With the radio business declining, it’s no surprise that CBS is splitting off its radio company.
The radio business is a shrinking business due to the rise in digital media. With the rise of digital media, it is risky to invest in a traditional media company. With the rise of digital media there are risks of potentially losing market share to rivals and declines in advertising revenue.
The statistics show as well. CBS radio has accumulated a net loss of $136.5 million on revenue of $1.2 billion last year, after the diminished value of licenses. In 2014, revenue was 1.3$ billion and the net income was $176.5 million. The Radio Advertising Bureau states that radio advertising sales have decreased 1 percent even with digital radio sales increasing by 5 percent.
CBS Wants Nothing to do with its Radio Business
The CBS Radio Inc., a division of the parent company CBS Corp., is filing for an initial public offering. The company is filing for an initial offering of $100 million. The initial offering was discussed with the Securities and Exchange Commission on Friday. The $100 million is just a placeholder to calculate fees and will change. CBS Radio plans to take a debt to give CBS Corp. and the Friday filing shows in addition to the IPO proceeds.
CBS radio consisted of 117 stations established in the country’s major markets. The prospectus states, “upon completion of both this offering and the separation, we believe we will be a very well-capitalized company and well-positioned to take advantage of our strong assets, scale and competitive strengths to grow our business.”
When CBS Radio becomes an independent company, CBS plans to get rid of common stocks. If the spin off doesn’t occur, CBS will sell its common shares to outside buyers or company stockholders.