Clear Channel explores a sale

Clear Channel explores a sale
Web Posted: 10/25/2006 08:48 PM CDT
Meena Thiruvengadam
Express-News Business Writer
Clear Channel Communications Inc. on Wednesday confirmed it is considering putting itself up for sale and has hired Goldman Sachs as an adviser.
Since CNBC reported the company was "warming" to the idea of a buyout on Tuesday, media outlets around the world had begun speculating the company could go private because of lackluster radio ad sales and sluggish stock prices.
The San Antonio-based company refused to comment on the speculation, but on Wednesday announced its board "is evaluating various strategic alternatives to enhance shareholder value."
It would not comment beyond its statement.
Shares of Clear Channel stock, which were trading as high as $85.49 in 1999, have been trading between $27 and $35 for the past two years.
Its shares hit a 52-week low of $27.17 in August.
"There's a lot of private equity money out there, and people are just putting two and two together," A.G. Edwards & Sons analyst Michael Kupinski said before Wednesday's announcement.
"It's fairly typical when stocks are tremendously out of favor. "
If it is taken private, Clear Channel would join the ranks of companies like Freescale Semiconductor Inc., Michaels Stores Inc. and HCA who have all recently agreed to be bought out by investor groups.
The company had restructured itself in the past year by spinning off its entertainment division, which it called Live Nation Inc., and 10 percent of its outdoor advertising unit, Clear Channel Outdoor Holdings Inc.
The company still has a substantial $7.9 billion in debt.
Last year, in an effort to lure back listeners who had moved on to iPods and satellite radio, Clear Channel began charging more for ads but playing fewer of them to minimize commercial time.
The strategy appeared to be working.
"It's one of the few in the industry that's showing pretty decent revenue growth," Kupinski said.
Clear Channel reported second-quarter 2006 revenue of $1.85 billion.



Revenue was up 6 percent for the quarter in the company's radio broadcasting unit, thanks to strong ad spending from the automotive, services and retail sectors.



Clear Channel share prices rose 15 cents Wednesday to close at $32.35 on the New York Stock Exchange following a 42-cent jump after the news report Tuesday.



In after-hours trading Wednesday, its stock was up $1.87, or 5.8 percent, to $34.22.



The company also announced it plans to release its third-quarter 2006 earnings before the market opens Monday.