Clear Channel Says Yes To A $26.7 Billion Deal:
The CLEAR CHANNEL BOARD has agreed to a bid of $26.7 billion by private equity firms THOMAS H. LEE PARTNERS and BAIN CAPITAL, including the assumption or repayment of approximately $8.0 billion of net debt. CLEAR CHANNEL will still be run on a day-to-day basis by Chairman LOWRY MAYS, CEO MARK MAYS, and President/CFO RANDALL MAYS.
The bid values CLEAR CHANNEL, which has about 1,150 radio stations, at $37.60 a share, representing a premium of approximately 25% over CLEAR CHANNEL's average closing share price of $29.99 during the 30 trading days ended OCTOBER 24, 2006, the day before CLEAR CHANNEL first acknowledged that it was evaluating strategic alternatives.
CLEAR CHANNEL retains the right to solicit other offers until DECEMBER 7 and negotiate with other bidders until JANUARY 5, which leaves the door cracked open for further bids.
Radio Outside Of Top 100 Markets And TV Group To Be Sold
Additionally, CLEAR CHANNEL has announced plans to sell 448 of its 1,150 radio stations, all located outside the Top 100 ARBITRON markets -- 90 markets are affected -- as well as the company's 42-station TV group. Collectively, these properties contributed less than 10% of the company's revenues last year.
ALL ACCESS hears that a few of the markets may already be spoken for, with rumors swirling that MARATHON MEDIA has dibs on CC's NORTH DAKOTA, MONTANA, WYOMING, and IDAHO (except BOISE) properties and WEST VIRGINIA RADIO CORP. is lined up to buy CC's WEST VIRGINIA stations.
CLEAR CHANNEL CEO MARK MAYS said, "We are very pleased to announce this transaction which provides substantial value to our shareholders. We look forward to working with THOMAS H. LEE PARTNERS and BAIN CAPITAL PARTNERS to continue our business plan to provide exceptional programming to our audiences and value to our advertising partners."
Regarding the divestiture of radio and TV properties, MAYS added, "Our decision to divest these broadcast properties was reached as a result of the ongoing optimization of our diverse portfolio of media assets. These are profitable and well-managed properties in excellent markets. We believe that the sale of these stations will allow us to position our business to provide even greater value to our listeners and shareholders."
THOMAS H. LEE PARTNERS Co-Pres. SCOTT SPERLING stated, "CLEAR CHANNEL is one of the nation's truly great companies that has the finest collection of outdoor and radio assets in the industry. We are extremely pleased to be partnered with the management team led by MARK and RANDALL MAYS and to have the opportunity to work with them and to grow this company that was created by its Chairman and founder, L. LOWRY MAYS. CLEAR CHANNEL has tremendous long term growth opportunities in both the radio and outdoor businesses and we look forward to partnering with MARK and RANDALL to create value in the years ahead.”
BAIN CAPITAL Managing Dir. JOHN CONNAUGHTON added, "We are very impressed with CLEAR CHANNEL's strong management team and the company's leadership positions in a variety of markets and media formats. CLEAR CHANNEL is an exceptional media franchise that is well-positioned to grow thanks to the solid foundation the MAYS family has created. We look forward to partnering with CLEAR CHANNEL as it continues to innovate in meeting the changing needs of the audiences and advertisers it serves."
No buyers have been announced for the stations in these markets.
Central Michigan University School of Broadcast and Cinematic Arts faculty member Heather Polinsky, an expert in media economics and policy, is available to discuss Clear Channel's decision to become a private company by selling to Thomas H. Lee Partners, Bain Capital and the Clear Channel-founding Mays family.
A few of Polinsky's initial thoughts on the subject:
* "The Mays family, founder of Clear Channel, has not made any secret of wanting to take Clear Channel private, so this sale is not a surprise."
* "The most profitable enterprise of Clear Channel has been and continues to be its outdoor advertising. Clear Channel acquired its radio station holdings very quickly after the passage of the Telecommunications Act of 1996 and was never able to turn a huge profit with its radio station holdings. Clear Channel was famous for buying several stations in a market and streamlining the stations' personnel and equipment to the bare minimum."
* "Clear Channel found that radio programming is not done well on the cheap, so it is no surprise that it is selling off its medium to smaller market stations. Larger-market radio stations tend to do better because these markets have a larger number of advertisers to support a larger number of media outlets."
* "It will be interesting to see what happens to Clear Channel's radio networks. Its Premiere Radio Network has some of the bigger names in talk radio. And its music networks serve a significant number of automated stations across the country in small to large markets. These may continue to turn a profit for Clear Channel."
Polinsky is an expert on audio recording technology and the convergence of computers and broadcasting. She assists with WMHW-FM, the CMU student radio station, and teaches basic and advanced audio courses. Polinsky's research interests include media economics, media policy and new media technologies.