CBS Looks To Divest Radio Holdings
CBS Chairman Les Moonves told investors today that the company intends to divest its radio holdings in the coming year.
The plan would “unlock value for our shareholders” in a division that Moonves called “slow-growth and a drain on resources that can be better directed to content production”.
CBS Radio maintains 117 stations in 26 markets with a focus on the largest ones. Moonves intends to explore options including a spin-off, merger, or outright sale of the complete radio division. In recent years the company had focused on narrowing its radio holdings to markets where it also owns television stations, but outside of its swap of its Charlotte and Tampa stations to Beasley for Miami and Philadelphia in October 2014 it had not completed any deals.
In the meeting today with investors, Moonves stated that the company’s radio revenues dropped by 6% in 2015 due to “continued softness in the radio advertising marketplace as well as fewer radio stations and lower political revenues.” The company also took a $484 million impairment charge on the value of its radio group due to the stations no-longer being worth as much as the company previously valued them.
INSTANT INSIGHT: It’s not really a shocker that CBS is looking to exit radio as it narrows its focus on developing further digital video products to better match its CBS television and Showtime holdings. Rumors yesterday stated that the company was interested in acquiring the Starz cable network to pair with Showtime. Liberty Media, which owns 49% of Starz is the majority stakeholder of SiriusXM. Could a pairing of terrestrial and satellite help the company increase its radio revenue?
Looking at other radio groups, iHeart and Cumulus have major financial issues and would have many divestitures to work out. Could CBS Radio be the final piece Alpha Media CEO Larry Wilson needs to take his company public? Perhaps a merger with CBS Radio followed by an IPO for CBS to cash out would enable both groups to get what it wants.