Susquehanna Pfaltzgraff Co., a privately held media company, is selling its radio and cable television businesses in separate deals for nearly $2 billion.
Cumulus Media Inc., one of the nation's biggest radio station operators, said Monday it is joining a group of investors to acquire Susquehanna's radio broadcasting business for about $1.2 billion. Meanwhile, the nation's biggest cable system operator, Comcast Corp., said it is buying Susquehanna's cable TV and broadband businesses for $775 million.
Susquehanna Pfaltzgraff, based in York, Pa., had said earlier this year that it would sell the cable business, citing changes in corporate and family circumstances. The company is operated by the children and grandchildren of the Pfaltzgraff and Appell families.
Susquehanna Radio is the largest privately owned radio broadcasting company in the United States and the business consists of 33 radio stations in eight markets including: San Francisco, Dallas, Houston, Atlanta, Cincinnati, Kansas City, Indianapolis and York, Pa.
Cumulus Media's partners in the investment group buying the radio assets include private equity firms Bain Capital, Blackstone Group and Thomas H. Lee Partners L.P. The partnership is called Cumulus Media Partners LLC.
Atlanta-based Cumulus Media will provide management services to the partnership and will get a quarterly management fee. It will also contribute its two FM stations in Houston and two FM stations in Kansas City, Mo., in return for its membership interest in the partnership.
Cumulus will initially own approximately 25 percent of Cumulus Media Partners, with performance incentives that can increase that stake up to approximately 40 percent.
The transaction is expected to be completed in the first half of 2006.
In the second deal, Susquehanna is selling its cable television and broadband services division to Comcast, which already owned 30 percent of Susquehanna Communications. Comcast said the acquisition will add 225,000 basic cable subscribers, based mainly in Pennsylvania, New York, Maine, and Mississippi, complementary to areas already served by Comcast.
Comcast said it will consolidate Susquehanna Communications' operations for a cash investment of about $540 million, or $440 million after certain tax benefits.
"Technological innovation is occurring rapidly in the cable and telecommunications industries, providing the ability for large companies like Comcast to cost-effectively deliver more traditional cable channels, as well as advanced services like video on demand and voice over Internet protocol telephony," said William H. Simpson, president and chief executive of Susquehanna Pfaltzgraff, in a statement.
The deal is expected to close in the first half of 2006, subject regulatory approval and other conditions.