Radio Waves Podcast #120

Airwaves: March 25, 2016

A long rumored sale by CBS of its entire radio division is in the works according to numerous sources. CBS is the owner of local Los Angeles stations KNX (1070 AM), KRTH (101.1 FM) Jack (93.1 FM), KTWV (94.7 FM), Amp Radio (97.1 FM) and KROQ (106.7 FM). Nationwide the company owns 117 stations in 26 markets.

The rumor of a sale came from comments made by CBS Chairman and CEO Leslie Moonves, who said last week that he was exploring “strategic options” for the radio division that was once a crown jewel for the company but now appears to be holding it back.

However, while I am the first to admit that I’d like to see the stations become locally owned and operated, nothing in the statement indicated that a sale was imminent, nor that it would happen soon. On the contrary, Moonves was clear to say that he was exploring options -- which could include anything from spinning off the division as a separate company to selling stations wholesale. He was also clear in stating that the company would take its time in deciding what to do as it hopes to “unlock shareholder value.”

Unlike Cumulus and iHeart Media, CBS never went on a buying spree that left it saddled with debt it cannot pay. The only station recently sold is KFWB (980 AM), a station it held illegally for over a decade as it found itself over the ownership limit. But as a company, with notable exceptions such as KFRC/San Francisco where it stupidly sold the best signal in the area, it tends to do at least a decent job running stations.

CBS is even one of the last group owners to have live personalities on many stations overnight, something dropped by many stations years ago.

Essentially, CBS is the victim of bad moves by competitors that have brought down the entire industry. Bad programming and huge commercial loads have driven people to find alternative means of entertainment ... and advertisers to find ways to make ads stand out. Radio itself, though -- at least in my opinion -- still has a lot of life left in it, and can easily be “fixed.”

Personally, I don’t see CBS selling outright. They MAY spinoff the division as a separate publicly-traded company, at which time it would ironically be able to buy the likes of Cumulus and iHeart Media which ave been teetering on bankruptcy.

 

But what I see instead is CBS selling what they consider underperforming stations or clusters in underperforming markets and holding on to its crown-jewels, such as KNX, KROQ and KRTH. The remaining group of stations would add much to the bottom line of the company while allowing resources to focus on rebuilding a brand damaged less by itself than by its competitors.

That’s actually what should be done by iHeart and Cumulus, though time is short for those companies feverishly trying to restructure debt. And it’s why the FCC should reinstate ownership limits so that no company can own more than three stations in a market and no more than 50 stations nationwide. The combination on local ownership and reduced or eliminated debt will do much to save radio.

It’s not Spotify or iTunes or anything else hurting radio, it’s the current ownership structure created by the FCC deregulating the industry and essentially eliminating caps on the number of stations one company can own. We know that now. Will the impotent FCC ever do anything about it?