Disney Dazzles Wall Street

"Our recently announced plan to acquire Pixar advances our efforts against each aspect of that strategy," Iger said. "In addition, today's announcement of our proposed combination of the ABC Radio business with Citadel Broadcasting (CDL Quote) underscores our commitment to maximizing the value of our assets for our shareholders, while focusing our capital and management resources toward our core businesses."

The radio deal will combine Disney's ABC Radio, which includes 22 radio stations and the ABC Radio Networks, with Citadel Broadcasting. The newly combined company, to be named Citadel Communications, will be the third-largest radio group in the United States, with a strong national footprint reaching more than 50 markets. TheStreet.com reported Friday a deal was imminent.

Disney shareholders will own 52% of Citadel Communications and Disney will retain $1.4 billion to $1.65 billion in cash, depending on the market price of Citadel Broadcasting at the time of closing. Citadel shareholders will own the remaining 48% of the combined company. Valued at $2.7 billion, the deal is expected to be completed by the end of the year, subject to regulatory approvals.

Farid Suleman, Citadel's chief, will be CEO and lead the management team of the new company. Suleman, a seasoned industry leader with both radio station and radio network experience, is the former CEO of Infinity Broadcasting, the companies said.

As part of the transaction, 14 FM and 8 AM ABC radio stations in nine major markets, including New York, Los Angeles, Chicago, San Francisco and Dallas, will join Citadel Communications.

In addition, the merger includes the ABC Radio Networks, which create and distribute programming to more than 4,000 affiliates. The programming includes popular syndicated radio programs such as "Paul Harvey News and Comment," "The Sean Hannity Show" and "The Tom Joyner Morning Show," as well as 24/7 music formats.