A new era has begun for WCCO radio as CBS Corp. sells its radio division to Entercom.
In a deal expected to close by the end of 2017, Entercom will purchase CBS Radio's 117 stations in an all-stock transaction.
CBS, which had earlier ownership stakes WCCO AM, acquired the Minnepolis AM radio station in 1992 as part of its purchase of Midwest Communications Inc., which also included WCCO-TV and several other broadcast properties.
The Feb. 2 tax-free merger comes as a surprise for industry veterans, as CBS previously announced plans for an IPO. In addition, Entercom is smaller than CBS, said Mark Fratrik, senior vice president and chief economist at media consulting company BIA/Kelsey.
"It's encouraging that there's investors that have enough confidence in Entercom that can help them along to make this acquisition happen," he said.
The move will boost suburban Pennsylvania-based Entercom from the fourth to second largest U.S. radio company, with a combined revenue of $1.7 billion and stations in 23 of the 25 major markets, according to a news release.
"I think it's a real positive for the market," Fratrik said. "You're combining two very strong companies that do very well in their respective markets."
CBS announced in March 2016 that it was looking to exit the radio business. In July, the company filed for an IPO. The merger with Entercom was announced Feb. 2. CBS Corp. said in a December regulatory filing that CBS Radio generated a net loss of $225 million in 2016 on revenue of $1.22 billion. Financials for individual properties were not broken out.