This rumor is getting enough momentum that people are talking about it in open discussions.
You probably are aware by now that Australian born Rupert Murdoch (Fox News, WSJ, etc) is making a bid to take over Time Warner. Time Warner sold off its cable and Internet access business in 2008 – which is now merging with Comcast, pending government approvals. Last year, Time Magazine was spun off with its portfolio of 21 magazines. Time Warner music is long gone.
What is left at Time Warner is cable entertainment channels and movie business.
So without their cable TV business, magazines, AOL and the music business, why is Rupert Murdoch going to pay $80 billion for it?
HBO & Cinemax
Turner Broadcasting – CNN, Headline News, TNT, TBS, Cartoon Network, Turner classic movies
Warner Bros – film production, home video, TV series
With that background, the rumor is – to fund the deal and reduce issues with the Justice Department, Rupert Murdoch would spin off CNN. CNN would be acquired by CBS. CBS would fund the purchase of CNN by selling CBS Radio to Cumulus media.
Looking in from the outside, CBS seems to be the best run major radio company. They understand the importance of paying good people well, and the importance of spending money to promote the radio stations. Almost all their stations air live 24 hours a day with local programming (except the recent CBS Sports Radio network). They have the advantage of also owning television stations and a major news operation that provide resources and cross promotion to the radio stations.
That is the opposite of Cumulus media, of course. From all reports I’ve seen, Cumulus treats its employees like interchangeable minimum-wage slaves and blindly cuts costs without considering the longer-term implications that will cause a permanent decrease in listenership and revenue.
Generally speaking, Cumulus won’t have a lot of problems with FCC ownership limits – since the bulk of their stations are in small and unrated markets where CBS does not have a presence. New York City is immediately a problem – CBS owns highly profitable WINS-AM and WCBS-AM and is already at the ownership caps that allow ownership of eight stations, with no more than five in AM or FM.
Cumulus owns WABC-AM and WPLJ-FM from the ABC Radio group – which they are running into the ground, having lost Scott Shannon, Rush Limbaugh, and Sean Hannity. Clear Channel is an obvious candidate to buy WABC and then flip WOR to Univision to play Sombrero music or maybe Fox Sports. Combining WCBS and WINS is an obvious possibility, but there really is no economic reason to do that
While news is very profitable, is also very expensive – and the producers and on air talent are very smart and aware of what’s going on in the world. You’re not going to treat them like crap without destroying the product. CBS radio has long been irepresented by labor unions – (SAG)-AFTRA. You’re not going to just walk all over them.
So, where will Cumulus media get the money to acquire CBS radio? The most likely scenario is a repeat of their acquisition of Susquehanna broadcasting – CBS radio would become a separate legal entity funded by private equity money, and Cumulus would receive a fee for “managing” the spinoff with promises of massive cost-cutting.
I sure hope the rumors are wrong.
Because CBS owns a TV station in New York (WCBS), their Radio ownership limits are much smaller. One of the first things Clear Channel did after “going private”, was to sell off all of its television stations. That got Clear Channel out from under the cross media ownership caps.
*light bulb*
If the CBS radio stations are not owned by CBS, but a legal entity that owns no TV stations – the looser radio limits would apply and the new company could acquire additional radio stations in New York. The tricky part is that neither cumulus nor CBS could wind up with a “attributable ownership interest” in the spinoff. Private equity firms make the world go around.
A “somewhere in the middle” approach might be for CBS to retain some of its major market stations – perhaps the all-news stations – and so only the smaller market stations to Cumulus. That’s been the smoldering for a long time.
Better for Rupe to spin off CNN to Glenn Beck — what delicious irony that would be!
Heh
I don’t think Glenn Beck’s pockets are that deep, but the thought is kind of interesting. Ted Turner would put on his end of the world music and say goodbye.