CBS Radio up for sale

cbs-radioIt’s an end of an era.

CBS Corp. announced on Tuesday it was exploring several options of its radio station group, including a sale.

The stations could be spun-off, swapped, or sold outright. CBS owns several radio/TV combos in most large markets, including Chicago, New York, Los Angeles, Philadelphia, San Francisco, Boston, Dallas, Atlanta, Minneapolis, Detroit, Sacramento, and Baltimore. In all, CBS owns 117 stations in 26 markets.

The group includes some legendary calls, including KDKA Pittsburgh, the first-ever radio station to sign on in 1920. CBS purchased WBBM-TV in 1953, taking the call letters from its radio station to replace the WBKB calls, which went to Chicago’s ABC affiliate (the present-day WLS-TV.)

CBS also owns non-combo stations in Washington D.C., Phoenix, Hartford, Las Vegas, and St. Louis, including KMOX-AM. CBS owned the TV counterpart from 1957 to 1986.

The move was speculated for months, as CBS proclaimed radio to be a “slow-growth” business, despite reports surfacing last summer that radio was having a renaissance year due to increased listenership and reach. But the news wasn’t enough to impress Wall Street.

CBS has no plans to sell any of its TV stations, although it sold some smaller-market ones in 2007. CBS spun-off its outdoor business in 2014.

CBS Chairman Les Moonves said there is no timetable for the deal: “We’ll take our time as we did with outdoor, and we’ll make sure we do it right.”

In Chicago, CBS owns seven stations: ratings and revenue leader WBBM-AM/WCFS-FM (780 AM/105.9 FM); sports talk WSCR-AM (670AM); Adult Alternative WXRT-FM (93.1 FM); Top 40 WBBM-FM (96.3, known as B96); Country WUSN-FM (99.5, known as US 99); and Classic Hits WJMK-FM (104.3; known as K-Hits). CBS leads the Chicago market in radio revenue.

Many of CBS’ properties are strong in Chicago; dominant WBBM had a strong year thanks to newly-arrived Cubs baseball and Bears football, and WSCR is expected to benefit from Cubs baseball coming to the station this spring. Meanwhile, WXRT and WJMK continue to do well.

On the other hand, CBS is feeling the heat from rival iHeart Media on two fronts: WUSN is facing stiff competition from new rival WEBG (Big 95.5) and after years of dominating WKSC-FM (Kiss 103.5), B96 has slipped behind its CHR rival considerably.

CBS has taken a huge $484 million write-down in the fourth-quarter of 2015, citing “the sustained decline in industry projections for the radio advertising marketplace since 2014.”

Potential buyers are hard to pinpoint. Both iHeartMedia and Cumulus are struggling with debt, plus cap/limit concerns come into play. If one were to guess, potential suitors could be Entercom, Hubbard, and Cox. Another scenario is the stations may be sold piecemeal.

This is the second time in a month a major media company has put its properties up for sale. Tribune Media did so a few weeks ago, exploring the sale of some of its assets. Tribune owns WGN-TV and WGN-AM in Chicago.

TV/Radio combos, which were outlawed by the FCC in 1975 unless grandfathered in, is becoming a rarity these days as many media companies are splitting their properties, as witnessed by the number of companies splitting up their TV stations and newspapers. In recent years, Tribune, Belo, Schurz, and Gannett have done exactly that.

Among the big three networks, CBS is the last one to sell its radio division. NBC sold its radio business to Emmis in 1988 and Disney/ABC sold theirs in 2007 to Citadel, which is now part of Cumulus.