The Ride’s Over for CBS

5/26/2006 8:00 PM Eastern

CBS Corp. made moves last week to beef up its war chest, selling off its amusement-park unit Paramount Parks in a $1.24 billion deal and placing as many as 39 small-market radio stations on the block.

Last Monday, CBS said that it had reached an agreement to sell Paramount Parks, which had been on the block since the beginning of the year, to Sandusky, Ohio-based Cedar Fair L.P. for $1.24 billion in cash.

Back on Jan. 26, CBS said that it was seeking to divest the Paramount Parks unit, which includes parks in Toronto; Cincinnati; Richmond, Va.; Charlotte, N.C.; and Santa Clara, Calif., in order to focus more on its core content business. In addition to the CBS Television Network, the company consists of several TV stations, Showtime Networks Inc., CBS Outdoor and CBS Radio. The Paramount Parks deal is expected to close in the third quarter, and the parks will remain in full operation throughout the divestiture, CBS said in a statement.

The price for the parks works out to be about nine times 2005 cash flow, according to Miller Tabak & Co. media analyst David Joyce.

“It was a pretty healthy price,” Joyce said.

A day after the Paramount announcement, CBS said it would investigate the possible divestiture of radio stations in 10 markets.

CBS said that it is exploring selling off radio properties in Austin, Texas; Buffalo, N.Y.; Cincinnati; Columbus, Ohio; Fresno, Calif.; Greensboro-Winston/Salem, N.C.; Kansas City; Memphis, Tenn.; Rochester, N.Y.; and San Antonio, Texas.

According to CBS Radio’s Web site, the division has 39 radio stations in those 10 markets.

Just what price those stations could attract is anyone’s guess. However, earlier this year Cumulus Media purchased 33 radio stations in large and small markets from Susquehanna Media for about $1.2 billon.

CBS had previously stated its intent to sell several smaller-market radio stations to maximize the performance of the division overall.

CBS Radio owns about 179 radio stations across the country, including those earmarked for sale. The division, formerly known as Infinity Broadcasting Corp., has been in decline for the past few years. According to its first-quarter financial statement, CBS Radio revenue was down 6% to $434.5 million, while cash flow declined 13% to $170.6 million.

With the potential of $2 billion added to its coffers, Joyce said that it is likely that CBS will use the bulk of that cash for share buybacks and small acquisitions.

Possible targets for CBS include sports-programming content along the lines of its January purchase of College Sports Television (CSTV) in January for about $325 million.

Joyce added that after the split of Viacom Inc. into two separate companies — Viacom and CBS — in January, CBS has concentrated on sports and TV, while Viacom has focused on entertainment and movie studios.

“They [CBS] are more of a player in the sports arena,” Joyce said.