Radio Daze: Clear Channel Takes Some Stations Off The Market

ClearChannel screengrabWith the legal drama of its private-equity sale battles behind it, Clear Channel Communications is taking some of its small and mid-sized radio stations off the market. The decision, disclosed in a quarterly 10-Q filing with the Securities and Exchange Commission, is yet another sign that radio is going through hard times.

The company originally announced its intention to sell 448 radio stations in smaller and mid-sized markets back in November 2006, when the planned buyout by Thomas H. Lee and Bain Capital Partners was first made public. Since then, the company has succeeded in selling 223. Another 32 are under definitive purchase agreements, meaning that their sale is likely; that brings the total sold, or pending sale, to 255. This leaves 20 non-core stations still for sale.

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Of the 173 stations being taken off the market, 145 were classified as "discontinued operations" by the company for accounting purposes, but have now been reclassified as "continuing operations."

Clear Channel said it decided to take the stations off the market because "it determined that market conditions were not advantageous," hinting at lukewarm interest from potential buyers. Clear Channel Radio, along with the rest of the radio industry, has suffered revenue declines in year-over-year comparisons; in the first quarter, radio revenues were down 4% to about $770 million.

The overall downdraft in radio also jeopardized the company's sale to private equity, along with other factors, including the global credit crunch. The six-bank consortium that originally agreed to fund the deal got cold feet when radio revenues began falling at the same time credit was contracting. The banks thought the price of $39.20 per share was too high, in light of the radio industry's woes.

After being sued by Clear Channel and its private-equity buyers, the banks agreed to a settlement that lowered the price to $36 per share; this price still must be approved by Clear Channel's shareholders.

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