CBS Planning IPO for Radio Unit With No Signs of Right Buyer

(Bloomberg) -- CBS Corp. is planning to file to take its radio division public by the end of the month, a sign that the owner of the most-watched U.S. TV network can't find a buyer willing to pay the right price.

The decision, announced in a prospectus for senior notes due 2020, means the company will cut ties to radio stations dating back to the inception of Columbia Broadcasting System in 1927. While CBS has been exploring strategic options for the division, including a sale, analysts anticipate the company to spin off the business as it did with outdoor advertising.

Terrestrial radio is a shrinking business, with advertising revenue falling and the company writing down the value of its station licenses last year. Cumulus Media Inc. and IHeart Media Inc., two competitors, are both highly leveraged. 

U.S. radio industry ads may drop 2 percent to $14.2 billion this year, according to Magna Global. CBS's local broadcasting division, which includes radio and TV outlets, reported sales of $2.6 billion in 2015, the lowest since 2009. CBS and Showtime are the company's two premium brands, Chief Executive Officer Leslie Moonves has said.

While unloading some assets, the network has said it will increase sales by $3.75 billion through higher retransmission fees, selling CBS All Access and Showtime over the Internet, and licensing TV programs for broadcast outside the U.S.

CBS Radio, which may be worth about $2.9 billion according to Bloomberg Intelligence estimates, operates 117 radio stations in 26 U.S. markets, including WFAN in New York. IHeart is the largest radio company with 861 outlets.

To contact the reporter on this story: Paul Barbagallo in New York at pbarbagallo2@bloomberg.net. To contact the editors responsible for this story: Crayton Harrison at tharrison5@bloomberg.net, Paul Barbagallo, Molly Schuetz