The future of CBS Radio?

[Zeb Norris]

It would really help if people in radio actually spent some time to understand the business they're in.

How deftly condescending.

Minor problem for your contention, it's a teeny tiny bit easier to get a loan when your stock is $100 a share than when it's under $10.

 

[qtpieislit]

The point is that they've lost more than 50% of their value in just a few months. Apple was near $200, and now it can't crack $100. Google has no debt. They have lots of cash on hand. Apple has debt, but their cash on hand covers it. That's what radio needs now, and it will only come from sale of assets. And that's why they bought a lot of these stations in the first place...so they'd have assets to sell when times got bad.

There ARE no buyers. And the few that may foolishly entertain a dead end 8 year multiple debt ratio for an acquisition can't find any financial institution suckers to underwrite the financing. Terrestrial Radio will be a long gone dead medium well before 8 years. In fact it may be only 4 or less. That's part of the reason radio is mired in penny stock land and fading fast.

 

[RadioStarOne]

The sports and news stations on AM will move to and save FM radio along with all the cookie cutter formats from the two or three left over radio companies. Will they?

 

[davideduardo]

The sports and news stations on AM will move to and save FM radio along with all the cookie cutter formats from the two or three left over radio companies. Will they?

Actually, what will happen is that the one or two strong AM stations remaining in most markets today will move to FM, either with a total move or simulcast to save their salability by improving the 35-54 demos most AMs have lost or have very little of.

This will not "save" FM as FM is much stronger in many ways... audience size, demographics, etc... than FM.

In fact, if you look at the listening levels of FM radio vs. AM radio, you can see that a significant part of radio's decline in TSL can be attributed to the losses of AM overall, not to FM.

 

[EbolaMonkey]

Whether Redstone sells his shares in CBS or not, CBS is a profitable, dividend paying company.

CBS is obsessed with its dividends payments. CBS makes those payments by selling assets and laying off employees. This enriches Sumner and it enriches upper managers with gifted stock.

Meanwhile the stock price has been falling since the late 90's. The company is far from healthy.

It is said that when a company's main purpose is keeping its dividends payments going, it's an indicator that the company's leadership has no idea where to take the company in the future.

CBS is the text book case for this in the radio industry.

 

[TheBigA]

Meanwhile the stock price has been falling since the late 90's.

As a longtime CBS stockholder, I can report that is absolutely false.

It is said that when a company's main purpose is keeping its dividends payments going, it's an indicator that the company's leadership has no idea where to take the company in the future.

Said by who? Certainly not anyone who advises people on stocks. During this recent meltdown, the ONLY stocks that were being recommended were those that paid dividends.

CBS has been a leader in new media, especially during the past year. They have a very clear idea where they're going.

 

[EbolaMonkey]

As a longtime CBS stockholder, I can report that is absolutely false.

Ha! CBS's "Fund the Future" program has never paid a cent. It can't. Because the stock has gone down every year since the program was implemented in the late 90's.

Maybe you've mistaken very brief hiccups upwards for something of significance. Don't kid yourself.

CBS has been a leader in new media, especially during the past year.

You can't be serious. CBS has bought a few already existing dot-com's and pretty much screwed them up. See Last.fm for instance.

During this recent meltdown, the ONLY stocks that were being recommended were those that paid dividends.

When almost every stock is falling, then, yes, dividend paying stocks are the ones you'd want. But we both know that CBS is an ever-falling stock with no future. The higher-up's at CBS are years into a run-out-the-clock strategy. Through these dividend payments (along with CBS's bonus system) they are filling their own bank accounts while the company dies a slow death.

 

[TheBigA]

Because the stock has gone down every year since the program was implemented in the late 90's.

Once again, not true. And anyone can view their stock record on the web.

CBS has bought a few already existing dot-com's and pretty much screwed them up.

Your opinion. They have been very aggressive in other areas of new media. More than almost any other broadcaster.

 

[BossJock1947]

Because the stock has gone down every year since the program was implemented in the late 90's.

Once again, not true. And anyone can view their stock record on the web.

CBS has bought a few already existing dot-com's and pretty much screwed them up.

Your opinion. They have been very aggressive in other areas of new media. More than almost any other broadcaster.

Your opinion. They have been very aggressive in other areas of new media. More than almost any other broadcaster.

That statement means NOTHING.

 

[amfmsw]

Fabulous discussion. All have valid points. I think some paint a too rosy of a picture, however. If a business is selling assets to boost bottom line "profitablilty", it is in trouble. The CBS medium market sell-off, at a depressed price, is a sign.

The TV Net is doing well with entertainment, but the News Division is a disaster. And if CBS is at the cutting edge of new revenue streams, why were Fox, CNN and NBC allowed to steal the News Heritage. That's been on a depressing slide for years. I can't understand why they never invested in Cable News.

Hear that sound? It's William Pailey rolling over again. I'm afraid the "Tiffany Network" is now an also ran.

 

[TheBigA]

If a business is selling assets to boost bottom line "profitablilty", it is in trouble.

Not necessarily. We are in a depression. Ad-supported media has been in a 3 year depression. It is killing ALL forms of ad-supported media, from TV to newspapers to radio to magazines. Even the internet is struggling, and Google, which sells internet ads, has lost more than 60% of its value in the last 6 months.

I can't understand why they never invested in Cable News.

Just what the world needs...yet another cable news channel. NOT! The bigger question is why it split its cable operations from its broadcasting operations. All their cable TV properties are part of Viacom, not CBS. And why media companies have been unable to profit from their own internal synergies.

 

[EbolaMonkey]

The bigger question is why it split its cable operations from its broadcasting operations.

I believe my explanation handles this one. It was a move made purely on short term stock price manipulation.

CBS leadership has no expectation for being competitive in the future. They are making all moves based on stock price, which enriches, not coincidentally, CBS's corporate leadership who stand to profit by these moves.

Again, they are running out the clock on the company diverting every possible cent of company wealth into their own bank accounts.

On the topic of the trajectory of CBS stock over the last 10 years, I'm right about the "Fund of the Future" never paying a cent. And wrong about the beginning of the slide. It started in the middle of the year 2000. Not in the late-90's. See for yourself:
http://moneycentral.msn.com/investo...geForm=1&C9=2&DisplayForm=1&ComparisonsForm=1

The slide hardly mirrors the overall economy. CBS manages to lose stock value through thick and thin.

 

[TheBigA]

The bigger question is why it split its cable operations from its broadcasting operations.

I believe my explanation handles this one. It was a move made purely on short term stock price manipulation.

It wasn't for the short term, and it wasn't made by CBS.

They are making all moves based on stock price, which enriches, not coincidentally, CBS's corporate leadership who stand to profit by these moves.

Explain to me how they profit from a stock which you say loses value.

 

[EbolaMonkey]

Explain to me how they profit from a stock which you say loses value.

Through the dividend payments. And they generate dividend payments through moves that sacrifice the company's future.

It wasn't for the short term, and it wasn't made by CBS.

It was a Viacom decision when CBS stock was under the Viacom umbrella. Semantics.

One stock was meant to help dividend payments in the short term. The other was thought to be a longer term performer. That's why the cable broadcast, movie and publishing properties were split from radio, tv and outdoor, leaving you scratching your head over the loss of a synergy opportunity.

 

[TheBigA]

And they generate dividend payments through moves that sacrifice the company's future.

Explain.

It was a Viacom decision when CBS stock was under the Viacom umbrella. Semantics.

No, it was a Redstone decision. Individually.

That's why the cable broadcast, movie and publishing properties were split from radio, tv and outdoor, leaving you scratching your head over the loss of a synergy opportunity.

No, publishing is part of broadcasting. And your theory doesn't explain why there aren't more synergies among radio and TV properties, leaving many radio stations to make alliances with TV stations owned by NBC or ABC.

 

[EbolaMonkey]

It was a Viacom decision when CBS stock was under the Viacom umbrella. Semantics.

No, it was a Redstone decision. Individually.

Sumner is Viacom. He certainly was at the time of the split.

And your theory doesn't explain why there aren't more synergies among radio and TV properties, leaving many radio stations to make alliances with TV stations owned by NBC or ABC.

No, that's not a part of my theory. My observations over the years lead me to believe that CBS employs more than its fair share of awful decision-makers. So the lack of synergies where there could be synergies does not surprise me. However, there are markets where CBS TV has partnerships with its local radio cluster.

Explain.

CBS's layoffs, mid-market station sell-off's, and other cost-cutting moves are all about freeing up cash for dividend payments. Those moves aren't turning CBS into a better radio company. They're funding dividend payments.

 

[TheBigA]

CBS's layoffs, mid-market station sell-off's, and other cost-cutting moves are all about freeing up cash for dividend payments. Those moves aren't turning CBS into a better radio company. They're funding dividend payments.

Depends on the specifics. Selling the three stations in Denver makes CBS a better radio company, because those three stations were underperformers. Some of the layoffs, such as the ones in Phoenix, make CBS a better radio company because they replace underperforming talent with Tim & Willy, who are heritage talent, and proven market leaders. I'd suggest redistributing staffing from underperforming broadcasting properties towards new media properties makes CBS a better company.

 

[EbolaMonkey]

I'd suggest redistributing staffing from underperforming broadcasting properties towards new media properties makes CBS a better company.

We'll see... ;D The company history since mid-2000 doesn't look encouraging.

And your post begs the question: Which came first, those stations' underperformance? Or CBS's asphyxiation of the properties?

Regardless, any day that sees CBS sell a station is a good day for radio. I hope CBS will continue selling it's "underperformers" with abandon.

 

[TheBigA]

We'll see... ;D The company history since mid-2000 doesn't look encouraging.

We still differ on that. CBS has outperformed all other broadcasters, regardless of size, during that time. While most others are now in danger of being de-listed, CBS doesn't have that threat.

And your post begs the question: Which came first, those stations' underperformance? Or CBS's asphyxiation of the properties?

Most of them were not quality properties in the first place.

Regardless, any day that sees CBS sell a station is a good day for radio. I hope CBS will continue selling it's "underperformers" with abandon.

You should go to the Denver board and read what people in that market think. Most wouldn't agree.