CBS head honcho Les Moonves is looking to ramp up dealmaking as part of an overhaul of his old-growth media company.
His first step — a spinoff of the billboard division — has sparked talk that CBS Radio will be the next to hit the market.
While CBS insists radio is a core business, industry insiders believe Moonves is open to a sale of the station group as he looks to reduce the company’s reliance on advertising and shed slower growth businesses.
“He’s trying to diversify. He’s actively looking. He’s got to do something,” said a top entertainment executive. “And he’s not being shy.”
Sources said that while a sale of the radio unit isn’t imminent, it could happen in the next 12 to 24 months. Cumulus boss Lew Dickey, who runs the second-largest radio station group after Clear Channel, has already sent out feelers to No. 3 CBS Radio, sources said.
By acquiring CBS Radio, Cumulus would become roughly equal in size to Clear Channel. Cumulus has already teamed with CBS to get its fledgling CBS Sports Radio network off the ground.
A source familiar with Dickey’s thinking said he believes Cumulus could buy CBS Radio through a spinoff structure known as a reverse Morris trust that would minimize the tax hit to CBS.
With analysts predicting a five percent decline in revenue for the radio industry this year, industry insiders say there will be merger activity.
“That’s not a growth industry and as pained as it makes me to say it, radio has seen its finer day,” said Jerry Del Colliano, publisher of InsideMusicMedia.com. “The next big thing is mergers.”
While CBS played down any talk of a radio sale, the company has been paring back stations in smaller markets to focus on larger markets.
“We just bought a major station in New York and launched the CBS Radio Network,” said a CBS spokesman. “We are not selling CBS Radio.”
Aside from the flagship CBS network, the company owns billboard business CBS Outdoor and book publisher Simon & Schuster along with premium cable channel Showtime and Internet news site CNET.
Simon & Schuster reportedly held merger talks with rival HarperCollins late last year, although no deal was announced. News Corp. owns HarperCollins and The Post.
Broadcast TV accounts for roughly half of CBS’s $14 billion in annual revenue. But that business is coming under pressure, too, leading other big media companies to diversify into areas such as cable, where CBS only has a small presence through Showtime.
Meanwhile, CBS announced last week a plan to spin off the US outdoor division and turn it into a real estate investment trust. It also plans to sell the international billboard business.
Analysts say CBS could use the proceeds from the sale of the overseas outdoor business — which could bring in $1.3 billion, according to Bernstein Research’s Todd Juenger — to boost buybacks or pursue acquisitions, such as cable channels or a TV/film studio.
CBS has made no secret of its interest in buying cable assets at the right price. CBS discussed a bid for Current TV but didn’t get close to the $500 million offered by Al Jazeera’s backers.
“Other likely suspects include: Hallmark, TV Guide Network or AMC Networks,” Juenger wrote in a recent note.
CBS is also said to be eyeing Sony’s TV and movie production business should Sony decide to unload them as it did recently with its New York headquarters building.
Until now, CBS has focused on buying back shares to boost its stock price — a move that is working.