Reaction from industry experts to the news CBS intends to explore its options for the Radio division have ranged from “It’s a bad omen for radio” to “This whole thing is sad to me.” Another expert told RBR+TVBR “maybe bringing in new owners committed to radio would be good.”
We’ve reported CBS has been selling smaller-market stations for years, but we wanted to know what clinched the decision at CBS to pull the trigger on the radio division now.
One broker asked us rhetorically: “The radio division is highly profitable. So why sell it?”
Indeed, revenue in the company’s local broadcasting group, which also includes its TV stations, totaled $719 million in the fourth quarter of 2015, down 9 percent from $785 million during the same period the previous year. CBS said that revenue in its radio group was down 5 percent in the fourth quarter of 2015, because of “continued softness in the radio advertising marketplace and lower political advertising.”
CBS also reported an impairment charge of $484 million last year to reduce the value of F.C.C. radio licenses. The radio division grossed $1.28 billion in revenue in 2014, according to BIA/Kelsey.
Brokers believe CBS Chair/CEO Les Moonves sees more growth coming from TV and streaming in the future; Indeed, we’ve reported Moonves was enthused about these avenues, plus more revenue coming to the company from television retransmission fees and political advertising this year.
“Basically radio’s not high-growth and it’s not video,” summed up a second broker from a larger brokerage house.
Still a third expert, Bob Heymann of the Chicago office of Media Services Group, echoed this, noting radio’s recent small growth. “For public companies like CBS, what drives stocks are revenue growth.”
Sumner Redstone leaving the company gives Moonves room to make big-ticket decisions now. And a company departure and arrival signaled coming change, experts believe. Former CBS Radio President/CEO Dan Mason departed last year and Andre Fernandez took over the role. Fernandez helped Journal sell itself to Scripps, making one broker speculate he could have been brought in to do the same thing for CBS Radio — sell it.
