The new radio group-which will keep the Chancellor name-would bump CBS Corp. from the No. 1 slot in stations and revenue, with the newly combined entity totaling 471 stations and reaching between $1.6 billion and $2.3 billion in annual revenue.
CBS Radio stands at 162 stations with about $1.5 billion in revenue, but last week CBS announced separately that it will make a public offering of 20% of the radio and TDI Worldwide outdoor divisions. The new group, to be called Infinity Broadcasting, revives the name of the group CBS bought in 1996 for $4 billion, which brought on now-CBS Radio Group President-CEO Mel Karmazin.
In the top 10 markets, Chancellor would have a minimum 14.7% of market revenue, and as much as 39.3% in Houston-Galveston, according to BIA Research. The deal also would give Chancellor more than 40% of the market in Jacksonville, Fla. (47.9%); Greenville-Spartanburg, S.C. (46.5); Honolulu (48.4%); and Baton Rouge, La. (44.2%).
JUSTICE SCRUTINY LIKELY
In 20 smaller cities, the deal will result in control of greater than 50% of market revenue going to Chancellor.
The Chancellor deal is expected to get strong scrutiny from the Justice Department, which has contended local marketing agreements should be viewed the same as ownership.
Based on past actions, the Justice Department is unlikely to approve much control over 40% and may not allow such consolidation in markets in which station formats now oppose each other.
The deal already is getting strict scrutiny from the Association of National Advertisers.
"We have serious concerns and our media policy committee will be meeting shortly to discuss access issues," said John Kamp, senior VP. "It looks like one company is getting a lot of media power."
"This is not making me happy from my side of the desk," said Allen Banks, exec VP-executive director of media at Saatchi & Saatchi, New York. "I tend to be very skeptical that concentrating all these stations in the hands of one owner is going to be to [advertisers'] benefit."
LATEST CHANCELLOR ACQUISITION
This is the latest in a string of acquisitions for Chancellor, which also owns AMFM Radio Networks, launched this year. Last June, it purchased outdoor group Martin Media for $610 million, joining other radio groups in acquiring outdoor companies. Such multimedia capabilities-also at Clear Channel-Eller Media and at CBS with TDI-seem to offer synergy but few advertisers may be interested.
"It's been tried in the past but doesn't seem to have worked," said Pete Riordan, associate and director of out-of-home at BBDO Worldwide, New York, citing efforts decades ago from 3M Media-Magazine Network and USA Today-Gannett Outdoor. "Why buy a medium just because it's cheap?"
CBS recently inked a $25 million cross-media ad package with Pennzoil Corp., its first such deal.