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CBS, Entercom to Merge Radio Business

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Leslie Moonves attends the 2015 CBS Upfront at The Tent at Lincoln Center

Radio giant Entercom, the parent company of sports talk radio WEEI, has bought its arch-rival The Sports Hub, WBZ-AM and other CBS Radio stations, the Herald reported.

CBS (CBS) wanted to sell its radio group, and then when no firm bidder appeared, planned to spin it off as a separately traded stock early this year.

The merged entity will own 244 stations, including CBS Radio's 117 stations, with pro forma revenue of about $1.7 billion on a trailing 12-month basis.

"This agreement is great for shareholders and achieves our previously stated objectives by separating our radio business in the best possible way", said CBS CEO Leslie Moonves, according to the Hollywood Reporter.

Pro forma revenue (trailing 12 months) was about $1.7B, which would track to the second-largest radio station owner, and EBITDA was nearly $500M when transaction synergies are included.

The deal, subject to regulatory approvals and a vote by Entercom's board, is expected to close in the second half of the year.

A purchase price was not disclosed, but the companies said the deal would be structured as a Reverse Morris Trust, which would be tax-free to CBS and its stockholders.

CBS shares closed Wednesday at $64.60, up 0.2%.

The combined company will have post-merger revenue of $1.7 billion and cash flow of almost $500 million. But the headquarters will be at Entercom's Bala Cynwyd offices, and the joint company will be run by David Field. In this deal, CBS shareholders will have the opportunity to exchange all, some, or none of their CBS shares for CBS Radio shares.

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