Clear Channel Accepts $18.7 Billion Takeover Bid/Private Equity Loves Media

CLEAR CHANNEL ACCEPTS $18.7 BILLION TAKEOVER BID
[SOURCE: New York Times 11/16]
The nation’s largest network of radio stations, Clear Channel Communications, agreed Thursday morning to be bought for $18.7 billion, in a deal that may test private equity’s seemingly insatiable appetite for media properties. A consortium that includes Thomas H. Lee Partners and Bain Capital won the bidding, beating out a rival consortium of Providence Equity Partners, the Blackstone Group and Kohlberg Kravis Roberts & Company. The deal would rank as one of the largest media buyouts ever, surpassing the recent takeover of Spanish-language broadcaster Univision Communications, which a private equity consortium bought for $12 billion earlier this year. In a press release announcing the transaction on Thursday, Clear Channel put a total value of $26.7 billion on the transaction, including $8 billion in assumed debt. The company’s board has unanimously approved the proposed transaction and is recommending that shareholders vote in favor of it. Clear Channel said in a separate statement Thursday that it would sell all of its radio stations outside the top-100 markets, totaling 448 of 1,150 stations, as well as its 42-station television group. Overall, the properties generated less than 10 percent of Clear Channel’s revenue last year, and all the properties are located in small to mid-sized markets across the nation. In addition to its radio stations, Clear Channel owns a substantial number of billboards and other outdoor advertising. The company generated $6.6 billion in sales in 2005. Clear Channel’s broad reach could raise regulatory concerns, however. Thomas H. Lee Partners is part of the buyout consortium that owns Univision, so the Clear Channel deal may be the first in which regulators will have to consider private equity owners as established players in some media markets.
http://dealbook.blogs.nytimes.com/2006/11/16/clear-channel-accepts-185-b...
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* Clear Channel Sold for $26.7 Billion
http://adage.com/mediaworks/article?article_id=113246

* Clear Channel agrees to $18.7B buyout
http://hosted.ap.org/dynamic/stories/C/CLEAR_CHANNEL_BUYOUT?SITE=AZTUS&S...

* May's Family Finds Buyers for Clear Channel, TV Stations for Sale
http://www.broadcastingcable.com/article/CA6392037.html?title=Article&sp...

* Clear Channel Sale to End Era
http://www.washingtonpost.com/wp-dyn/content/article/2006/11/16/AR200611...

* Clear Channel to be sold for $18.7 billion
http://www.latimes.com/business/printedition/la-fi-clear17nov17,1,696211...

PRIVATE EQUITY LOVES MEDIA COMPANIES
[SOURCE: New York Times, AUTHOR: Andrew Ross Sorkin & Peter Edmonston]
Some of the largest broadcasters and publishers are being swept into the arms of private equity firms, which are drawn to the rich cash flows these businesses generate and are undaunted by their slowing growth. The trend could raise new regulatory concerns, however, as some of the big private equity firms start to weave a complex web of cross-ownerships in the industry. As the audiences for traditional media companies have shrank, advertisers have responded by moving more dollars to the Internet. As a result, the growth rates at many media companies have slowed sharply, making them undesirable to many investors. But many of these same businesses throw off a great deal of cash that can be used to support a debt-financed buyout. There are plenty of banks willing to lend money for such deals, and interest rates are relatively low. Private equity firms believe they can unlock value by selling off pieces or making drastic operational changes.
http://www.nytimes.com/2006/11/17/business/media/17private.html?ref=busi...
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A LOUD AND CLEAR SIGNAL ON MEDIA BUY-OUTS
[SOURCE: Financial Times, AUTHOR: Aline van Duyn and Joshua Chaffin]
The willingness of private equity investors and banks to buy Clear Channel at valuations above those placed on it by stock markets could lead to other buyouts or sales attempts at media companies. “Clear Channel is the most important media deal so far,” said one senior banker. “Not only is its scale important – it sets a new benchmark for going-private deals – but the board is voluntarily saying they’re better off private than public.” Private equity investors, despite the mountains of equity they are willing to invest and the ease with which they can raise debt, are not likely to pounce on all media assets, however. In the sale of Knight Ridder, private equity bidders were notable for their absence. Even in Clear Channel’s case, the attraction was not so much its radio stations, but its outdoor advertising business, one of the few media sectors that is not suffering from a decline brought on by digital distribution.
http://www.ft.com/cms/s/13ea445e-759e-11db-aea1-0000779e2340.html
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