Clear Channel Goes Private and Streamlined

7Prime writes "Clear Channel Communications Inc., the nations largest radio, billboard, and entertainment outlet, announced their intention this morning to sell the company to a consortium of private-equity firms for over $26 billion. In addition, Clear Channel's TV division, as well as its smallest 448 radio stations would be sold out of the company and will be looking for potential buyers." From the article: "The buyers, led by Bain Capital Partners and Thomas H. Lee Partners, also are bidding for Tribune Co., which owns several newspapers and television stations. That process is ongoing. If Bain and Lee purchase Tribune, they may be forced to sell certain newspapers and television stations to comply with Federal Communications Commission regulations that prohibit one company from owning a newspaper and radio or television station in the same city. The buyers paid $37.60 per share for Clear Channel, the highest price the stock has seen since mid-2004, and a 25 percent premium on the stock's average price in October. The purchase price includes the assumption of about $8 billion in debt."

The End of the Beginning?

[RobertB-DC]

Here's a note I sent to the KHYI-Fans [yahoo.com] email list, a group of fans of independent alt-country station KHYI [khyi.com] (and others) in Dallas:

As Winston Churchill said, "This is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning." Clear Channel, the company that took advantage of greed and laziness in the radio biz and used it to buy over a thousand formerly independent radio stations, is in the process of being bought out itself.

Don't expect to hear good music on the radio again right away, but according to the AP wire, CC is already planning to sell of 448 of its 1,150 radio stations and all of its 48 TV stations. They're all in small markets, and together make up only 10% of CC's revenue. But putting those stations back in local hands -- even if they're still part of some corporate portfolio -- will give good music an opportunity to start eating at the edges. And "702 radio stations" had a decidedly less impressive ring than "Over 1,100 stations" -- meaning that CC won't have the same ability to push advertisers around.

On the down side, CC is likely to be bought out by a private investor group. That means that they won't be subject to the financial disclosure requirements that publicly traded companies must comply with, so the company will become even less transparent than before. But with dwindling influence both in market share and in Washington, it may not matter anyway.

It's the end of the beginning, but the end of corporate radio can't come soon enough.

KTVF...

[7Prime]

I work for a small Clear Channel owned TV station here in Fairbanks, Alaska, KTVF [webcenter11.com], and I found out about this this morning when I came into work. Not a whole lot will change when we get sold (depending upon the owner). Many of the CC TV stations were bought by CC just a few years ago when CC tookover The Akerley Group, of which our station was a member. We have been through 4 different coorporations (statewide and national), in the last 15 or so years... none of the sales having any reliviance to the profits of this station.

So, basically, our website will probably change (since it's currently a Clear Channel developed layout), we will no longer be pushed into the sales promotions that are currently required of us, and our logo will probably have to be changed a bit. I just hope the new boss isn't the same as the old boss... so to speak.

Call me suspicious, but...

[Valdrax]

A group of investors wanting to take private some of the largest media companies at high prices and willing to accept large debt for it? I kind of wonder what they expect to get out of it. This kind of a media consolidation at a loss smells of political and not financial motives to me, and I have to wonder if someone's not trying to be the next Rupert Murdoch.

Please please please

[computertheque]

Does this mean that we'll get some decent radio stations back? Clear Channel effectively ruined the radio for me, NPR being the only remaining reason to turn it on.

Re:The End of the Beginning?

[jfengel]

Clear Channel + Major Labels were a kind of unholy feedback loop of genericizing music. The labels knew that they could hit one target and have their music played in every single market, so they had no reason to try to create music for minor tastes. In fact Clear Channel would rather try to play the same music in every market, and knew that the labels would test for what made the most generically popular music. That made the music even more generic, which made aggregating the radio stations even more profitable.

It didn't help that with the lack of really independent radio stations, there didn't seem to be anybody willing to call Clear Channel and the labels on payola, which is an open secret in the music industry. Everybody knows, and it's illegal, but since the only people involved are profiting, nobody sues. The ones who would sue are already out of business, or recognize that they don't have the kind of money it would take to call Clear Channel and the labels to task.

So it's not just the desire to please most of the people; it's the fact that pleasing most of the people most of the time is so very profitable, especially when you can take a community good like the airwaves (the single best way to advertise music) and deprive the community a chance to use it.

This isn't going to change anything any time soon. This is just them recognizing that smaller markets aren't profitable. Independent bands and labels still will have a hard time getting air play, because it'll still be a challenge to find the niches.

And in related news...

[JonTurner]

... its smallest 448 radio stations would be sold ...

Music fans rejoice. IOW, there's a small chance that, some day, you may be able to find a radio station with Music That Doesn't Suck.

Re:Please please please

[7Prime]

Well, 445 of the smallest radio stations are being cut loose (about 1/3rd). So there are some local stations that will now be out from CCs thumb (and under someone else's, most likely). You might just get your wish. This effectively cuts the size of CC down by quite a bit, and it takes them out of the tallons of the "I want my money NOW!" shareholders. They have been trying to do this for quite some time, actually. Going private is probably the best thing that has happened to the media industry in years.

Re:The End of the Beginning?

[From A Far Away Land]

As a Dixie Chick fan, I'm not surprised you're happy to see Clear Channel retreating [if that is in fact what's happening here?].

I hope this brings about a new age in American radio and billboards, where there's less group-think, and more think-think.

Re:The End of the Beginning?

[Luscious868]

I think the consolidation of local radio stations is partially to blame for the decrease in CD sales that the record companies have been complaining about. For most people radio is the primary means of finding new music and when most of the stations in your market play the same top 40 crap day in and day out, you're exposed to less music and you'll probably by less music by extension. It's clearly not the only problem plauging the music industry but I'm certain it plays a large role.

I never listen to the radio anymore because I get tired of hearing the same stuff over and over and as a result I by less music because I'm exposed to less music.

Oh, what a lucky man he was

[jmb-d]

I can't abide pop music. Top-40 radio is horrid. Blathering, inane DJs suck.

Thankfully, I'm lucky enough to live within the broadcast region of WRNR [wrnr.com], an independent station. There's no playlist -- the DJs are free to play whatever they want. Refreshing, that.

If only they did a streaming broadcast...

Re:Interesting...

[davecarlotub]

Politics? ClearChannel banned the Dixie Chicks records [bizjournals.com] after they spoke out against Bush.

Re:front

[Perseid]

I wouldn't go that far. The Madison, WI Air America affiliate is a Clear Channel station.

Re:ClearChannel is not about music

[jfengel]

Absolutely. The same thing happens in TV. You're not the network's customer. The advertiser is the customer. You're the product. The music/news/whatever they're broadcasting is a capital expense to ensure a supply of product, and like any company they want to maximize return on capital by minimizing expenses.

I'm nearly 40 but I'm not old enough to remember a day when that wasn't true. They've gotten better at it, or perhaps just realized that they could farm up their product with less work (the 44 minutes a TV show lasts now, compared to 55 back in the 60s).

I'm hoping the Web will take these guys out as soon as possible.