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Radio station giant Clear Channel Communications agrees
By mobile | January 29, 2008
The transaction would be one of the biggest deals in which a company has been taken private, and showcases the vast sums that buyout groups have been able to assemble to acquire public companies.
In the Salt Lake market, Clear Channel owns six radio stations and two TV outlets. It owns KZHT (FM-97.1), KNRS (AM-570), KJMY (FM- 99.5), KODJ (FM-94.1), KXRV (FM-105.7) and also KOSY (FM-106.5). It also owns KTVX, Ch. 4 and KUCW, Ch. 30.
The Salt Lake “cluster” of Clear Channel radio stations is located at 2801 S. Decker Lake Blvd., West Valley City.
An investor group led by Thomas H. Lee Partners LP and Bain Capital Partners LLC is paying $37.60 in cash for each share of Clear Channel, a 10.2 percent premium over its closing price on Wednesday. The buyers are also assuming about $8 billion in debt.
Clear Channel’s shares jumped $1.38, or 4 percent, to $35.50 in very heavy trading on the New York Stock Exchange.
The company said in a regulatory filing that it doesn’t expect any senior management changes or significant layoffs. Mark Mays will remain CEO while Randall Mays, his bother, will stay on as chief financial officer. Their father Lowry Mays, the chairman, will continue to have an active role, the company said.
It’s not yet clear how much the Mays stand to make in the deal. Clear Channel said Thursday that three members of senior management agreed to “significantly” reduce payments that would be made on a change of control.
A Clear Channel spokeswoman declined to elaborate. The Mays family owns about 7 percent of the company.
Clear Channel said it plans to sell 448 of its radio stations, all located outside the top 100 markets, as well as its 42-station television group, which are also located in smaller markets. Collectively the properties made up less than 10 percent of the company’s revenues last year.
The acquisition is not dependent on the sale of those assets, the company said.
Since Salt Lake is the 31st largest radio market in the nation, it appears the Clear Channel radio stations here aren’t ones to be sold. However, KTVX and KUCW could be part of the mass TV sale.
It was not immediately clear what effect the sale of Clear Channel to investors, or a possible sale of KTVX and KUCW, would have here in Salt Lake City.
Clear Channel has until Dec. 7 to solicit competing proposals. Another bid for Clear Channel had been expected from Providence Equity Partners, the Blackstone Group and Kohlberg Kravis Roberts & Co.
Clear Channel owns or operates 1,150 radio stations and is the largest operator of radio stations in the country. It also owns a majority of Clear Channel Outdoor, a major operator of billboard and bus-stop ads.
The company’s directors have approved the agreement, with the board insiders recused from the vote.
Once stock market darlings, radio stocks have fallen out of favor on Wall Street in recent years amid sluggish advertising revenues and competition from the boom in portable listening devices like Apple Computer Inc.’s iPods and the emerging growth of satellite radio.
Since January of 2000, Clear Channel stock has fallen from a high of more than $91 to the upper end of its current 52-week range of $27.17 to $35.55.
Clear Channel has instituted several measures to try to win listeners back, including cutting back on the number of commercials. However other operators have yet to embrace its “less is more” strategy.
Clear Channel was founded in 1972 and benefited greatly from the loosening of media ownership rules, which allowed more radio stations to be held by a single owner in each market.
The deal would rank behind KKR’s 1988 buyout of RJR Nabisco Inc., which still is the biggest going-private deal ever at $25.1 billion. It would also trail two other deals announced earlier this year. Those included the $21.8 billion buyout of airport development company BAA PLC and the $21.2 billion buyout of hospital company HCA Inc.
Topics: Radio Communication |
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