Clear Channel Pulls Back Small-Market Sell-Off

[Mr. Jones]

Inside Radio:

Clear Channel pulls back on its small-market sell-off. At least for the time being, Clear Channel-owned stations in more than two-dozen markets ranging from Anchorage, AK to Williamsport, PA won’t be sold. Broker Frank Kalil tells Inside Radio “We pulled it in. These stations have to be operated and will not be punished by the incorrect belief that there is a lack of equity in the market.” The clusters were generating bids, but offers were coming in below what Clear Channel thinks the stations are worth. Kalil says “People are bottom-fishing right now.” Since the beginning of the year Clear Channel has sold ten stations in Minnesota, Ohio and Tennessee for a combined $12.95 million. Two weeks ago the company gave VP of corporate development Dirk Eller the task of handling asset sales and divestures following Jerry Kersting’s departure to Tribune. In November 2006, Clear Channel announced plans to sell 448 non-core stations. At one point it looked like the process would be quick. It sold 187 stations in 36 markets to Frequency LLC for $452 million — but that deal went sour and ended with still pending lawsuits.

Does this involve any local/regional clusters?

[genlock]

No buyers?

[Lester]

It looks like plenty of buyers, that want to pay what their worth *NOT* what Clear Channel paid for them.

[cgarison]

It looks like plenty of buyers, that want to pay what their worth *NOT* what Clear Channel paid for them.

Precisely. CC cannot afford that kind of loss at this time.

[Maddog]

Wheeling, Huntington, and Parkersburg are all off the market with this announcement.

[genlock]

More cuts to make them look profitable?

[Tom Taggart]

Suppose Clear Channel, as in CCU the public company, reached agreement to sell the Smallville cluster to John Doe & Co. They apply to the FCC for permission to transfer the stations. The deal to take Clear Channel private finally closes. Then Clear Channel becomes Clear Channel Holdings, or whatever Mssrs. Bain and Lee are going to call the new, privately held corporation, and all of the CCU stations become the property of the new Clear Channel Holdings. This then means the transfer application for Smallville must be re-filed with the commission, in order to show that it is "Clear Channel Holdings" transferring the station cluster to John Doe & Co.

Just wait. In a few months all of these "departing markets" will once again be available for departure.

[kentuckymedia]

Bingo. They are just waiting for Bain to take the thing private and clear (no pun intended) up their own messes in San Antonio.

They made the stupid move of suing the banks, lets see how these banks treat them after they go private!

[Tom Taggart]

They may not be waiting for long. CC just sold 17 stations in the Bangor and Augusta/Waterville, Maine, markets to a new outfit called Blueberry Broadcasting. Price:11 million. Bangor 12+ is 163,000; while Augusta is 108,000 12+; some of the stations overlap between the markets. Blueberry will have to spin off some stations because of the new multiple ownership rules based on Arbitron markets, as opposed to the contour method CC used to assemble these clusters.

Note that both clusters were part of the Good Radio buy that crashed and burned. Based on the total price for that deal, Good Radio would have paid somewhere north of 35 million for these 17 stations, had that deal closed.

So it is safe to assume that Wheeling-Parkersburg-Huntington remain on the market, along with the other "departing markets," despite protestations to the contrary emanating from San Antonio.

[Maddog]

I don't think that it is safe to assume anything. Many of the markets, including Wheeling, Parkersburg & Huntington that were pulled back into the company are profitable markets, and unless the price is right, I seriously doubt they will be sold. Obviously, if someone comes to the table with an offer that is profitable for CC, then CC would be insane not to accept it, but they are not going to entertain offers from bottom feeders looking for fire sale prices, when the markets in question continue to be extremely profitable.

[kentuckymedia]

Very true. It amazes me how much money is mined out of Wheeling. However the problem doesnt lie in the local market, its the fact that Bain doesnt care about the local market.

The stations that Blueberry bought...they got extremely cheap. For example, the cluster in Augusta was out-pacing Citadel 2-1. Bangor was outpacing Cumulus and Zone. The stations were and are very solid there. Blueberry had the financing, and CC wants to shed as much weight as possible as quickly as possible.

Bain looks at the small markets like they mean nothing. For a company that big, they really dont mean anything... But once Bain takes over, look for a warehouse sale of all stations under market 75. Maybe even Market 50.