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CBS Sheds Radio Outlets

8/25/2006 8:00 PM Eastern

CBS Corp. is close to halfway done with a plan to possibly sell 39 radio stations in nonstrategic markets, agreeing to unload 17 stations in two separate deals valued at more than $300 million.

CBS said in May it would explore the sale of radio properties in 10 markets — Austin and San Antonio, Texas; Buffalo and Rochester, N.Y.; Cincinnati and Columbus, Ohio; Fresno, Calif.; Greensboro-Winston/Salem, N.C.; Kansas City and Memphis.

On Aug. 21, CBS said it had agreed to sell 15 stations in four of the markets — Austin, Cincinnati, Memphis, and Rochester — to Entercom Communications Corp. for $262 million. Bala Cynwyd, Pa.-based Entercom is the fourth-largest U.S. radio broadcaster.

Two days later, CBS said it had agreed to sell two stations in San Antonio to Border Media Partners — the largest Hispanic-owned radio station group in the U.S., with 37 stations — for about $45 million in cash.

The CBS Radio division owns about 179 radio stations across the country. The former Infinity Broadcasting Corp. has been declining for the past few years, exacerbated by the loss of popular host Howard Stern, who jumped to Sirius Satellite Radio Inc. in January. In the second quarter, the radio division’s revenue dipped 8%, to $519 million, and cash flow declined 14% to $228 million.

Merrill Lynch analyst Jessica Reif Cohen in a report called the station sales a good start, representing healthy multiples — the Entercom sale price was about 14 times annual cash flow.

In July, CBS sold its Paramount Parks amusement parks to Ohio-based Cedar Fair LP for $1.24 billion.

Reif Cohen estimated that based on the Entercom valuation, CBS could realize about $700 million before taxes from selling all 39 stations on the block. She said CBS has said more station deals could come in the third quarter.

“Given the tax efficiency, it would not surprise us if CBS were to expand its list of stations for sale, possibly driving proceeds above $1 billion,” she wrote.

September