There's been a lot of noise recently about trouble stalking CBS. A steep 16 percent ratings decline this season led the network to fall behind Fox into the No. 2 spot, while the writers' strike threatened to drive down revenue for all of the media conglomerate's television holdings.

But when CBS Corp. reported fourth quarter results this week, it was the radio division rather than television that was the real dog in terms of profit.

CBS Radio's operating income for the fourth quarter of 2007 decreased 22 percent to $159.6 million while revenues decreased 7 percent, excluding 39 recently divested stations. For the year, operating income was down 16 percent overall; revenue decreased 6 percent.

That's because TV's ratings shortfalls and advertising concerns are nothing compared with the problems plaguing terrestrial radio. CBS had nothing to blame sour results on other than the need to divest 39 stations in 10 markets, and a sluggish year for ad sales overall.

Barry Parr, a media analyst for Jupiter Research Group, identifies two issues squeezing terrestrial radio stations.

One is that listeners' options are mushrooming. Abundant internet content, the proliferation of portable digital audio from music to podcasts, and the advent of satellite radio have all combined to make good old-fashioned radio less and less compelling.

"If you start talking about internet streaming, suddenly you're in a word where traditional radio is just one of a zillion products," says Parr. "And in many ways, it's not a very attractive product online."

Offerings on the internet include not only a wealth of audio streaming commercial-free, but now even the likes of BlogTalk radio—a site which essentially allows anyone to broadcast their own radio show for free over the internet.

And while internet offerings have long been stealing their share of listeners at home, terrestrial radio is steadily losing listeners on the road as well. Many cars now come equipped with options like satellite radio and mp3 device hookups, allowing drivers to listen to downloaded music and podcasts as they drive.

A second threat facing terrestrial radio are changes in local advertising markets. As large national retailers push out local businesses, local radio stations lose some of their best advertisers. Large retailers like Best Buy or Sears prefer TV to radio, and have the money to spend on television.

CBS Radio's C.E.O. of less than a year, Dan Mason, pledges that CBS radio is in the midst of a turnaround.

Parr, the Jupiter Research analyst, said he believes that if they are to succeed, traditional players like CBS will have to focus on serving local communities rather than moving towards a national model. Parr said internet and satellite rivals can't yet deliver professional-level coverage of local news, so CBS would do best to focus its attention there.

"It's the same problem as newspaper business—losing audience and losing advertisers," says Parr. "It's not simply the internet, but the internet is part of it. It's definitely wrecking business models like this that rely on scarcity, which simply doesn't exist on internet."