Clear Channel Strategy Gets Thumbs Up From Analyst

Clear Channel Communications is “making all the right moves,” financial analyst Marci L. Ryvicker says in her latest memo to clients.
She said the firm has made several recent announcements that “confirm the company’s commitment to finding new ways of generating growth. While we don’t know the potential financial impact of such initiatives at this point, we are comfortable in stating that upside is likely.”
Ryvicker wrote that the company continues to invest in its core business as well as new initiatives and is repurchasing shares; she noted Clear Channel’s “significant” free cash flow and said the company’s stock is inexpensive relative to the radio sector.
The analyst also commented on the idea that the company might go private, calling it not likely.
“A going-private transaction may make sense given the 26% decline in CCU’s stock price since the announcement of its first share repurchase plan (March 2004) and the 10% decline since the announcement of Less Is More (July 2004),” she wrote. “Meanwhile, the S&P 500 has risen 15% and 18%, respectively. However, our going-private analysis suggests a premium bid of only 10% relative to the current stock price. This is not a large enough gap, in our view, as confirmed by Emmis’ recent cancellation of a management buyout.
“Furthermore, we don’t think CCU management is ready to go private,” she concluded.
She added that Clear Channel would benefit if it sold off “non-core assets,” meaning selected stations, similar to the recent strategy of CBS.