With stock 'undervalued,' media giant tries a different path

Published November 17, 2006

Entertainment and media giant Clear Channel Communications Inc. fired local radio shock jock Bubba the Love Sponge Clem two years ago. It spun off operations at Tampa's Ford Amphitheatre to a new public entity late last year. And now the nation's biggest radio station operator, with eight stations in the Tampa Bay area, is taking its remaining business out of the public market.

Thursday, the San Antonio, Texas, company said it has agreed to be acquired by an investment group for $26.7-billion, including debt. The company also said it plans to sell 448 of its radio stations, none in the Tampa Bay area, as well as its 42-station television group. Here are more details.

Why is Clear Channel going private?

Radio, once a darling of the stock market, has been hammered by sluggish ad revenues and competition from iPods and satellite radio. Since January of 2000, Clear Channel's stock has fallen from a high of more than $91 a share to a closing price Wednesday of $34.12. Company CEO Mark Mays said the time was right to take the company private because its stock was being undervalued by the stock market.

Who's buying and how much are they paying?

Plenty. An investor group led by Thomas H. Lee Partners LP and Bain Capital Partners LLC is paying $18.7-billion or $37.60 for each share of Clear Channel. Buyers are also assuming about $8-billion in debt for a total price tag of $26.7-billion.

What does Clear Channel Communications own in the Tampa Bay area?

Eight radio stations: WBTP-FM 95.7 "The Beat" hip hop; WDAE-AM 620 "The Sports Animal"; WFLA-AM 970 Fox News; WFLZ-FM 93.3 popular music; WFUS-FM 103.5 country music; WHNZ-AM 1250 news; WMTX-FM "Mix" 100.7 popular music; and WXTB-FM 98 Rock.

Will formats or staffing change with the buyout?

Clear Channel's not saying. Some observers say that since top management will remain the same, staffing cuts that have been ongoing will continue with few other changes. Other analysts say new ownership always brings change as it looks to maximize return on investment. "Sales are always one part exhilaration, one part fear," said Fred Jacobs, a long-time industry analyst in Detroit.

Is this a done deal?

Clear Channel has until Dec. 7 to solicit competing proposals. Analysts expect other bids as well as pressure from some shareholders for the company to be broken up and sold in pieces to get a higher total return.

What effect will this have on Ford Amphitheatre?

Hard to say, since Clear Channel no longer directly runs the operation at the venue in Tampa. In December, Clear Channel spun off its entertainment division into Live Nation, a separate, publicly traded company. But the Mays family, which owns about 7 percent of Clear Channel, owns a similar stake in Live Nation, making it the largest non-institutional shareholder. The Mays family also has three board seats on Live Nation.

What happens to Clear Channel's billboard and bus-stop ad operation, so prominent across the Tampa Bay area?

Clear Channel Outdoor, which has an office in Clearwater, is a separately traded company, although its majority owner is Clear Channel Communications. In Thursday's announcement, Clear Channel made no mention of taking the Outdoor company private.

What happened to Clear Channel Communications' stock Thursday?

It closed at $35.36, up $1.24.

Kris Hundley can be reached at hundley@sptimes.com or (727) 892-2996.