CBS Firms Up Plans To Spin Off Radio Division

by Wayne Friedman , July 7, 2016

CBS plans to file an IPO of shares of common stock for its radio unit, the company said on Wednesday. CBS Radio operates 117 radio stations in 26 markets, including New York and Los Angeles.

Bloomberg estimates that CBS Radio could be worth $2.9 billion. CBS Radio says it reaches 70 million U.S. listeners a week.

Back in March, Leslie Moonves, chairman/CEO of CBS Corp., said the company was exploring a sale or spinoff of the radio business.

CBS Radio revenues were down around 6% the entire year for 2015, with one report suggesting the network pulled in around $1.2 billion in revenue for 2015, which has remained virtually the same for the last few years.

For the fourth quarter of 2015, CBS took $454 million charge to reflect the declining "fair value" of the radio FCC licenses. Advertising dollars have continued to shift away from traditional media to digital.

CBS Radio is the third-largest radio group in the United States.

Previously, CBS Corp. spun off its outdoor advertising unit.

broadcast networks, radio

5 comments about "CBS Firms Up Plans To Spin Off Radio Division".

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Ed Papazian from Media Dynamics Inc, July 8, 2016 at 11:13 a.m.
Another sign of the times----I'm sorry to say.
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Doc Searls from Customer Commons, July 8, 2016 at 12:13 p.m.

Radio isn't radio any more. It's just a name for one legacy-labeled stream among countless others on the Net. The boat-anchor legacy is called "range" and "coverage." On AM and FM, it's limited to a city or region, and to legacy receiving devices mostly used in cars, where more and more sources (Apple, Pandora, Spotify, SiriusXM, et. al.) appear on the dashboard the quality of legacy electronics is also limited to cheap available chipsets and by the fashion of concealing antennas, making reception even worse. (AM won't even work in all-electric cars, thanks to interference from computing machinery. That's why it's not included in Teslas.)

CBS radio, the only valuable parts of which are its news and sports coverage, will eventually be just another branded source of "content," which — if people still want it — will arrive via subscription, either directly or through bundles such as SiriusXM provide (currently sans CBS news, last I looked). Since most of CBS radio's income today is from advertising, and people are increasingly boycotting advertising (through blockers and tracking protection), the only sure long term value of CBS is subscription-worthy news and sports. For a smart buyer, that's what's worth having. Maybe. In other words, caveat emptor.

Ed Papazian from Media Dynamics Inc, July 8, 2016 at 7:35 p.m.

Talking about AM/FM outlets, Radio's main problems are the lack of a significant programming presence on a national basis, very limited merchandising opportunities and, most important, the assumption---not necessarily supported by facts---that radio commercials are simply not as effective as TV commercials. Add to this the fact that most advertisers who don't use the medium are very poorly informed about it and radio's lack of a qualified task force to make the rounds, presenting and following up with client brand managers and marketing directors---not media buyers--- a marketing relevant case for the medium and you have an ad revenue problem. It's all very fine to keep promoting radio's high reach but that's not getting radio any lifts in ad revenue---is it? Why not try something different---like more of those Nielsen Catalina ROI studies covering both TV and radio for more representative products and why not find a way to explain the results so decision makers not only get the point but believe it?

Tony Jarvis from Olympic Media Consultancy, July 11, 2016 at 3:04 p.m.

Having worked at CBS radio I am still a great supporter of the medium and its ad effectiveness whatever the digital source via my speakers wherever I am. Radio will always be the "theater of the mind" and as such presents unique creative oportunities. In addition the plethora of programming now available offers everyone riches to suit their tastes!
While I wholeheartedly agree with "try something different" perhaps that should simply start with minute-by-minute plus commercial minute audience measurement for direct delivery comparisons with TV (network) which would give radio a significant edge over spot TV whose audience measurement has long been broken. ROI studies potentially offer radio the "proof of the pudding" in terms of radio's contribution to driving brands sales. However, Ed, before you "endorse" Nielsen Catalina Solutions please be aware that in their Crystal Light Analysis for Time Inc. (magazines) Nielsen Catalina conveniently and consistently mislabelled critical basic media terms. Consequently this research provided misleading and inappropriate descriptions of much of the data collected and therefore tenuous insights.
BTW: NCS' excuses among many, which included certain details of their methodolology, was that such mislabeling, "is a common practice across all media analytics". This is shameful and unprofessional of course. As I pointed out to NCS from Alice in Wonderland, "Then you should say what you mean," the March Hare went on. "I do," Alice hastily replied; "at least - at least I mean what I say - that's the same thing yo know". "Not the same thing a bit!" said the Hatter. "You might just as well say that 'I see what I eat' is the same thing as 'I eat what I see'!"
Sorry Ed, but radio should beware of Nielsen Catalina ROI studies or, as we have seen too often, any studies reflecting, "What results would you like? How much money have you got?"

Ed Papazian from Media Dynamics Inc, July 11, 2016 at 3:57 p.m.

Very interesting comments, Tony, about Nielsen's Catalina studies. I haven't seen these in any detailed way nor been able to ask questions about their assumptions and methodology. If you are correct, then radio sellers need to find another way to get at comparative ROI metrics for TV vs radio---or TV in combination with radio, as the case might be.

I think you are right about radio switching to commercial minute audiences for better comparability however I have grave reservations about the ability of both the TV people meters and the radio PPMs to give a true indicator of commercial "viewing" or "listening". In both cases, this is assumed, not actually measured---and, to be fair, measuring it in a meaningful manner may be an impossiblilty.

Finally, I should point out that of all of the problems facing radio,the most daunting one concerns he belief/assumption by many advertiser decision makers that TV ads are considerably more effective on a per exposure basis. Until this is dealt with---or, at least better defined---- most of the other issues are secondary.