• by Erik Sass , December 15, 2008

Clear Channel Communications and CBS Radio are swapping a total of seven stations, with Clear Channel picking up five mid-sized market stations in exchange for two large-market stations. The swap is one of a series of deals and divestitures undertaken by Clear Channel to satisfy the conditions that were placed on its merger with a private equity firm by the Department of Justice.

The Feds dictated that Clear Channel had to sell or otherwise relinquish control of a number of stations and also sell its TV properties.

According to the companies, Clear Channel is picking up KBKS-FM (Seattle), WQSR-FM (Baltimore), KXJM-FM and KLTH-FM (Portland, Ore.), and KQJK-FM (Sacramento, Calif.). In return, CBS is getting KLOL-FM (Mega 101.1) and KHMX-FM (Mix 96.5), both in Houston. CBS said this is part of its strategy to focus on stations in larger markets.

The divestitures demanded by the Department of Justice are separate from the sale of hundreds of radio stations in smaller markets that was first announced by the company in November 2006. At the time, Clear Channel said it would be selling up to 448 smaller stations, but later revised this number to 275--of which it had sold 238 by the end of the second quarter, with 18 more sold in the third quarter.

Ironically, although Clear Channel and CBS both say they are focusing on mid-sized and large-market stations, in general these tend to be suffering bigger drops in ad revenue than stations in smaller markets over the last couple of years.

In September, Jim Boyle, an analyst with CL King, noted that over the previous 18 months, small-market radio enjoyed monthly average revenue growth of about 1.1% versus a monthly average decline of 3.6% in big markets. Boyle attributed small-market success to their continued emphasis on unique local content and strong relationships with local advertisers. Also, such markets were probably spared the price wars that undercut ad rates in big markets over the last two decades.