Speculators pondering the future of CBS


CBSTalk of CBS selling its outdoor properties has kicked up again, and some are wondering if the media giant might start there and keep on going – all the way to Hollywood.

Richard Morgan of The Deal added up all the moving parts that could even involve taking the company private.

Divesting outdoor could be worth $6B, but most think it is more realistically valued toward the lower end of an overall $4B-$6B range of possibility. Part of the reason is that although it is a big revenue generator, it isn’t all that big when it comes to cash flow.

According to the Morgan report, another reason to drop outdoor is that it is the only part of the company that does not deal in content; further, it would reduce CBS’s exposure to the volatility of the advertising market in general.

The next steps would be to ditch the 127-station radio group, even though it is estimated to be responsible for about half of the company’s broadcast revenue, which along with that brought in by the group’s 29 television stations is said to be about $2.7B.

There is one more candidate for divestiture – the group’s Simon and Schuster division, which may spark interest as holder of a library of titles that may pick up in value as readers pick up digital material for whichever electronic book-reading device they happen to favor.

CBS would be able to possibly withdraw from the stock market (reducing exposure to the volatility of Wall Street), and it would also be in a position to acquire a major studio, a business they have edged into and a move that would feed into the Hollywood-centric view of the entertainment business that is said to be favored by honcho Les Moonves, and even to an extent by Sumner Redstone himself.

RBR-TVBR observation: CBS is not a toy. It’s not a major league athletic team, either. Some of us football fans in certain media markets have suffered under major league owners who view the team – our team – as their own personal plaything.

The point is, it’s fun to think about what CBS might do – but we think the company would have to receive some serious money for wares to consider parting with cash flow of any kind. We find it a little hard to believe they’d offer bargain prices unless they were under financial duress.

On the radio side, the biggest companies are for the most part capped out in the big markets where CBS stations tend to be – so while there may be a lot of interest in the stations, there may not be very many companies that would be able to pay the interest rates that would be a necessary part of buying them.

Anyway, these are all interesting theories, and we’ll be watching to see if developments seem to indicate a move in this direction.