CBS Selling Stations, but Who's Buying?

Implications: CBS Corp., the second largest radio operator in the U. S., announced it will divest 50 radio stations located in mostly medium size markets in order to reduce expenses and focus on large market clusters.  The question is who will buy these stations?

Analysis: CBS Corp. has decided to shed a good chunk of its radio stations in order to improve its bottom line--a target of 50 stations, most of them in medium size markets although the actual stations for sale have not yet been released publicly.

The radio industry has been in trouble for months.  Revenues for the industry are declining, and time spent listening is down as radio continues to lose audiences due to increasing options for consumers--notably the iPod, Internet radio, and satellite radio.  CBS has weathered the storm as well as any company, but has decided to sell a chunk of stations and focus on large market clusters.

The 50 stations could net as much as $1 billion.  CBS said they plan to use the proceeds to buy back stock.  And the deal(s) could probably bump their performance up at least 1-2%, assuming the $1 billion price tag. 

But the question I have is who is going to buy these stations?  You can rule out a mega-deal where some company buys the whole lot, because there are simply no takers.  Some of the smaller groups may be candidates, like Beasley, Saga, Entravision, etc., who want to add to the markets they are operating in--if they can get the financing.  Most likely, whatever deal-making is done will involve an infusion of private equity funds, which has been the trend in most recent radio deals.

It is also interesting with the strategic focus CBS is placing on major markets.  The big markets have been hit the hardest by advertising declines and a heavily competitive environment, while medium and smaller market stations are actually performing better during this difficult time for radio.  My guess is a series of small deals is the most likely scenario for CBS to reach their goal to unload these stations.