Clear Channel agrees to be taken private

Mark Mays said only that “we don’t stand to gain anything except what ... shareholders gain.”

James Goss, media and entertainment analyst for Barrington Research, said the price of $37.60 was in line with expectations. The figure represents a 10.2 percent premium over shares’ closing price on Wednesday.

“I don’t think there’s anything that’s happened that’s been totally surprising,” Goss said.

Clear Channel also said it plans to sell 448 of its radio stations, all located outside the top 100 markets, as well as its 42-station television group, which are also located in smaller markets. Collectively the properties made up less than 10 percent of the company’s revenues last year.

The acquisition is not dependent on the sale of those assets, the company said.

Clear Channel owns or operates 1,150 radio stations and is the largest operator of radio stations in the country.

Kit Spring, an analyst for Stifel Nicolaus & Co. Inc., wrote in a note that shareholders should reject the initial offer.

“(Clear Channel’s) assets could command a much higher price if sold piece by piece, in our view,” the note said.

Moran said the other “wild card” in Thursday’s announcement was the fate of Clear Channel Outdoor, a major operator of billboard and bus-stop ads. Clear Channel owns a majority of the outdoor business, which trades separately.

Outdoor advertising company JCDecaux last week expressed interest in acquiring Clear Channel Outdoor.

Thursday’s announcement doesn’t include any provisions for taking the public portion of Clear Channel Outdoor private, the company said. However, Clear Channel’s majority ownership of Clear Channel Outdoor will transfer to the private equity group.

The company’s directors have approved the agreement, with the board insiders recused from the vote.

Once stock market darlings, radio stocks have fallen out of favor on Wall Street in recent years amid sluggish advertising revenues and competition from the boom in portable listening devices like Apple Computer Inc.’s iPods and the emerging growth of satellite radio.

Since January of 2000, Clear Channel stock has fallen from a high of more than $90.

Clear Channel has instituted several measures to try to win listeners back, including cutting back on the number of commercials. However other operators have yet to embrace its “less is more” strategy.

Clear Channel was founded in 1972 and benefited greatly from the loosening of media ownership rules, which allowed more radio stations to be held by a single owner in each market.

The deal would rank behind KKR’s 1988 buyout of RJR Nabisco Inc., which still is the biggest going-private deal ever at $25.1 billion. It would also trail two other deals announced earlier this year. Those included the $21.8 billion buyout of airport development company BAA PLC and the $21.3 billion buyout of hospital company HCA Inc.

Clear Channel said it expects to close the acquisition by the fourth quarter of next year.

And beyond that?

“Maybe they won’t be private forever,” said Goss. “That’s always a possibility (going public again) because private equity usually has an exit strategy. They don’t really buy it just to own it forever. ... If it were public again it wouldn’t look the same day as it did the first time around.”

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