CBS Plans to Spin Off Radio Business

By Maria Armental 

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.

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 [e-mail]

(END) Dow Jones Newswires

July 06, 2016 14:58 ET (18:58 GMT)

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