CBS RADIO to Merge with Entercom; Move Creates 244-Station Company, Second Largest Based on Revenue. The rumors of a
CBS Radio–
Entercom merger turn out to be true as the two firms announce a stunning deal to make Entercom the second largest radio company – based on revenue – in the nation with 244 Stations, including 23 of the top 25 markets. CBS Corp's plans for spinning off the radio division via an IPO never
really took off, probably due to the fact that radio is not viewed by investors as a growth industry. This merger will be tax free for CBS as it's being accomplished through a Reverse Morris Trust. Here's how it will work: CBS shareholders will have the opportunity to
exchange all, some, or none of their CBS shares for CBS Radio shares. Immediately following the completion of this exchange offer, CBS Radio will merge with an Entercom subsidiary, with the new CBS Radio shareholders receiving Entercom shares in exchange for their CBS Radio shares in the transaction. After completion of the merger, CBS Radio shareholders will receive approximately 105 million Entercom shares, or 72% of all outstanding shares of the combined company on a fully diluted basis. Existing Entercom shareholders will own 28% of the combined company on a fully diluted basis. The big question for CBS Radio staffers at the corporate level is how this merger – expected to close sometime during the second half of this year – affects their positions. Obviously, there will be redundancy at the corporate level, but how Entercom will ultimately choose to organize its
corporate staff remains to be seen.
Andre Fernandez will remain president of CBS Radio through the closing. Today's press release notes that the combined company will be known as Entercom and will be headquartered in Philadelphia, "with a significant ongoing presence in New York." Upon closing, the company's Board of Directors will consist of nine members: five current Entercom directors, including
David Field as Chairman of the Board, and four directors nominated by CBS Radio. Entercom president and CEO Field states, "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. 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."
