Report: CBS Radio may go on the block


CBS RadioCBS Corp. CEO Les Mooves is looking to ramp up dealmaking as part of an overhaul of his old-growth media company. His first step — the spinoff of the billboard division — has sparked talk that CBS Radio will be the next to hit the market, according to a NY Post story:

“While CBS insists radio is a core business, industry insiders believe Moonves is open to a sale of the station group as he looks to reduce the company’s reliance on advertising and shed slower growth businesses.

“He’s trying to diversify. He’s actively looking. He’s got to do something,” said a top entertainment executive. “And he’s not being shy.” Sources said that while a sale of the radio unit isn’t imminent, it could happen in the next 12 to 24 months. Cumulus boss Lew Dickey, who runs the second-largest radio station group after Clear Channel, has already sent out feelers to No. 3 CBS Radio, sources said.

By acquiring CBS Radio, Cumulus would become roughly equal in size to Clear Channel. Cumulus has already teamed with CBS to get its fledgling CBS Sports Radio network off the ground.

A source familiar with Dickey’s thinking said he believes Cumulus could buy CBS Radio through a spinoff structure known as a reverse Morris trust that would minimize the tax hit to CBS.”

While CBS played down any talk of a radio sale, the company has been paring back stations in smaller markets to focus on larger markets.

“We just bought a major station in New York and launched the CBS Radio Network,” a CBS spokesman told The Post. “We are not selling CBS Radio.”

Meanwhile, CBS announced last week a plan to spin off the US outdoor division and turn it into a real estate investment trust. It also plans to sell the international billboard business.

Until now, CBS has focused on buying back shares to boost its stock price — a move that is working.

On the Outdoor side, CBS has begun converting its outdoor segment in the Americas to a real-estate investment trust (REIT) and will also divest the segment’s business in Europe and Asia. The goal is to increase shareholder value. Indeed, shares rose some 9% after the news came out. As part of the REIT conversion plan, CBS will submit a request for a private letter ruling from the IRS in Q1. If the ruling is granted, the conversion could be completed in the taxable year beginning in 2014. The other part of CBS’s outdoor business, in Europe and Asia, will be divested and presented as a discontinued operation as of 12/31/12.

RBR-TVBR asked Cumulus CEO Lew Dickey for any reaction to the story, but has heard nothing back yet.

See the NY Post story here

RBR-TVBR observation: It does make some sense. CBS Radio just formed the CBS Sports Radio Network with Cumulus and that airs on numerous CBS Radio stations. Cumulus would be the only group that would make sense at this point to do the sale because that revenue would stay at those stations.