Disney Radio Talk Gets Louder

Chatter surrounding a possible sale of Disney's(DIS - Cramer's Take - Stockpickr) radio assets is on the rise.

A research report released Monday by Merrill Lynch says that it "believes that Disney continues to explore its options with regard to its radio division and that some type of transaction remains likely."

A sale of its ABC Radio assets is viewed as a distinct possibility now that CEO-elect Robert Iger is taking the reins this fall. Merrill Lynch says that Disney has reportedly hired an investment bank to run the process.

Sources say Disney is working with Goldman Sachs and Bear Stearns.

The company's 71 stations are valued at between $2.6 billion and $3.6 billion, according to the Merrill report, which also cited the attractiveness to suitors based on its prime key markets. "The station group should be relatively attractive to bidders due to its strong position in key markets such as New York (three stations), Los Angeles (four stations) and Washington, D.C. (three stations)," the firm wrote.

While still spinning off a lot of cash for the company -- Merrill projects EBITDA of $240 million in 2005 -- traditional radio is feeling the heat from coming satellite providers Sirius(SIRI - Cramer's Take - Stockpickr) and XM(XMSR - Cramer's Take - Stockpickr). A deal would come on the heels of other recent media disassembly plays at Clear Channel(CCU - Cramer's Take - Stockpickr), Viacom(VIA - Cramer's Take - Stockpickr) and Emmis(EMMS - Cramer's Take - Stockpickr), which announced plans to sell its 16 broadcast television stations, valued at $1 billion.

Emmis said in early May it would consider spinning off its 16 midsize-market TV stations. Gannett(GCI - Cramer's Take - Stockpickr) is said to be looking closely at a purchase of the Emmis stations to increase its local TV broadcasting footprint.

Likely bidders for Disney's radio assets include a host of midsized radio station groups including Emmis, Citadel(CDL - Cramer's Take - Stockpickr), Cox(CXR - Cramer's Take - Stockpickr) and Entercom(ETM - Cramer's Take - Stockpickr).