• by Erik Sass , July 30, 2007

Clear Channel Communications, which owns Clear Channel Radio and Clear Channel Outdoor, enjoyed a 19% increase in earnings during the second quarter of 2007 compared to the same period in 2006, the company announced Friday. Overall, the company recorded revenues of $1.8 billion in the second quarter, up 5% from $1.7 billion in the second quarter of 2006. The positive earnings news comes as the media giant heads into a painfully negotiated private equity buyout.

The company's radio business--which constitutes the majority of its revenue--remained essentially flat compared to this period last year, increasing just 1% to $918 million. These results are on par with the radio industry at large, which has seen revenues stagnate over the last several years. According to the Radio Ad Bureau, April saw a 2% increase in total revenues, while May is down 1%. (June figures and quarterly totals are not yet available.)

Clear Channel's restructuring plans include the sale of 448 radio stations in smaller markets. According to the company, this sale is nearly complete, with agreements to sell 389 stations in 77 markets for a total $875.1 million.

On the outdoor front, that division is booming, posting 12% growth in revenue to $836.7 million. Here, the company outpaced broader industry growth. Overall, outdoor revenue grew 8% in the first quarter--the most recent data available from the Outdoor Advertising Association of America. Clear Channel expects outdoor revenues to grow 10.6% in the third quarter and 7.2% for the year.

It's not clear what effect, if any, the positive earnings will have on the pending acquisition of Clear Channel by two private-equity firms, Thomas H Lee Partners and Bain Capital Ventures. The firms have agreed to pay $39.20 a share for the company--a 6% premium over the current price of $36.98--while allowing current stockholders to retain 30% of their shares.

This $19.45 billion deal was the result of repeated negotiations after several rebuffs from institutional shareholders, who felt that earlier offers were too low. Some shareholders argued they could undertake actions to produce higher stock value on their own, including the spinoff of the company's profitable outdoor business. The deal, however, was approved by the Clear Channel board of directors in May. It is set for a shareholder vote that has yet to be scheduled.