Citigroup expects CBS Radio to have a difficult time in 2006 due to the loss of Howard Stern, potentially resulting in a revenue loss of around $150 million. However, the company has indicated that the impact of Stern’s departure should not impact EBITDA significantly. Citigroup has difficultly believing this. While the direct revenue from Stern may be around $150 million in revenue, Citi believes Stern was used to sell additional ad time through out the day. While difficult to quantify with precision, Citi thinks this raises incremental risk to CBS’ near-term outlook. Stern replacements have not fared particularly well in the ratings. Until a better roster of talent is found, Citigroup expects Radio results to come in below expectations.

Citigroup believes there is mounting evidence that car makers could install satellite radio equipment as a standard piece of equipment in all cars, and perhaps could offer a free satellite radio subscription, as well. Hyundai is already doing the former, and Rolls-Royce is pursuing the latter. Citigroup's analysis suggests that ubiquitous satellite radio service on all U.S. vehicles would reduce CBS' equity value by 35%. They believe standard iPod connections in cars also poses risks.

Citigroup believes that as auto executives scramble to keep production lines running, it's not unreasonable to assume that more auto manufacturers follow the lead of Hyundai and Rolls Royce. Citigroup notes that "premium" car features typically seep into the mass market over time: e.g. AM/FM radios, air conditioning, power locks, air bags, anti-lock brakes. Each of these premium features began in expensive cars and migrated to the mass market over time.

Announcement of such deals would likely cause radio multiples to compress.