STATIC ON DISNEY RADIO? SPECULATION GROWS ABOUT SPINOFF.

Byline: Evan Pondel Staff Writer

The prospect of Walt Disney Co. signing off from its radio business could be a step in the right direction as Robert Iger prepares to take the helm of the entertainment behemoth this fall, industry trackers said Tuesday.

Often in the shadow of more profitable revenue streams, Disney's radio properties have long been perceived as a lukewarm investment despite the promotional benefits of the medium. Operating about 70 stations and a radio network comprised of several thousand affiliate stations, Disney rarely even mentions the multibillion-dollar business during its investment conferences.

Last five years, I've listened intently for the company to talk about radio. I've even done word searches for the words radio and Disney, and they turn up empty,'' said Tom Taylor, editor of Inside Radio, an industry trade publication whose corporate parent is Clear Channel Communications.

On Monday, The Wall Street Journal reported that Disney is considering a spinoff of its radio properties via a ``reverse Morris Trust.'' The transaction would spin Disney's radio business into a new company and then distribute its stock to shareholders. Subsequently, the stock would then be acquired by an outside company.

But much conjecture still resonates as to whether Disney will even go through with such a transaction. With programming that includes ABC News Radio and ESPN Sports radio, prospective suitors might find Disney's radio properties too expensive.

``Disney's radio business is almost too big to sell and too small to keep,'' said Dennis McAlpine, analyst with McAlpine Associates in New York. Regardless of what Disney does, ``the radio business is just another item on Iger's checklist before he takes over.''

According to the Journal, analysts value Disney stations at about $1.5 billion to $1.75 billion, while the radio network hovers between $1.25 billion and $1.5 billion. The stations, which include news-talker KABC-AM (790) and classic rock outlet KLOS-FM (95.5) in Los Angeles, brought in an estimated revenue of almost $454.8 million in 2004.

Considering ABC is under Disney's umbrella, the ``wholesale or piece- by-piece divestment of ABC radio stations would almost certainly create an instant feeding frenzy,'' said Adam Jacobson, radio editor at Radio & Records, an industry trade publication in Century City.

Disney would not comment on plans for its radio stations. But the Burbank company did tout its ABC affiliate. ``ABC radio is a wonderful asset. It's an extremely well-managed group that is a consistent contributor to the Walt Disney Co.,'' said Julie Hoover, spokeswoman for the company.

Gigi Johnson, executive director of the Entertainment and Media Management Institute at the University of California, Los Angeles, said it would make sense for Disney to divest its radio business. ``If anything, they would be able to remove some baggage,'' she said. ``Disney doesn't have a massive competition advantage in these businesses. And maybe someone else could do something with them.''

But some still perceive a spinoff of Disney's radio stations as nothing short of a long shot. ``It's perhaps a good idea, strategically, if Disney could reap a bonanza from it - but my hunch is that it can't, and in the end, it won't. Won't do the sale, that is,'' Taylor said.

Shares of Disney shed 23 cents to close at $25.41 Tuesday on the New York Stock Exchange.

Evan Pondel, [phone]

evan.pondel(at)dailynews.com