UPDATE 1-CBS to convert Americas outdoor unit into REIT

Wed Jan 16, 2013 6:04pm EST

Jan 16 (Reuters) - CBS Corp is planning to convert part of its billboard division into a real estate investment trust (REIT), the company said on Wednesday.

The media conglomerate plans to turn its billboard business in the Americas, which includes Canada, Latin America and South America, into a publicly traded trust known as a REIT. Its outdoor advertising businesses in Europe and Asia are up for sale.

Investors and analysts long have anticipated that CBS would make a move with that division made up of billboards and other outdoor marketing space known in advertising parlance as "out of home."

Shares of CBS rose 8 percent in after hour trade after closing at $37.94 on Wednesday.

"We are increasingly enthusiastic that this transaction - as well as the sale of our business in Europe and Asia - will achieve significant value for our shareholders," CBS Corp Chief Executive Leslie Moonves said in a statement.

As a REIT, it can avoid paying corporate level income taxes if it distributes at least 90 percent of its taxable income to shareholders in the form of dividends.

The outdoor division represented about 13 percent of the company's total revenue of $10.8 billion for the nine months ending September 30.

CBS has yet to determine the structure of the REIT. The process requires the approval of the U.S. Internal Revenue Service and the company said the conversion could happen next year.

Outdoor rival Lamar Advertising Co said last August it was considering converting to a REIT. [ID: nL4E8J84P6]

CBS is the highest-rated U.S. broadcast network in overall viewers with its stable of hits such as "The Big Bang Theory" and "NCIS." It also operates cable networks including Showtime, the publishing house Simon & Schuster, and a group of radio stations.