CBS may spin outdoor properties


CBS OutdoorIf you have somewhere between $4B-$6B to spend, CBS Outdoor just might be the thing for you – it’s big, it brings in truckloads of cash and it makes a profit. And it might very well be available.

According to reports, CBS honcho Les Moonves has stated that he’d be willing to part with the company’s collection of billboards, despite the fact that its $1.89B in revenue during 2011 comprised about 13% of the corporation’s total.

The reason, according to Business Insider, is that the operating income generated by all that revenue was only $107M. And on top of that, the division had $235M in depreciation and amortization charges.

BI notes that revenue is variable, affected by the advertising environment, traffic patterns and real estate values. Meanwhile, depreciation and amortization are constant, and tend to run higher in outdoor than in any of CBS’s other operations.

Since the division is not moving forward, BI says it’s a drag on the rest of the company and reduces earnings per share.

Marci Ryvicker of Wells Fargo wrote that $6B is rumored as the current asking price, $1B greater than last year when similar CBS Outdoor rumors were making the rounds. She said that word from buyout firms and other outdoor companies has it that $4B stands as a “realistic” price.

Ryvicker doubted that Clear Channel would make an offer given its current debt structure, and that the price tag would be too rich for JCDecaux, another rumored possible buyer. With those two eliminated, she said a private equity firm would be the most likely type of entity to step forward, but said Wells Fargo does not believe any sale is imminent.