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CBS' radio group files IPO
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September 18, 1998: 7:06 p.m. ET
Infinity returns to public market as different entity in changing landscape
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NEW YORK (CNNfn) - Two years after acquiring Infinity Media Corp. in the first place, CBS Corp. on Friday filed papers to sell the radio group in an initial public offering.
The stock sale will represent a full circle for Infinity, which in 1996 was purchased by the former Westinghouse Electric Corp. for $4.7 billion in stock and debt.
The filing values the offering at $10 million, but that amount was preliminary and listed in the document for procedural reasons with the Securities and Exchange Commission. Exact terms of the deal will be available at a later date.
The filing did, however, offer valuable insight into the operations of Infinity -- which is now considerably different from the entity that was purchased in 1996.
The major consistency, though, is the leadership of two of Infinity's top officials -- Mel Karmazin and Farid Suleman -- who have risen to powerful roles in the CBS executive suites.
When Karmazin first joined the organization in December 1996, he was put in charge of a combined CBS radio group. But when Peter Lund -- president of the television network -- lost the confidence of CBS's affiliates in May 1997, Karmazin took on the first television role of his career.
By April 1997, Karmazin was named CBS president and chief operating officer -- the heir-apparent to Chairman and Chief Executive Michael Jordan. Suleman -- who oversaw the financials of Infinity -- is now chief financial officer of the so-called "Tiffany" network.
Infinity Media now includes about $1.2 billion in CBS's own radio assets as well as the operations of American Radio Systems Corp., which was acquired in June for $2.7 billion. CBS also contributed $2 billion toward its operations along the way.
The company has 161 radio stations serving 34 markets. In addition, the company conducts an outdoor-advertising business through its wholly owned subsidiary, TDI Worldwide Inc.
But in a business that is heavily dependent on critical mass, Infinity now is confronted by a very different landscape. Once the largest player in a fragmented market, Infinity has lost its top-ranking.
Chancellor Media Corp., which is merging with Capstar Broadcasting for $4.1 billion, will have more than 450 stations in over 100 markets. And Clear Channel Communications Inc. has more than 200 stations.
Accordingly, the company explained in its filing that it plans to aggressively pursue a strategy of growth through acquisitions.
"While the company does not believe that it needs to make acquisitions to grow its business, it intends to pursue acquisition opportunities that would enable it to continue to compete more effectively for advertising revenues and to increase its cash flow," Infinity Media said.
However, only a small portion of the proceeds from the offering will go toward acquisitions. On Sept. 18, Infinity Media gave CBS a $2.5-billion dividend in the form of a five-year, floating rate promissory note. The company intends to use most of the net proceeds of the stock sale to prepay the note.
For the year ended June 30, Infinity Media recorded pro-forma net revenues of $1.95 billion and cash flow (as defined as earnings before interest, taxes, depreciation and amortization) of $757 million.
-- by staff writer Robert Liu
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