Cumulus Fizzle Typical of Radio's Fading Signal

Shocker: The Cumulus Media (CMLS - commentary - Cramer's Take) deal has broken down! This going-private transaction was one of the longest endless dragouts, even as the stock kept going lower and lower and lower, signaling, no doubt, that the deal was always in jeopardy, almost from the day it was announced.

There were always hopeful people. Stiffel Nicolaus put out a note last summer when Cumulus reported, saying that the deal, which was valued at $11.75 a share, should be able to get done. And who can blame them for hoping, especially with Clear Channel (CCU - commentary - Cramer's Take) looking as though it will get done at an astronomical $36, given the deterioration, long-term, the secular decline, of the media.

Cumulus is another one those unreal situations where radio is just going through a death spiral but the managements just don't buy it. No industry, save the monoline industry, is as glowing and positive on businesses that are just slowly dying. Emmis (EMMS - commentary - Cramer's Take) and Entercom (ETM - commentary - Cramer's Take) have managements that are every bit as bullish as Cumulus was.

Cumulus' Lew Dickey is one of the nicest guys I have ever met. He is a true believer, and like everyone else in radio, he only looks at cash flow. No matter what happens, the cash flow is always looking good to these guys.

Radio is a funny business. The managements just don't know how to be anything but optimistic. They are always talking about how much money they are going to make.

The reality is that if XM Satellite Radio (XMSR - commentary - Cramer's Take) and Sirius (SIRI - commentary - Cramer's Take) combine, these companies are going to see a dramatic leg down, as all cars will come standard with satellite.

Maybe it doesn't matter. But these media industries are endlessly drawing bargain-hunters. And the big money still loves them, as we can tell from the Clear Channel, where the players who want to close the deal are talking a real good game about how great radio is.

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