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CBS Corp. Releases 3Q Financials

Says radio spinoff on track

CBS Chairman and CEO Leslie Moonves made it clear Thursday CBS Radio will be operating as a standalone company at some point in 2017.

Moonves spoke during CBS Corp.’s third quarter results presentation and stood firm on plans to split out CBS Radio describing it as “on track” and a move that will allow CBS Corp. to return more capital to shareholders.

“Once the separation is complete, CBS will be even more focused on developing and creating premium content,” Moonves said.

CBS Radio, which operates 117 radio stations in 26 U.S. markets, saw revenues go up slightly with $319 million for the third quarter of 2016 compared to $318 million for the same period in 2015. CBS says higher national advertising sales were offset by lower local advertising. Radio operating income grew by 5% to $77 million compared to $73 million a year ago. That increase reflects lower expenses from restructuring put in place in 2015.

Joe Ianniello, chief operating officer, added more detail to the status of the CBS Radio separation from its parent during Thursday’s earnings call for investors. “CBS Radio has issued $1.46 billion of debt with a weighted average interest rate of 5.25%. We are on track for an IPO [Initial Public Offering] in early 2017,” Ianniello said.

Ianniello did hedge a bit on that last point saying there is a small window of opportunity to go even earlier (before the end of the year) if market conditions are remain favorable in Q4. Following the IPO — for approximately 20% of CBS Radio — there will be an exchange offer for the remaining shares of CBS Radio sometime in 2017 resulting in “more capital return for CBS shareholders,” he said.

CBS Corp. had revenues of $3.4 billion for the third quarter of 2016, which were up 4% from 2015. Moonves says the CBS Corp. is well on its way to a record setting year of revenue and profit as it considers a recombination with Viacom. “It could be an attractive opportunity,” Moonves said.