Static Gets Louder for CBS Radio

Firing of Imus Compounds Loss of Howard Stern

CBS Radio's firing of disgraced host Don Imus yesterday is the latest blow for a company stung by multimillion-dollar indecency fines, poor financial performance and the loss of top-tier talent in recent years.

In an industry in which advertising growth is stagnant at best and listenership is down, CBS Radio has underperformed the market and has so far been resistant to corporate-turnaround attempts.

Now it must absorb the loss of a second marquee name in a little more than a year, following the defection of longtime top-earner Howard Stern to Sirius Satellite Radio in 2006. The company has been unable to find a suitable morning-drive replacement for the father of all shock jocks but may find a successor in the recent hire of comedian and former talk-show host Dennis Miller of Westwood One, a distributor of radio programming managed by CBS. Miller debuted in January. Westwood One also distributed Imus.

Losing Imus "is a blow to CBS, and it will take some time to recover," said Mark Fratrik, a radio analyst with BIA Financial Network, which tracks the industry. "The key questions are: Who will replace him, and how quickly can they replace him on morning-drive?"

Imus was carried by 61 stations across the country and had an estimated audience of about 2.3 million listeners a week, according to Talkers Magazine, which covers talk radio. The simulcast of Imus's show on MSNBC gained him about 360,000 viewers a day. MSNBC announced Wednesday that it would cancel the simulcast of Imus's show. The cancellation came a day after several key advertisers pulled out, citing Imus's racist and sexist remarks about the Rugters University women's basketball team after it lost to Tennessee in the national championship game.

CBS Radio has been a disappointment to CBS Corp., which has had success in its other divisions, such its television network and billboard unit.

In 2006, CBS Radio's operating income was down 11 percent compared with 2005, the only CBS Corp. division to show a decline. But that decrease was an improvement compared to 2005, when CBS Radio operating income was down 13 percent compared to 2004. The company attempted to offset the poor performance by selling 39 of its 147 stations last year, raising $668 million.

By comparison, CBS Radio's largest competitor, Clear Channel Communications, showed an 8 percent increase in operating income last year compared with 2005. Overall, the radio industry's revenue grew 0.4 percent last year, Fratrik said.

Part of last year's revenue decrease at CBS Radio can be attributed to Stern's exit. Stern had been a mainstay on CBS stations, such as Washington's WJFK (106.7 FM), for years, a guaranteed advertising and ratings draw.

CBS Radio is the former Infinity Broadcasting. The radio unit went with CBS Corp. when it split from Viacom last year.

In addition to losing Stern to Sirius, Infinity lost radio executive Mel Karmazin to the satellite company in 2004, taking with him years of radio experience and countless sales contacts. More than anyone, Karmazin built what is now CBS Radio.

The radio division's poor performance in recent years led to exit of CBS Radio chief executive Joel Hollander in March. He was replaced by radio veteran Dan Mason. Westwood One is doing no better. Even excluding substantial one-time charges in its 2006 earnings statement, profit last year was down by more than half from the year before.

CBS Radio tried to replace Stern with a morning-show team of former Van Halen frontman David Lee Roth and comedian Adam Carolla. When the pair failed to stimulate ratings, CBS brought back the raunch team of Opie & Anthony in April of last year. They had been fired by Infinity in 2002 for broadcasting what they claimed was a couple having sex in a Manhattan cathedral.

More important to the bottom line, Opie & Anthony were partly to blame for $3.5 million in indecency fines levied by the Federal Communications Commission, which Viacom paid to settle in 2004.

As for Miller's role, CBS Radio declined to comment possible replacements for Imus. On Wednesday night's "O'Reilly Factor" on the Fox News Channel, Miller poked fun at Imus, saying that when the 67-year-old host wears his cowboy hat, he "looks like Wyatt AARP."