Clear Channel Sale to End Era
http://www.washingtonpost.com/wp-dyn/content/article/2006/11/16/AR200611
1600537.html
By Frank Ahrens
Washington Post Staff Writer
Friday, November 17, 2006; Page D01

Clear Channel Communications Inc. has agreed to sell the company to a
consortium of private-equity firms and plans to shear off more than
one-third of its 1,150 radio stations, dismantling a giant that
dominated the industry and became the bogyman of media consolidation for
the past half-decade.

Clear Channel is hard to avoid in Washington. It owns eight local radio
stations, including popular rocker DC101, top 40 station Hot 99.5 and
sports-talk WTEM-AM. It sells ad space atop hundreds of taxis and on the
sides of bus stops and provides traffic updates through its Total
Traffic Network unit.

The buyers, led by Bain Capital Partners and Thomas H. Lee Partners,
agreed to pay $26.7 billion for the company, which includes the
assumption of $8 billion in debt.

In a separate transaction also announced yesterday, Clear Channel said
it would seek buyers for all of its television stations and 448 of its
smaller radio stations, presumably because the private-equity buyers are
not interested in owning television or small-market radio. The stations
marked for sale are all outside the nation's top 100 markets, which
would exclude Washington, the eighth largest.

The sell-off will mark the end of the consolidation era for the radio
industry and its largest player, Clear Channel, and an acknowledgment by
the company that it no longer is interested in smaller radio markets.

The predecessor to Clear Channel was founded by L. Lowry Mays and Red
McCombs, former owner of the Minnesota Vikings, with the purchase of one
San Antonio radio station in 1972. The company went public in 1984 and
grew remarkably in the 1990s as the result of favorable Federal
Communications Commission rules allowing for radio consolidation. The
company topped out at more than 1,200 stations in 2000, just before
radio ratings and ad revenue began to flatten as listeners moved
elsewhere.

As the company grew, it received unfavorable press for its size and
influence on music playlists and artist development. Clear Channel was
criticized for homogenizing the sound of FM radio and strong-arming acts
into playing company venues in return for airplay. The criticism became
so intense that the company posted a "myth vs. facts" section on its Web
site to answer charges.

Mays's sons, Randall and Mark, will continue to operate the stations
under new ownership. As part of the sale, all three received substantial
payouts, the value of which was not disclosed.

Bain and Lee also are bidding for Tribune Co., which owns several
newspapers and television stations. That process is ongoing. But now
that the two private-equity firms are set to own Clear Channel, an
additional purchase of Tribune could force the private-equity firms to
sell certain papers and television stations to comply with FCC
regulations prohibiting one company from owning a newspaper and radio or
television station in the same city.

Clear Channel stock closed up $1.24 yesterday to close at $35.36. The
buyers paid $37.60 per share, the highest price the stock has seen since
mid-2004, and a 25 percent premium on its average price in the month
ending Oct. 24. 
Last year, Clear Channel radio reported more than $3.5 billion in
revenue, tops among radio groups. CBS Radio was second at $2.1 billion.

It's been all downhill for Clear Channel stock since its high of nearly
$100 per share in 2000, and a buyout likely represents the greatest
value its owners felt they could get for their shareholders and
themselves.

The buyout is a "significant milestone in radio industry history," said
BIA Financial Network radio analyst Mark R. Fratrik, noting the move of
traditional media from public to private ownership.

"By going private, these companies and their financial backers believe
that they can grow in value over the long term without being concerned
about investors' quarterly targets," Fratrik said.

Bennett Zier, who managed Washington's Clear Channel stations until
January, when he left to launch Daniel M. Snyder's Triple X ESPN Radio
venture, said: 
"We're private, and we love it."kd7jn