22b1fore Lewis Dickey
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When radio broadcaster Paul W. Smith worked in Toledo in the 1970s, there was a boy who cut the grass at the radio station.
“I used to see this young man mowing when I walked from the parking lot to the station back then," the current WJR broadcaster said. “I’d always tell him he was doing a good job but that he didn’t want to do that all his life, and he’d say ‘No, sir.’”
Mr. Smith said he is glad he was nice to that young man, Lewis Dickey, Jr., who in 1997 was a co-founder of Cumulus Broadcasting, which is now the second-largest radio company in the country.
In 2011, Mr. Dickey called Mr. Smith at WJR and told him Cumulus had completed a deal with Citadel Broadcasting Corp. to acquire more than 100 stations, including the Detroit AM radio powerhouse. That boy with the mower was now Paul W. Smith’s boss.
Not only had Cumulus acquired Citadel, it had bought up dozens of small and medium market stations.
Among the first stations acquired by Cumulus in 1997 were six Toledo stations that had been part of Midwestern Broadcasting, which was started by Lewis Dickey, Sr.
It was the elder Mr. Dickey, who died Nov. 28, who made sure his children learned the radio business from the bottom up at the family-owned stations in Toledo.
“We had to mow the lawn, do production, sales … everything,” recalls Mr. Dickey, Jr., who was chief executive officer of Midwestern Broadcasting before founding Cumulus.
“Toledo feels like home,” he said. “It’s like your children — you’re not supposed to have favorites, but I’ve known the Toledo stations longest. They’re special.”
The company that Mr. Dickey founded in 1997 now owns and operates more than 450 stations in 89 U.S. markets as well as a radio network serving more than 10,000 stations nationwide.
Mr. Dickey, 51, is focused on growing Cumulus Broadcasting even further by making it an important source of content for radio and other means of delivering audio material.
For some who have known him for a long time, Mr. Dickey’s success is not a surprise.
Marc Lautenbach first met Lewis Dickey when they were freshmen at St. John’s Jesuit in Toledo. They were both on the golf team.
“It was obvious from freshman ‘Algebra II’ in 1975 that Lew would be successful. He was a great student, took all the right classes, got good grades,” he said. Mr. Lautenbach is currently the CEO of Pitney Bowes, a Fortune 500 company that specializes in packaging and shipping.
For a while, it seemed that Lewis Dickey, Jr., was destined to be a professional golfer. He attended Stanford University on a golf scholarship, earning undergraduate and graduate degrees in English. But an injury sidelined him during his time at Stanford and the downtime opened his eyes to other things on campus. When he returned to golf, it didn’t look like a career any more.
“I just said ‘I don’t want to do that’,” he recalled.
Instead, he headed back to Toledo and the radio business.
He and Stanford classmate Alfred Lutter III created a software operations business called Omni Software and then sold it.
Stratford Research was the next Dickey-initiated start-up. It provided research to broadcasters and led to the discovery of what would become Mr. Dickey’s true calling.
“We had radio stations that used our information, adopted our strategies, and increased their value,” Mr. Dickey said of those Stratford years from 1985 through 1987.
When a group of stations in southeastern Michigan used Stratford research to sell their properties for a big profit, Mr. Dickey decided that was how he wanted to be involved in broadcasting.
But he decided he needed more in the way of a business background and earned a master’s degree from the Harvard Business School in 1990.
“I like to say I started at Harvard and ended at Harvard,” he said, describing the path of his education, which started at Harvard Elementary School in Toledo.
His St. John’s classmate, Mr. Lautenbach, credits “the rigor and discipline” of their high school education as a firm foundation for success. He also pointed to “Midwestern values” as an asset in business.
Lewis Dickey’s Harvard MBA went out into a business world that was in a slow spot.
“We were in a recession. It was awful.”
Mr. Dickey continued his Stratford research business until he spotted an opportunity to grow in Atlanta in 1992.
Two radio stations were in bankruptcy and for sale.
“They were bleeding cash. We bought them at a fire sale on the courthouse steps,” Mr. Dickey said. He moved to Atlanta and worked those stations.
By 1995 the company he had dreamed of developing to grow and flip stations had the two stations in Atlanta, the stations his father had owned in Ohio, and one in Nashville.
The research consulting company, Stratford, was folded into the business.
The name Cumulus was chosen after the wife of Mr. Lutter, his Stanford classmate, told them it meant “to accumulate.” The chance to really do some accumulating came in 1996.
Mr. Dickey was chatting with a man on a plane while returning from a business trip. He was optimistic about a change in federal regulations that would allow companies to own several broadcast stations in a single market.
The fellow passenger provided the connection to the first of millions of dollars in private equity that started the accumulation of 130 stations in small and medium broadcast markets over the next three years.
Lew Dickey, Jr., was named CEO in 2000, and in 2003 Radio Ink named him broadcast executive of the year. He was 41.
In 10 years, the Cumulus station count neared 500, with 7,000 employees.
Cumulus’ 2013 SEC proxy statement showed that as of April 5, Lewis Dickey, Sr., and Lewis Dickey, Jr., each had 13.8 percent of voting control in Cumulus Media Inc. based on shares they own individually and as part of Dickey Holdings Limited Partnership and DBBC LLC.
Crestview Radio Investors has 41.2 percent of voting control.
One of Lewis Dickey Jr.’s brothers, John W. Dickey, handles Cumulus’ content strategy.
Mr. Lutter, the college friend who helped start the original software company, is Cumulus’ chief technical officer.
In looking at good potential employees, Mr. Dickey says he values what he grew up with: a Midwestern sensibility and work ethic.
“I look for a person who is smart, honest, hardworking, competitive, and who has a track record,” he said.
Until recently, Atlanta-based Cumulus had been acquiring radio stations in smaller markets, fine-tuning their formats to fit the market, and combining functions among some stations to save money.
Some stations were sold recently to help pay for an acquisition that marks a future direction for the company.
This month, Cumulus completed a $260 million deal to buy Dial Global, which operated Westwood One, a major broadcast syndicator.
The purchase of an entity that creates programming gives Cumulus access to a variety of programming, including entertainment, talk, and sports.
It opens the possibility of another revenue stream from selling that programming to outlets other than its own stations, including those of the largest U.S. radio business, Clear Channel Broadcasting.
Broadcast business analysts say this acquisition of Dial Global makes the company a serious player in syndication.
It also fits in with Mr. Dickey’s plans for continued growth.
“We will still be acquiring companies, but we will be looking at top 50 markets. In midsized markets, we will program diverse formats. Large markets will focus on specific segments,” he said.
Mr. Dickey said he has high hopes for a concept he likens to ESPN, the sports broadcasting entity.
Cumulus is busy developing “NASH” a country music-based format that is aimed at being a “lifestyle and entertainment brand.”
The rollout for the elements of NASH should begin to be seen in Cumulus markets in 2014, after the consolidation with the Westwood One purchase is complete.
Some businesses that have used the advertising model as a business plan are concerned that potential consumers are being splintered into smaller targets by using media online or on personal devices.
Mr. Dickey thinks radio is still in a good position.
Company research shows that Americans consume 17 hours of audio material per week, material that can be accessed by personal device or in the traditional way.
“Local radio is still free,” said Mr. Dickey, the executive whose start was mowing the lawn of radio stations in Toledo.