stations in the country’s top markets, making it the nation’s third-largest radio group. The complex deal is structured to be tax-free to Disney shareholders.
ABC Radio owns WRQX-FM (Mix 107.3), WJZW-FM (Smooth Jazz 105.9) and WMAL-AM (630) in the Washington area; Citadel does not own any local stations.
Disney also reported higher earnings in its first quarter despite a plunge in profits from its studio division.
The media conglomerate said net income rose to $734 million (37 cents per share) in the fourth quarter, compared with $666 million (33 cents per share) a year earlier.
Revenue rose slightly to $8.85 billion from $8.67 billion a year earlier.
The current quarter includes a one-time gain of $70 million (2 cents) related to the sale of assets.
Disney had said for more than a year that it was looking to sell its ABC radio group. The company said yesterday that owning the radio stations was not important to its core goals of creating popular shows, using new technology and expanding internationally.
“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,” Disney Chief Executive Officer Robert Iger said.
Citadel CEO Farid Suleman will lead the new company.
Disney will borrow between $1.4 billion and $1.65 billion, using its ABC Radio holdings as collateral. It will spin off or split off the stations in a transaction that would require Disney shareholders to swap current shares for shares in a new entity.
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