• by Erik Sass  @eriksass1, June 21, 2011

Following his exit from the newspaper business in October 2010, former Tribune CEO Randy Michaels is heading back to more familiar territory with a new deal to buy three radio stations: two in Chicago and one in New York City from Emmis Communications.

Michaels has formed a new company, Merlin Media, to carry out the transaction, which will be funded in part by GTCR, a private-equity firm based in Chicago.

According to the terms of the deal disclosed in a filing with the Securities and Exchange Commission, Emmis will receive somewhere between $110 million and $130 million. It will also retain a partial interest in Merlin Media, including the right to appoint one of Merlin's board of five managers.

The Chicago stations to be acquired by Merlin include WLUP (97.9 FM, "The Loop," classic rock) and WKQX (Q101, alternative). In New York, Merlin will pick up WRXP (101.9, classic rock, new music and alternative). It's unclear whether any of these stations will change formats or on-air personalities following the acquisition.

WLUP has been a mainstay of classic rock in the Chicago area since 1977, and WKQX has remained similarly committed to its alternative format since Emmis relaunched it in 1992. WRXP switched from smooth jazz to its current format in 2008.

Emmis CEO and chairman Jeff Smulyan stated: "While it is always difficult to part with stations that have been valuable contributors to our company, we believe that today's transaction will create significant value for our shareholders. As a significant minority partner in Merlin Media, we're delighted to remain engaged with these markets and stations in the exciting days ahead."

Although he made his name in the radio business, Michaels' most recent claim to fame was his role as CEO of Tribune Co., which remains mired in a drawn-out legal battle resulting from its declaration of bankruptcy in December 2008.

Michaels resigned the top spot at Tribune in October 2010 amid complaints about an off-color email sent by his right-hand man, chief innovation officer Lee Abrams. Many observers said the email controversy was a convenient way for Tribune's board of directors to eject Michaels, as well as placate creditors unhappy with the bankrupt company's management.