CBS Plans to Spin Off Radio Business
July 06 2016 - 3:20PM
Dow Jones News
CBS Corp. plans to spin off this month its money-dragging radio
business, whose holdings include such iconic stations as the
all-news outlet 1010 WINS-AM in New York.
The company, which began in 1927 as a radio company and is now
part of media mogul Sumner Redstone's empire, filed preliminary
documents for an initial public offering with the Securities and
Exchange Commission. The separation, which Chairman and Chief
Executive Leslie Moonves disclosed in March at the company's
investor day, would follow a similar path as the 2014 spinoff of
its outdoor-advertising unit.
National Amusements Inc., the holding company through which Mr.
Redstone controls CBS, owned approximately 79.5% of CBS's voting
Class A stock as of Dec. 31, according to regulatory filings.
In Wednesday's filing, CBS didn't offer much detail on the
planned offering beyond saying it would sell senior notes due in
2020. The notes would add to the company's roughly $8 billion debt
load.
S&P Global Ratings and Fitch Ratings rate CBS's proposed
senior notes at triple-B, two notches into investment grade, with a
stable outlook. Fitch noted the spinoff would lower CBS's exposure
to more volatile advertising revenue by about 5 percentage points
based on 2015 figures, when advertising accounted for about half of
overall revenue.
Proceeds from the offering would go toward "general corporate
purposes," such as buying back stock, according to the filing.
Citigroup, J.P. Morgan, Mizuho Securities and RBC Capital Markets
are the joint book-runners.
The media giant, whose holdings include publisher Simon &
Schuster along with cable networks and broadcasting stations, has
been narrowing its focus on its TV business and expanding into
other platforms, such as streaming and digital, as it seeks to
boost revenue by $3.75 billion through 2020.
Once a dependable contributor to the company's bottom line, the
radio business fell victim to growing competition from satellite
radio and streaming services. In the fourth quarter, CBS took a
$484 million write-down on the value of its radio licenses.
Shares, which set a 52-week-high on May 5 at $57.89, were up 24
cents to $54.91 on Wednesday.
Joe Flint contributed to this article.
Write to Maria Armental at maria.armental@wsj.com
(END) Dow Jones Newswires
July 06, 2016 15:05 ET (19:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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