Reactions Roll in as Clear Channel Considers Sale

Perhaps Clear Channel will go private.
Reacting to rumors that Clear Channel Communications could sell part of or all of the company, the big radio owner confirmed that its board of directors “is evaluating various strategic alternatives to enhance shareholder value.”
The board has retained Goldman, Sachs & Co. as its financial advisor as it sorts through leveraged buyout offers.
Clear Channel stated that no deal may happen and it doesn’t intend to comment further publicly unless the board approves a deal. At the same time, the company moved up release of its third quarter earnings to Monday, Oct. 30.
Neither Banc of America media analyst Jonathan Jacoby nor Wachovia Securities analyst Marci Ryvicker believe the Mays family intends to give up control of the company. In a research note, Ryvicker said a partial spin-off of a non-core asset is more realistic, perhaps radio or TV stations or a partial spin-off of outdoor, rather than a leveraged buyout.
A Financial Times story stated that Clear Channel has had serious talks about going private with a number of buyout groups including Kohlberg Kravis Roberts. “People familiar with the situation said members of the founding Mays family, which had previously rejected approaches from interested private equity investors, were now more open to the idea of a buy-out,” it reported. “However, they cautioned that no deal appeared imminent.”
The Financial Times puts the company’s market capitalization at $16 billion. CNBC first reported Clear Channel’s discussions with potential suitors.
Ryvicker noted that Clear Channel shares were down 20% since the announcement of its first share repurchase plan in early 2004 and also off since the announcement of Less Is More later that year, while the S&P 500 increased 23% and 26%, respectively.
Mark Fratrik, VP of BIA Financial Network, said in a commentary e-mail that the decision “speaks to lackluster enthusiasm in (the) radio market and the industry’s core revenue history in recent years.” It’s a response, he says, that a lot of companies are considering. “The public market does not perceive the same value the company sees, particularly in radio, thus allowing them to move forward in a more strategic fashion.”
Despite sluggish growth, though, Fratrik wrote, “Radio is by no means a dying medium; it just has challenges. Some markets are actually rebounding and performing well.”