While Sumner Redstone's legal battles have raised speculation of a reunion of Viacom (VIAB) and CBS (CBS) , the latter's Les Moonves is moving forward with a spinoff of the Tiffany Network's legacy radio business.
CBS filed a prospectus for an initial public offering of the radio business with the Securities and Exchange Commission on Friday after the close of financial markets. The S-1 filing for CBS Radio could be an attempt to prod bidders to action. As TheStreet's sister publication The Deal pointed out in April, however, a breakup was the most likely option if CBS could not tempt private equity buyers to make a bet on radio -- a sector that has burned sponsors recently.
CBS Radio has 117 radio stations in 26 markets and generated more than $1.2 billion in broadcast and digital revenue in 2015. The station group could play the role of the former Clear Channel Communications, which now goes by iHeartMedia (IHRT) , as a radio bellwether and consolidator.
The radio auction faced an undeniable challenge, in that the largest potential strategic buyers, iHeartMedia and Cumulus Media (CMLS) , are laden with debt and are in no condition to launch a multibillion-dollar acquisition.
CBS Radio still could be attractive to private equity firms if the sponsors aren't scared away by the problems that iHeartMedia and Cumulus have encountered by levering up.
"The radio business is still a very, very good business, but it's not all that leverageable," Moody's Investors Service analyst Neil Begley said. "It's very dangerous to put a lot of leverage on a radio company."