Report: CBS Radio Still Open To Sell-Off

Now that CBS Corp. has released preliminary financial information related to its intention to spin off or sell its radio business, Variety took a look at the unit’s performance vs. that of its major radio peers: iHeartMedia, Cumulus Media, Townsquare Media, and Alpha Media.

CBS is fifth on the list in terms of number of radio stations owned, with 117 as of the end of 2015. At the top is iHM, with 861; followed by Cumulus, 454; Townsquare, 309; and Alpha, 136 (the latter has grown to 250 following an acquisition that closed earlier this year).

But when you look at 2015 revenue, the field is different. While iHM is the giant in this category, too, with well over twice the revenue of any of its peers, CBS ranks second, just ahead of Cumulus and with twice as much as Townsquare.

CBS Radio also scores fairly well with operating margins, although they’ve been declining for the past two years. Radiocontinues to suffer in the face of competition from TV and online options. Ramping down costs in proportion to revenue is challenging; hence the squeeze on margins.

Though iHM might seem like the sector’s most attractive business, it is saddled with enormous debt.

CBS Radio, on the other hand, has zero debt pre-spinoff (none of the CBS corporate debt is allocated to the radio unit). However, it will take on an as-yet-unspecified amount of debt before a spinoff, which will change the equation.

Judging by commentary on its recent earnings call, CBS is still open to a sale of the unit, and appears to prefer that outcome to a spinoff. It’s a rare opportunity for a buyer to get one of the biggest U.S. radio businesses in one fell swoop.

But the lack of activity since the filing in early July suggests that buyers aren’t coming forward — at least not at the right price — and the obvious bidders have their own heavy debt loads to consider. A spinoff is starting to look like the most likely outcome after all.