CBS Submits SEC Filing To Spin Off Its Radio Unit

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Never mind the threats to the radio business from Sirius XM, Pandora, and podcasts. CBS tells Wall Street in an SEC filing today that will offer a good deal soon when it spins off CBS Radio — creating a new public offering for the business that dates back to 1927, and became a national power under CBS founder William Paley.

The company now has 117 stations in 26 markets.

They include “many of the leading radio stations in the United States, including the most listened-to Sports (WFAN in New York), News (1010 WINS in New York) and Alternative Rock (KROQ in Los Angeles) radio stations,” the preliminary proxy says. “We own the #1- or #2-rated local Sports radio station and the #1-rated All-News radio station in each of the markets in which we program these formats. Our radio stations reached an audience of more than 65 million people per week in 2015, making us the second largest radio group in the United States as measured both by audience and by revenue.”

CBS had hoped to find a buyer for the business. CBS chief Les Moonves told analysts in May that although he planned to spin off radio there’s “a lot of interest from outside parties” in acquiring the operation.

COO Joseph Ianniello added that the company expects the spin off to take place in two stages: CBS initially would offer less than 20%, but then would follow with a full split — similar to how the company unloaded its billboard business.

If that plan unfolds, CBS Radio will remain part of Sumner Redstone’s media empire after the initial public offering: His National Amusements owns 80% of CBS’ voting shares.

But 92% of the company’s book value represents an estimate of the worth of its FCC licenses and brand name. That’s at risk if the radio business loses popularity. Last year’s earnings were crushed by a $482.9 million impairment charge to account for the diminishing value of the stations.

The document doesn’t say how much debt it will take on, although it plans to make agreements prior to the offering. That cash will go to CBS, not to operate the radio business.

The preliminary filing also doesn’t say how much stock CBS plans to offer, and how much each share will cost.

CBS Radio President Andre Fernandez, who joined the company last year, is the only named executive or board member. The company will have three groups of directors, each serving staggered, three-year terms. Corporate governance activists typically frown on such arrangements, which make it hard for shareholders to replace the board.

CBS Radio has about 3,700 employees, 86% of them full time. With last year’s impairment charge, CBS Radio reported a $132.7 million net loss in 2015, down from a $178.0 million profit in 2014, on revenues of $1.23 billion, down 5.6%.

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