Disney fine-tunes ABC Radio Auction

[SOURCE: Financial Times, AUTHOR: James Politi and Aline van Duyn]
Walt Disney has narrowed the field of bidders for its ABC Radio division. The move should pave the wave for a sale by the end of the year. Analysts have estimated the unit could be valued at between $2-3 billion. The potential buyers were Entercom Communications of Pennsylvania, Cumulus Radio of Georgia -- which recently acquired a large portfolio of radio assets from Susquehanna Pfaltzgraff, a Pennsylvania-based conglomerate -- and Kohlberg Kravis Roberts, the US private equity group that unexpectedly emerged as a player in the race in recent days. It was still unclear yesterday whether KKR had teamed up with a trade buyer in order to win the bidding, and perhaps structure the deal as a Reverse Morris Trust, under which ABC Radio would be spun off and then sold with Disney shareholders retaining a large stake. The Disney deal comes at a time when valuations in the radio sector are at a much lower level than when most of the mergers and acquisitions activity occurred in the early 1990s. However, the relatively high valuation of $1.2bn obtained by Susquehanna in its sale to Cumulus encouraged Disney to proceed, in the hope of clinching a deal before the end of the year. Disney’s radio group includes 72 stations, with 44 in the top 25 markets. In 2004, Disney group reported an estimated $710 million in revenue.
http://news.ft.com/cms/s/58e3bb80-6131-11da-9b07-0000779e2340.html
(requires subscription)