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CBS Corp. and radio station owner Entercom Communications said Thursday that they have entered an agreement, by which Entercom will combine with CBS Radio in a tax-free merger.
The transaction will create a sector giant with a nationwide footprint of 244 stations, broadcasting in 23 of the top 25 U.S. markets, as well as digital capabilities and a growing events platform.
CBS Radio owns 117 radio stations in 26 markets, including all of the top 10 radio markets as ranked by Nielsen Audio. Philadelphia-based Entercom is the fourth-largest radio company in the U.S. with 127 stations in 27 top markets. The combined company’s pro forma revenue on a 12-months basis is approximately $1.7 billion, which would make it the second-largest radio station owner in the U.S., the firms said.
The companies said the deal will create a company with a market capitalization of over $2 billion, “a strong balance sheet, significant free cash flow generation and an attractive dividend, positioned to drive shareholder value.”
CBS Radio was previously scheduled to be spun off in an IPO. CBS shareholders will own 72 percent of the new combined company, with Entercom shareholders owning the rest after the transaction, which will be tax-free for CBS and its shareholders.
“This agreement is great for shareholders and achieves our previously stated objectives by separating our radio business in the best possible way,” said Leslie Moonves, chairman and CEO of CBS Corp. “Entercom is a superbly run company, and together with CBS Radio’s powerful brands and remarkable people, we are creating an organization that will be even better positioned to succeed in this rapidly evolving media landscape.”
Andre Fernandez will continue as president and CEO of CBS Radio through the closing of the transaction, which is expected during the second half of the year.
David J. Field, president and CEO of Entercom, who will lead the combined company, said: “These two great companies, with their impressive histories, complementary assets, and premier content and brands, are a perfect strategic and cultural fit, enabling us to deliver local connection on a national scale and drive accelerated growth. We look forward to welcoming our talented new colleagues at CBS Radio, and we have the utmost respect for their significant contributions to the industry.”
Added Field: “Radio reaches more Americans than any other medium, and offers advertisers outstanding ROI and local activation. This transformational transaction creates scale-driven efficiencies and opportunities to compete more effectively with other media to better serve our listeners and our advertisers. The combination of a compelling strategic fit, an excellent balance sheet, and robust free cash flow generation, position us to create significant shareholder value for our investors.”
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