Clear Channel Tightens Belt; Buyers Send in Consultants

The Wall Street Journal reported this week that neither Clear Channel nor its buyers, Thomas H. Lee Partners and Bain Capital, were commenting about the transaction to take the broadcaster private.
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Some Clear Channel investors are worried about whether the $19 billion buyout will close, based on the principals’ closed lips about the deal and the broadcaster’s belt-tightening tactics in the first quarter.

The Wall Street Journal reported this week that neither Clear Channel nor its buyers, Thomas H. Lee Partners and Bain Capital, were commenting about the transaction to take the broadcaster private.

According to the account: “The five banks financing the deal — including Citigroup Inc., Royal Bank of Scotland Group PLC, Deutsche Bank AG, Credit Suisse Group and Morgan Stanley — are eager to escape huge financing commitments. And the radio industry, already facing competition from satellite and the Internet, could worsen if the economy slips into recession.”

Piling on for more bad news, the paper reports that company radio head John Hogan told managers to make budget cuts in Q1, as the division is generating less for the quarter than expected, while expenses are up 4%.

“No one anticipated how challenging Q1 would be for us,” the WSJ quotes Hogan as stating in a memo.

The buyout firms have sent teams of consultants to the company’s San Antonio headquarters to “help run the business,” according to the account.

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