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Is CBS Radio Going Public?



Is CBS Radio going public?

On July 6, 2016, a Bloomberg report citing an SEC (Securities Exchange Commission) prospectus filing for senior notes due 2020, that CBS (CBS) is planning to take its asset, CBS Radio, public by the end of this month. The company had indicated the same at the company’s fiscal 1Q16 earnings call.

Regarding CBS Radio, CBS had stated at the company’s fiscal 1Q16 earnings call, “We think a standalone public company exit is the best option available. However, if there is a transaction that can maximize the after tax value of this business in a shorter period of time with a higher degree of certainty, we will pursue that as well.”

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CBS also stated that it anticipates “a traditional two-step and IPO where it’d be sub 20%, again, similar to outdoor if you just looked at that as a template where CBS would own again, 80%-plus initially. But then we would follow that up later with a full separation of the assets, probably again an exchange offer vis-à-vis a split-off. Again, very similar to what we just did with outdoor.”

Why is CBS Radio spinning off?

CBS Radio owns and operates 117 radio stations that are located in 77% of the 25 largest radio markets in the United States. The majority of revenues for CBS Radio are generated through advertising.

However, revenues generated through radio advertising are shrinking. According to a Bloomberg report, citing research by Magna Global and as indicated by the above chart, radio advertising is expected to shrink by around 2% to $14.4 billion in 2016. One reason for the decline in advertising revenues for radio could be increasing listeners streaming Internet radio like Pandora Media (P).

Early this year, according to another Bloomberg report, CBS stated at an investor presentation that it wants to “unlock value” for its shareholders, which is one of the reasons for exploring strategic options regarding its asset, CBS Radio.

At CBS’s fiscal 1Q16 earnings call, the company also stated that it didn’t expect an IPO for CBS Radio to affect synergy in the markets where the company has both radio and television broadcast stations.


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