My Take on the Developments at Clear Channel

[TheRealOtherNeil]

I was recently speaking with the venerated radio correspondent from the AJC about Clear Channel. I said that the reason CC looks like it is in panic mode is because they are trying to sell the radio division in some markets and I think Atlanta is one of them. I reasoned that by dumping talent and flipping formats, Clear Channel is making the properties more sellable.

Now you may say, and rightly so, why make the house look like crap if you are trying to sell it? Simple, the property is probably priced too high and in order to get a buyer, they have to make it look like a steal. In addition, Clear Channel will still make money on the sale, no matter what the ratings/revenue are for the properties. Next, the buyer would probably split the group up because potential corporate buyers, ABC (Citadel), Viacom, Cox, Radio-One, Cumulus and Jefferson-Pilot, would all be over the FCC limit of stations if they bought the Atlanta group as a whole. Lastly, the only "big-ticket item" that CC is currently on the hook for is the Braves. With little talent to pay for, this makes the Atlanta group more attractive.

The formats currently in place can easily be changed upon new ownership. In fact, radio marketers love putting “NEW” in front of a station (The NEW Dirk-FM, with more staying power!). As I learned in Marketing 101, “new” means better. Think about it, do you want to wash your clothes in Tide or “New” Tide? I think Q100 is still calling itself new after 6 years.

Don't ever think that the higher ups at Clear Channel are dim with the regards to the filthy lucre. They may not know how to program a station but the know how to count the money.

Comments?

 

[RTibbs]

I think you make some great points. They probably have a window though of 9 months or so to sell it. If you look at the model of The River that started with high ratings and then slowly have decreased. It might be best to hope to catch some look at us we are new ratings.

Higher rating means more revenue. Less talent means less expenses. More revenue + less expenses = higher profits. Higher profits means a greater sale price.

I just can't wait to hear everyone complain when Clear Channel sells the market to Cumuluis. Cumulus doesn't know what they are doing they are ruining these stations. Ahh the vicious cycle continues.

 

[radiofriend1]

I think you make some great points. They probably have a window though of 9 months or so to sell it. If you look at the model of The River that started with high ratings and then slowly have decreased. It might be best to hope to catch some look at us we are new ratings.

Higher rating means more revenue. Less talent means less expenses. More revenue + less expenses = higher profits. Higher profits means a greater sale price.

I just can't wait to hear everyone complain when Clear Channel sells the market to Cumuluis. Cumulus doesn't know what they are doing they are ruining these stations. Ahh the vicious cycle continues.

atl. is not one of the markets cc will be selling. a majority of the stations are outside of the top 100 and even the divestitures are not entire markets.

one more time- clear channel atlanta is NOT on the block 4 sale

 

[TheGreenskeeper]

Who would buy? Would new ownership be any better?

 

[OICUR12]

I think you make some great points. They probably have a window though of 9 months or so to sell it. If you look at the model of The River that started with high ratings and then slowly have decreased. It might be best to hope to catch some look at us we are new ratings.

Higher rating means more revenue. Less talent means less expenses. More revenue + less expenses = higher profits. Higher profits means a greater sale price.

I just can't wait to hear everyone complain when Clear Channel sells the market to Cumuluis. Cumulus doesn't know what they are doing they are ruining these stations. Ahh the vicious cycle continues.

atl. is not one of the markets cc will be selling. a majority of the stations are outside of the top 100 and even the divestitures are not entire markets.

one more time- clear channel atlanta is NOT on the block 4 sale

The entire cluster is not for sale... but they have to sell one FM (probably 96.7) They also have to sell off stations in Columbus, Macon, and Augusta. Not entire clusters, but one or two stations in each.

 

[RandomGuy6]

Just because they're not on the list, does not mean they aren't up for sale.

 

[SaltyDog]

Is the whole thing for sale... one at a time?

Here's what I'm thinking. A bunch of private investors decided to buy the company. Do they think they know more than the current management? No. They are keeping the same management team. So what's the plan? The plan might be nothing more than to sell off the whole shebang. Now hear me out, I'm not some disgruntled ex-employee. I'm an ex-Clear Channel employee who admires what they have tried to do (at least the boldness of the thing). And I did very well working for them. I learned a lot too. But lots of businesses are worth more in parts than they are whole. If that's the plan, then it's at least a plan I understand.

I never did understand our business plan at Clear Channel and I ran stations for them. (Well, there was vague talk of "synergies" and such, but any student of business knew even than that other industries previously crashed and sank on the rocks of synergy.) The sum of the parts is probably worth more than the whole. Think of it as a chop shop. Only instead of chopping up cars, they're chopping up a whole company.

Or it need not even be the whole company. They could also just strip it down to a relatively small core of very valuable properties and markets. The revenue they derive from spinning off everything else would be more than their book value and they could retire a lot of debt along the way. They could then take this trimmed-down company and take it public again. Or they could then reload the company up with debt and put the proceeds in their pockets. I just don't think they will stop at the list they already distributed, or even the FCC mandated spins.

I know someone will shoot this down immediately and it's pure speculation on my part. But I haven't heard or read any other plausible theories about what The Mays can do better with a privately held radio company that they couldn't do as a publicly-held company. And if you can't improve the value, what is the point in buying it?

 

[RandomGuy6]

They're gonna pocket a boatload of cash and enjoy a nice, early retirement.

I think Salty Dog is 100% spot on. Clear Channel's stations are worth much more individually than as a whole. Watch CC become a small San Antonio based company once again, with the bulk of their 1200+ stations belonging to other people.

 

[radiofriend1]

Just because they're not on the list, does not mean they aren't up for sale.

u would sell minot north dakota, not atlanta georgia

 

[RandomGuy6]

That [EDIT] comment makes it sound like an Atlanta station should never be sold, ever. The value of the Atlanta stations, individually or as a whole, is far greater than any station in North Dakota. The nice folks buying CC specialize in busting up large companies into smaller pieces and selling them off. It's just a matter of time.


[EDIT-inflammatory]

 

[radiofriend1]

That [EDIT] comment makes it sound like an Atlanta station should never be sold, ever. The value of the Atlanta stations, individually or as a whole, is far greater than any station in North Dakota. The nice folks buying CC specialize in busting up large companies into smaller pieces and selling them off. It's just a matter of time.


[EDIT-inflammatory]

save us the *corporate radio sucks* routine

i never said "an atlanta station should never be sold, ever"

i am saying that for the purposes of their sale next year and those out of the top 100 market they say they are selling PLUS the divestitures in markets where they're over the limit CC-ATLANTA IS NOT FOR SALE. they don't intend to get rid of those properties

gee whiz

 

[radiobuff81]

CC-ATLANTA IS NOT FOR SALE. they don't intend to get rid of those properties

or at least that's what CC management says. i tend to agree, though....i could see them selling off a station or two, but not the whole cluster.

 

[starboy]

I'd like to see Clarke Brown, former Pres. for Jeff. Pilot, pick up a couple of them. He'd give you a great radio group. Mary Catherine Sneed, former COO at Radio One would be a good owner, too. Both C and M are very talent driven.

 

[OICUR12]

CC-ATLANTA IS NOT FOR SALE. they don't intend to get rid of those properties

or at least that's what CC management says. i tend to agree, though....i could see them selling off a station or two, but not the whole cluster.

Why is this so confusing? The Atlanta CLUSTER is not one of the ones for sale. BUT the FCC is not allowing CC to transfer the "Grandfathered" status of any stations that put CC over the limit of stations allowed in that market. In Atlanta they have to sell one FM, in Columbus two stations with at least one FM, Macon one FM, etc. There is a total of 80 stations that must be sold in markets across the country to bring the new CC into compliance.

To sum it up... CC will be selling 96.7 in Atlanta... but that's all.

 

[radiofriend1]

it's not at all hard 2 understand ;D

there are just some who feel smarter if they confuse things that are really pretty simple OR are just on an anti-corporate-radio rant and say ridiculous things just to stir stuff up

 

[SaltyDog]

Oh, geezz.. if you want to have a discussion, fine. But how about at least responding to what was discussed instead of pasting a templated response? I am what some people would call "a suit". I like radio. It has a great future. I even like the Mays family. I don't think it's a crime to make money. I'd like to make some myself.

So what is your theory about why private investors bought Clear Channel and took it private?

 

[Bubba2112]

it's not at all hard 2 understand ;D

there are just some who feel smarter if they confuse things that are really pretty simple OR are just on an anti-corporate-radio rant and say ridiculous things just to stir stuff up

Oh, geezz.. if you want to have a discussion, fine. But how about at least responding to what was discussed instead of pasting a templated response? I am what some people would call "a suit". I like radio. It has a great future. I even like the Mays family. I don't think it's a crime to make money. I'd like to make some myself.

So what is your theory about why private investors bought Clear Channel and took it private?

Beacuae they had a lot of money and nothing to do with it? Look at Rankin Smith and the Falcons.........

 

[SaltyDog]

Beacuae they had a lot of money and nothing to do with it? Look at Rankin Smith and the Falcons.........

What about Rankin Smith and the Falcons? ???

Let's see, who is buying Clear Channel? Is it Rankin Smith? No. Someone like a sports team owner who is looking to buy his way into the limelight? No. It's partly being purchased by Thomas H. Lee Partners L.P. What do we know about them? Yahoo Finance says: "Thomas H. Lee Partners is the teddy bear at the gate. Known as a "friendly" leveraged buyout (LBO) firm, the company uses a mix of debt, funds from institutional investors, and its own money to buy companies. Unlike the fearsome LBO outfits of the 1980s, Thomas H. Lee Partners eschews the axe for the handshake; it builds up a stake and courts management cooperation. Lee then usually sells the revamped acquisitions or takes them public. In 2006 the company teamed with Bain Capital to buy media titan Clear Channel for some $26.7 billion, including debt. Thomas H. Lee, who founded Thomas H. Lee Partners in 1974, left his namesake firm in 2006 to start a long-planned rival hedge fund and private equity venture." Source link: http://biz.yahoo.com/ic/40/40463.html

Who is the other partner in the purchase? Bain Capital. Check out their website and tell us if you think these people are investing in Clear Channel because they just want to spend excess cash. http://www.baincapital.com/

 

[Bubba2112]

Will you make up your mind and "tenses" (or is it tensi?) You FIRST axed why the Mays bought CC and now are talking about a proposed buy out by Banis and Co. I can only make speculations on WHAT you axe about, not what you a thinking of changing topics to or by what you MEANT to say....................

 

[SaltyDog]

Will you make up your mind and "tenses" (or is it tensi?) You FIRST axed why the Mays bought CC and now are talking about a proposed buy out by Banis and Co. I can only make speculations on WHAT you axe about, not what you a thinking of changing topics to or by what you MEANT to say....................

Ha, ha. The Mays, as rich as they are, do not have $26.7 Billion dollars in their savings accounts. They are significant shareholders in the company but they can't buy it themselves. They, Bain, and Thomas H. Lee are teaming up to take it private. It's not like I'm just guessing. You do know how to Google the press release I hope.

You know what? This whole discussion is really on the wrong board. I need to post this stuff on "The Business Of Radio."