CBS Sells Seashells to See More

"Svelte" and "scintillating" weren't the words investors were expecting to use in describing CBS (NYSE:CBS), but the Viacom (NYSE:VIA) spinoff continues to outshine its supposedly glitzier sibling.

Last night, CBS announced that it would be selling seven Fresno-area radio stations to Peak Broadcasting for $90 million in cash. This continues the company's trend in backing out of smaller markets if the right offers come around. Earlier this month, CEO Leslie Moonves announced that the company had already signed definitive agreements to sell 29 stations "for a terrific value."

Between shedding some of its skin in radio and selling its entire Paramount Parks amusement park chain to Cedar Fair (NYSE:FUN) back in June, CBS is becoming a leaner, more attractive investment. Since it began trading as a stand-alone company in January, CBS has raised its dividend three times and has seen its stock appreciate, while Viacom's stock has been sluggish.

It's important to note that CBS doesn't want to bow out of radio entirely. So far this year, radio may have accounted for just 14% of revenue, but it has delivered 30% of the operating profit. CBS also rolled the dice and gambled by getting XM Satellite Radio (NASDAQ:XMSR) stars Opie and Anthony to anchor the morning-show slot in key markets, even if the sometimes salty duo does a fair share of XM shilling during their weekday morning shows.

I discussed many of the challenges the radio industry is facing after yesterday's nearly $27 billion buyout of Clear Channel (NYSE:CCU). However, radio as a medium is a perfect fit for CBS. Its television, publishing, and outdoor-billboard businesses all revolve around building a network of sponsors, and the synergies are obvious.

Even though CBS will probably continue to trim its radio-station exposure in select markets, it's unlikely to follow Clear Channel's route of bowing out of radio whole hog. There are too many things at stake -- including the "On the Air" light that's been going off under the airborne feet of happy shareholders.

Cedar Fair is an Income Investor newsletter recommendation. XM is a Rule Breakers pick.

Longtime Fool contributor Rick Munarriz grew up on terrestrial radio -- and was even a DJ for a few years at his college radio station, WVUM -- but these days his ears belong to his XM and Sirius subscriptions and whatever he's loading on his SanDisk MP3 player. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.