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CBS sets radio group IPO
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August 27, 1998: 9:17 a.m. ET
Broadcaster will take 20% of radio assets public to help boost stock price
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NEW YORK (CNNfn) - Taking aim at its steadily declining stock price, broadcast giant CBS Corp. plans to spin off 20 percent of its radio and outdoor group in an initial public offering and take a restructuring charge of $50 million to $70 million in its third quarter.
CBS will retain 80 percent ownership of the new public company, to be called Infinity Broadcasting, and continue to operate the CBS Television Group, which embraces the network's broadcast empire of 14 stations.
CBS said it intends to file a registration statement for the IPO with the Securities and Exchange Commission in the third quarter and complete the offering by year-end, subject to regulatory approval.
Infinity would own and operate more than 155 radio stations.
The radio group includes TDI, one of the largest outdoor advertising companies in the country, and CBS's minority equity investment in Westwood One, a producer and marketer of nationally sponsored traffic, news, talk, sports and radio programming.
The strategy is seen as a brainchild of Mel Karmazin, the president and chief operating officer of the CBS Radio Group, who will serve as chairman and CEO of Infinity. CBS said it intends to retain existing management to operate Infinity.
Karmazin is said to harbor a long-standing frustration with what he perceives as Wall Street's undervaluation of his company's stock. Karmazin himself, a turnaround maverick who is also one of the biggest individual shareholders in CBS, has all but staked his legacy on boosting the company's stock price.
In recent months, amid a general downturn in broadcast stocks, CBS shares have tumbled 25 percent from a March high of 36-5/8. Wednesday, shares of CBS (CBS) closed down 81 cents at 27-3/16.
Karmazin has publicly blamed CBS's sagging stock price on investors' skewed focus on the television network, which is far less profitable than the radio side. Cash flow, or earnings before interest, taxes, depreciation and amortization, for the radio side is expected to total about $1.3 billion in 1998.
"We believe that in offering shares of the new Infinity Broadcasting, we will unlock the value of our largest and fastest-growing operating segment -- our radio and outdoor businesses," Karmazin said in a statement Thursday.
CBs also views the new entity as an attractive candidate for radio-and-outdoor acquisition opportunities.
CBS also said it intends to take a third-quarter charge of as much as $70 million as part of a broader streamlining aimed at enhancing the company's ability to compete in the multi-channel environment of the future. 
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