More Fuel for CBS Fire Sale Speculation

[SmokeRing]

I'd be shocked if Sumner Redstone hasn't already privately decided to chunk this dead weight off the Viacom ship. The only question is how many months till the announcement:


CBS Radio Q2 Revenue Falls 8%


CBS CORP. second quarter overall revenues fell 1% to $3.48 billion, blamed by a decline at radio, which dropped 8% to $519.1 million. Net earnings from contiuned operations rose from $380.1 to $489.8 million (47 to 64 cents/diluted share), and free cash flow rose 2% to $546.2 million.

Radio's revenue hit is being blamed on the soft ad market and "the impact of programming changes at 27 radio stations," which presumably includes the departure of HOWARD STERN and format changes at several stations. Division operating income fell 20% to $219.6 million (although 2005's numbers included a one-time $15 million gain from a station sale and stock-based compensation increased from $600,000 to $3.4 million).

Pres./CEO LES MOONVES said, "Radio has struggled as the marketplace continues to face challenges. Nevertheless, we are encouraged by the early results of many programming changes, particularly during morning drive time. The sale of selected stations in smaller markets will enable us to focus all of our energies on higher-growth markets, and recent initiatives to reduce Radio's cost structure will enhance the turnaround."

The company's guidance is for low single-digit revenue growth and mid-single-digit growth in operating income and earnings per share.

 

[Slambang]

I have a sneaking suspision there is going to be changes in Dallas radio come 2007....

 

[copydesk2]

About time.

 

[PandK_71]

At 105.3 I see Pugs and Kelly hitting the beach.
Kelly, will raise hell and sue..AGAIN but it will go nowhere, much like the career of Pugs and Kelly.
Break out the suntan lotion!!!!

 

[klifhanger]

I don't see man changes. Kluv is doing fine, Free 105 will still have Russ,maybe P&G will go back to working at 7-11, I would say Jack will change,but face it over all it's an improvement over "hot" and "wild". Introduction of Live DJ's? maybe.

 

[davideduardo]

Re: Why is the term Fire Sale being used?

I don't understand why "fire sale" is being used in this context. CBS/Infinity announced nearly two years ago that they would move out of the smaller markets that produced very little BCF relative to the management time needed to run them.

Generally, small markets take more administrative time as you have less expereinced staff that needs greater guidance. With the current high prices for stations, this is a great time for CBS to take bids on the stations that do not produce much money.

Again, they announced their intent to do this years ago... it is hardly a fire sale.

 

[SmokeRing]

Again, they announced their intent to do this years ago... it is hardly a fire sale.

David, sounds like you need to get yourself caught up on the current news. Read this link:
http://www.businessweek.com/magazine/content/06_29/b3993098.htm?campaign_id=search

 

[MarvinMiles]

REAVID ED.

David and most all others on here are full of themselves and proven mostly wrong. That's Radio i've become to learn.

 

[davideduardo]

Again, they announced their intent to do this years ago... it is hardly a fire sale.

David, sounds like you need to get yourself caught up on the current news. Read this link:
http://www.businessweek.com/magazine/content/06_29/b3993098.htm?campaign_id=search

The current sale of stations, basically in markets smaller than #50 or slow growth markets, was announced in late 2004. Finally, after the division of Viacom into two entities, Moonves put up a list of stations for bids, about 3 months before the date on the article you cite.

Again, these stations are being sold because they are not big dollar market facilities. As an example, the billings of every station in Fresno, a spin-off market, are less than 4% of the total billings of the LA market. Yet Fresno probably takes more management time than LA.

60% of the US population is in the top 50 markets. That is why there are vastly lower rates and revenues in the smaller markets.

 

[davideduardo]

REAVID ED.

David and most all others on here are full of themselves and proven mostly wrong. That's Radio i've become to learn.

And your qualifications or alternate point of view are expressed where?

If you have nothing to contribute, you are simply a sniper.

 

[SmokeRing]

The current sale of stations, basically in markets smaller than #50 or slow growth markets, was announced in late 2004. Finally, after the division of Viacom into two entities, Moonves put up a list of stations for bids, about 3 months before the date on the article you cite.

David... Dude! Don't you get it? The article I posted has nothing to do with the CBS radio stations already on the sales block. The article is about stockholders who are chewing on Sumner's ear telling him to break up the whole danged thing. They don't care about the stations you're talking about. Dropping those isn't enough. They think it's time for Viacom to get the heck out of the radio business...

Comprende?

 

[klifhanger]

[

David... Dude! Don't you get it? The article I posted has nothing to do with the CBS radio stations already on the sales block. The article is about stockholders who are chewing on Sumner's ear telling him to break up the whole danged thing. They don't care about the stations you're talking about. Dropping those isn't enough. They think it's time for Viacom to get the heck out of the radio business...

Comprende?

Smokering:
You will learn there is no discussion or debate with this guy. It is always "one way" It is best to roll past and move on.

 

[davideduardo]

David... Dude! Don't you get it? The article I posted has nothing to do with the CBS radio stations already on the sales block. The article is about stockholders who are chewing on Sumner's ear telling him to break up the whole danged thing. They don't care about the stations you're talking about. Dropping those isn't enough. They think it's time for Viacom to get the heck out of the radio business...

Comprende?

Smokering:
You will learn there is no discussion or debate with this guy. It is always "one way" It is best to roll past and move on.

Dude... I do get it. Dissident shareholders are part of the post-Enron world. However, it is very unlikley that Sumner and Shari are going to do anything they do not want to do. Plus, the capital gains on the original major market stations would be so huge as to remove much of the value of the sale. Look at ABC: they had to do a reverse Morris to avoid taxation by distributing the stations to the shareholders and then having them merged with the buyer (if that one goes through).

 

[SmokeRing]

Plus, the capital gains on the original major market stations would be so huge as to remove much of the value of the sale.

If you're right about this, David, then a fire sale will be even more embarrassing for CBS Radio's current brass when it does happen. Hopefully, the rest of the industry will think twice before absorbing these people into positions with similar responsibilities.

I don't know how well you know CBS, but most who haven't worked there recently would be absolutely shocked at how unhealthy the place has become. And I'm not talking about individual personalities. I mean it's an unhealthy business. A company on the ropes. And every decision they make that's supposed to fix the thing is worse than the previous decision that got them in the present trouble.

 

[Garrett]

I'd be shocked if Sumner Redstone hasn't already privately decided to chunk this dead weight off the Viacom ship. The only question is how many months till the announcement:


CBS Radio Q2 Revenue Falls 8%


CBS CORP. second quarter overall revenues fell 1% to $3.48 billion, blamed by a decline at radio, which dropped 8% to $519.1 million. Net earnings from contiuned operations rose from $380.1 to $489.8 million (47 to 64 cents/diluted share), and free cash flow rose 2% to $546.2 million.

Radio's revenue hit is being blamed on the soft ad market and "the impact of programming changes at 27 radio stations," which presumably includes the departure of HOWARD STERN and format changes at several stations. Division operating income fell 20% to $219.6 million (although 2005's numbers included a one-time $15 million gain from a station sale and stock-based compensation increased from $600,000 to $3.4 million).

Pres./CEO LES MOONVES said, "Radio has struggled as the marketplace continues to face challenges. Nevertheless, we are encouraged by the early results of many programming changes, particularly during morning drive time. The sale of selected stations in smaller markets will enable us to focus all of our energies on higher-growth markets, and recent initiatives to reduce Radio's cost structure will enhance the turnaround."

The company's guidance is for low single-digit revenue growth and mid-single-digit growth in operating income and earnings per share.

Notice how all he talks about is money, yet no discussion of programming? I dunno, maybe if they worried about putting on programming that people liked, that got ratings, then they could sell some advertising, and their money problems would be solved. They need to put entertaining radio on, and then they will make money. It is a simple as that.

They just don't get it, do they?

 

[radiodial]

Notice how all he talks about is money, yet no discussion of programming? I dunno, maybe if they worried about putting on programming that people liked, that got ratings, then they could sell some advertising, and their money problems would be solved. They need to put entertaining radio on, and then they will make money. It is a simple as that.

They just don't get it, do they?

If you remember they (CBS/Infinity) took the New York oldies station which was rated #9 in the 12+ -- and even higher in its demo -- and flipped it to Jack FM. And Jack FM sunk like a brick.

No telling what goes through their heads. When you get up in the corporate world with a very nice salary you tend to not want to say: "The Emperor has no clothes." And when pandemonium breaks out, i.e. reveunes take a dive, the last thing you are going to do is say, "The Emperor has no clothes."

JMHO

 

[little1]

Radio's revenue hit is being blamed on the soft ad market and "the impact of programming changes at 27 radio stations," which presumably includes the departure of HOWARD STERN and format changes at several stations. Division operating income fell 20% to $219.6 million (although 2005's numbers included a one-time $15 million gain from a station sale and stock-based compensation increased from $600,000 to $3.4 million).

Pres./CEO LES MOONVES said, "Radio has struggled as the marketplace continues to face challenges. Nevertheless, we are encouraged by the early results of many programming changes, particularly during morning drive time. The sale of selected stations in smaller markets will enable us to focus all of our energies on higher-growth markets, and recent initiatives to reduce Radio's cost structure will enhance the turnaround."

The company's guidance is for low single-digit revenue growth and mid-single-digit growth in operating income and earnings per share.

Notice how all he talks about is money, yet no discussion of programming? I dunno, maybe if they worried about putting on programming that people liked, that got ratings, then they could sell some advertising, and their money problems would be solved. They need to put entertaining radio on, and then they will make money. It is a simple as that.

They just don't get it, do they?

Well spotted. You're right. No discussion of programming changes in that article. Except, of course, for the 2 places where it talks about programming changes. :

 

[davideduardo]

If you remember they (CBS/Infinity) took the New York oldies station which was rated #9 in the 12+ -- and even higher in its demo -- and flipped it to Jack FM. And Jack FM sunk like a brick.

No telling what goes through their heads. When you get up in the corporate world with a very nice salary you tend to not want to say: "The Emperor has no clothes." And when pandemonium breaks out, i.e. reveunes take a dive, the last thing you are going to do is say, "The Emperor has no clothes."

JMHO

They get it. WCBS-FM was 14th in 25-54 (the sales demos), billings had been declining since 2000 (off 40% indexed against the market) and "their demo" was mostly over 55 which is unsalable. You could be #1 55+ and it still does not matter... agencies do not buy that demo. The format was dead; the replacement is no better, but at least they are trying something to replace the oldies format which was no longer viable.

 

[radiodial]

If you remember they (CBS/Infinity) took the New York oldies station which was rated #9 in the 12+ -- and even higher in its demo -- and flipped it to Jack FM. And Jack FM sunk like a brick.

No telling what goes through their heads. When you get up in the corporate world with a very nice salary you tend to not want to say: "The Emperor has no clothes." And when pandemonium breaks out, i.e. reveunes take a dive, the last thing you are going to do is say, "The Emperor has no clothes."

JMHO

They get it. WCBS-FM was 14th in 25-54 (the sales demos),

They were #9 in the 12+ when they flipped and you are saying they were LOWER in the 25-54? I am not buying it.

 

[klifhanger]

When it comes to sales.good programming doesn't matter as long as they get a commission.