Report: Hedge Fund Pressuring CBS To Merge Radio Operations With Cumulus
February 25, 2015 at 4:04 AM (PT)
Speculation over the fate of CBS CORP.'s radio division continues with a report at THEDEAL.COM that hedge fund SANDELL ASSET MANAGEMENT CORP. is pushing CBS to spin off the radio stations and merge them with CUMULUS MEDIA INC.
The site cites "a person familiar with the situation" and a recent FINANCIAL TIMES article for its report and says that SANDELL is proposing a reverse Morris Trust merger so CBS would not incur a large tax liability despite the radio properties having a low tax basis, and notes that CBS could also collect an almost $900 million dividend.
The proposed merged operations would have a projected $5 billion market cap with $2.4 billion in sales.
But CBS CEO LES MOONVES has noted that radio has 40% margins and sends cash flow to the corporation's bottom line; MACQUARIE CAPITAL analyst AMY YONG told THEDEAL.COM that while CUMULUS' LEW DICKEY "has always said that would be his ultimate deal," she thinks that "(g)iven where leverage is right now I don't see that as being very likely."