It’s not like CEO Les Moonves decided just yesterday to divest another 50 or so radio stations from CBS Radio. He told Wall Street analysts the company has already had talks with several strategic buyers, so a deal (or deals) could be announced within 30 days. RBR/TVBR estimates that the station sales should bring north of a billion bucks into the CBS coffers. What else will the company get? CFO Fred Reynolds told analysts that the revenue growth rate for CBS Radio should improve by 2% by shedding what Moonves called “slower growth” stations so CBS Radio CEO Dan Mason can focus on the large market stations.
Reynolds told analysts that the exact list of stations to be sold off is still “fluid,” but should amount to around 50 stations in 12 markets. The group to be sold has around $300 million in annual revenues and $100 million in operating profits.
So, as RBR/TVBR does the math, anything above a 10 multiple would mean a price tag of at least a billion bucks. CBS Radio’s 12 smallest markets are Charlotte, Cleveland, Denver, Hartford, Las Vegas, Orlando, Palm Springs, Pittsburgh, Portland, OR, Riverside-San Bernardino, Sacramento and West Palm Beach. That’s a total of 53 stations.
CBS has already paid for its $1.8 billion purchase of CNET, so it has no immediate need to raise cash to pay for an acquisition. The company said proceeds from the radio sales will be used to buy back CBS stock. CBS has been an active buyer of its own stock and CEO Les Moonves still sees the stock as a bargain for buybacks.
RBR/TVBR observation: Potential buyers? The usual suspects – growing companies (or companies-to-be) backed by private equity. We can’t imagine one of the public companies buying the whole bundle, unless they do it with a private equity-backed side company, the way Cumulus bought the former Susquehanna stations. Will this be the opportunity that finally lets Bobby Lawrence start using the Local Radio LLC name alongside Local TV LLC?