Report: Redstone May Not Be Able To Sell CBS

Sumner Redstone

Investors are speculating that embattled Executive Chairman and controlling shareholder SUMNER REDSTONE may be forced to sell the broadcast giant to pay off $1.6 billion in loans owed by his holding company NATIONAL AMUSEMENTS INC., reports CRAINSNEWYORK.COM. Analysts say there would be plenty of interest in sister company VIACOM, with its constellation of cable networks. But they say that nobody would want CBS, even at bargain prices.

"There would be strategic buyers for VIACOM," said NATIXIS BLEICHROEDER Sr. Media Analyst ALAN GOULD. "I’m not as sure there would be a strategic buyer for CBS."

In addition, the brutal credit market would make it all but impossible for a private equity firm to conduct a leveraged buyout.

"Generally speaking, you’re limited right now in terms of how a transaction can be executed, given capital market issues," said BMO CAPITAL MARKETS Managing Dir. SCOTT SINGER. "The same goes for sales of individual assets within companies."

The biggest drawback for CBS is that it has exactly the wrong assets for the current market. Though the network is doing well in prime time, the company relies on advertising for more than 70% of revenue, making it particularly vulnerable to the advertising recession. Its local television and radio stations also face erosion in ad revenue as marketers spread their investments across a fragmenting media landscape.

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