Clear Channel Going Private; to Sell All TV Stations

Nov 16, 2006  •  Post A Comment

Clear Channel Communications announced Thursday that it has agreed to be bought by private equity firms for $18.7 billion and will put all 42 of its TV stations on the market.

Thomas H. Lee Partners L.P. and Bain Capital Partners LLC led the buyers in the transaction with a total value of approximately $26.7 billion, including the assumption or repayment of approximately $8 billion of net debt.

Clear Channel shareholders, who must approve the deal, will receive $37.60 in cash for each share of Clear Channel common stock they hold, representing a premium of approximately 25 percent over Clear Channel’s average closing share price of $29.99 during the 30 trading days ended Oct. 24, 2006, the day before the company first acknowledged that it was evaluating strategic alternatives.

The TV stations are located in 25 mid-size and small markets that reach some 8 million homes, or approximately 25 percent of the TV homes in the country. Clear Channel also plans to sell some 448 radio stations outside the top 100 markets. These properties together contributed less than 10 percent of the company’s revenues last year, the company said.

CEO Mark Mays and President Randall Mays will stay on to run the company.

“Our decision to divest these broadcast properties was reached as a result of the ongoing optimization of our diverse portfolio of media assets,” Mr. Mays said. “These are profitable and well-managed properties in excellent markets.”

The combination of a small glut of TV stations on the market (Tribune may sell its 25 stations) and cross-ownership rules that regulate the sale of broadcast properties, plus the prospect that the Federal Communications Commission will tighten the media ownership rules, may make the sale of the stations “challenging,” said Mark Fratrik, VP of BIA Financial Network.

“Under the present regulatory regime it is kind of difficult,” Mr. Fratrik said. But he added that any station can find a buyer “for the right price.”