Clear Channel sold for $19 billion

[raymond_shaw]

SAN ANTONIO, Nov. 16 (UPI) -- Clear Channel Communications Inc., the No. 1 U.S. radio station company, accepted a $19 billion takeover offer from a private
equity group.

A consortium that includes Bain Capital Partners LLC and Thomas H. Lee Partners LP outbid a rival private equity group by offering $37.50 per share in an
all-cash proposal, Clear Channel said Thursday in a news release. Including
debt assumption the value of the definitive deal rises to $26.7 billion.

The price marks a premium of about 25 percent over Clear Channel's average closing share price of $29.99 during the 30 trading days ended Oct. 24, the day before the company acknowledged it was for sale.

Separately, Clear Channel is seeking buyers for 448 radio stations in selected small markets as well as for its television broadcasting division. The Bain Capital deal, a leveraged buyout, is not conditioned on the consummation of any of these sale transactions.

Besides radio stations, Clear Channel runs a large outdoor advertising business.

 

[Bob1370]

The interesting questions now are; 1) What will this new consortium do with the stations it's acquiring in the top 100 markets, including Rochester, Syracuse, Albany and New York City? and 2) what will be the fate of the TV stations the company is dumping throughout the country, including market-leaders WHAM-TV in Rochester and WSYR-TV in Syracuse?

Wall Street investment groups without prior broadcast experience usually don't make good broadcast station operators, tending to try to run things on the cheap and let program and technical quality deteriorate while they try to maximize immediate cash flow. If the idea is to milk them and then flip the properties again quickly before the bottom falls out, then the new owners might make money on their investment even if the subsequent buyers end up with burnt out shells of once-successful stations. If they don't do that, but try to keep milking the cash cows even after they starve them, they're going to wind up with big losses on their hands. Either way it won't be pretty for either employees or listeners...unless these guys show unusual savvy and actually try to invest enough in these stations to give them a chance to win.

As to the TV stations? If I'd been Randall Mays I wouldn't have sold them to begin with, they're good properties with good operating margins that they ought to hold on to even if they dump everything else. But they may luck out and get good prices for them--maybe even offers from companies that know what they're doing in the TV realm. There's talk that Gannett, which turned around Channel 2 in Buffalo, wants to get back into the Rochester market--and Channel 13 would be a good acquisition for them. I don't know for sure who'd bid for Channel 9 in Syracuse, but some say Hubbard (which owns 10 in Rochester and 13 in Albany) would like to spread further across upstate NY with its coverage, and might find WSYR-TV a good fit in its group.

 

[SirRoxalot]

Clear-voyant

Since the same management team will be in charge, I don't see a wholesale change in the markets they decide to keep. Since money-crunchers are now seriously involved, I see a very hard look at the bottom line coming. In markets where CC purchased a dominant position, like Syracuse, I expect that they'll continue to maximize profits through selective personnel cuts and getting even leaner and meaner.

Rochester could be interesting. WHAM-AM is the only dominant CC station in the market, and they've tied it closely to WHAM-TV. I could see the "new" CC spinning off Rochester to another radio/TV group. In fact, it wouldn't surprise me to see CC sell off Syracuse & Rochester along with Utica/Rome & Binghamton, abandoning upstate NY altogether. The economy here isn't helping their bottom line. They may keep Albany because it's closer to NYC, and they have a strong cluster there.

 

[SpareChange]

Re: Clear Chattel

Since money-crunchers are now seriously involved, I see a very hard look at the bottom line coming. In markets where CC purchased a dominant position, like Syracuse, I expect that they'll continue to maximize profits through selective personnel cuts and getting even leaner and meaner.

With the emphasis on MEANER. Investment groups are rat bastards without a soul, especially when the sale has a price tag of $26 billion (which includes the $8 billion in assumed debt.)

Make no mistake about it, the cuts will be deep, wide and not easily healed. They will cut a wide swath, from the bottom to the top of the totem pole: Board-Ops to Regional VP's should be very concerned. Of course, the Regionals may have silver if not golden parachutes, whereas board-ops will stand in the unemployment line.

As to Clear Channel selling off markets outside the top 100, they'll probably ask a ridiculous price for such markets and the likelihood of Joe Smith buying an AM-FM in Utica or East Bumshmuck will be minimal. Stations in those markets will likely fall into the hands of the pray for pay crowd, which always seems to have bushels of cash.

Pass the plate.

 

[Bob1370]

"Make no mistake about it, the cuts will be deep, wide and not easily healed. They will cut a wide swath, from the bottom to the top of the totem pole..."

An owner that destroys his franchise in the name of cost-cutting is asking for it. You can make a good argument that Clear Channel would have been a far healthier company, and fetched a higher price, if it hadn't been so obsessed with cost-cutting at the expense of quality. And if the next owner goes further in the same direction, that'll be a company without a future.

"Stations in those markets will likely fall into the hands of the pray for pay crowd, which always seems to have bushels of cash."

If that happens, you'll see some markets literally without secular radio programming options. That will literally kill the medium in portions of the country, since most people who listen to radio still expect to be informed or entertained rather than preached to.

 

[SirRoxalot]

Slicing and Dicing in Syracuse

The Syracuse Post-Standard reports some big cuts at CC Syracuse.

Rick Gary's gone from the Y-94 morning show, 7-Mid guy gone from Hot 107.9, 5-7PM local sports talker gone from WHEN, and even the 7-Mid guy gone from dominant country station B-104.7.

Less is more? CC is bathed in mostly program-side blood in markets from San Franciso to NYC. Check out this MediaWeek article for the current state of affairs.

Gee, aren't you glad that CC bypassed Buffalo?