Mark Mays, president-CEO of Clear Channel, said the moves are designed to "unlock" the asset value of the company giving it more "financial flexibility." That flexibility presumably would include increasing its cash position and improving its debt rating to make other potentially strategic acquisitions.
The move also signals part of a potential trend toward unbundling of media assets at big media companies. Viacom Chairman Sumner Redstone has floated a scenario to break Viacom into two separate operations - one headed by MTV Networks chief Tom Freston, the other by CBS chief Leslie Moonves - when he retires in a couple of years.
Meanwhile, the timing of Clear Channel's outdoor media spin-off is interesting. On Friday, the company released first quarter 2005 earnings, which show outdoor, not radio, to be its major advertising growth engine. Outdoor advertising sales rose 11 percent during the quarter to $579 million, while radio sales declined 7 percent to $774 million.
Clear Channel Radio's results lagged the radio industry during the quarter. On Thursday, the Radio Advertising Bureau released estimates showing that total radio advertising sales for the industry rose 2 percent during the first quarter, including a 3 percent spike in March. "Growth should remain steady throughout the year," said RAB President-CEO Gary Fries.
Mark Mays will continue as CEO and Randall Mays as CFO of Clear Channel's combined Outdoor operations. Paul Meyer was named global president and COO of Clear Channel Outdoor's worldwide operations. The company said it had 2004 outdoor advertising sales of about $2.5 billion, accounting for nearly half the medium's sales.
The 100 percent divestiture of Clear Channel Entertainment will results in a separate, publicly traded company with about $2.75 billion in entertainment - mostly concerts and events - sales.