Shares of Chancellor Media dropped 10 percent Monday morning after its chief executive officer and chief financial officer resigned. The company also dropped a plan to acquire LIN Television.
Chancellor, one of the giant radio arms of Dallas buyout firm Hicks Muse Tate & Furst, said that Chief Executive Jeff Marcus resigned and that Tom Hicks, Chancellor's chairman, will assume the role of CEO.
Chief Financial Officer Thomas McMillin, who Marcus brought in earlier this year to replace Matt Devine, has also resigned, the company said. James deCastro, who'd been chief operating officer, will become president and chief executive officer of the newly created Chancellor Radio and Outdoor Group.
Steven Hicks, president and CEO of the Hicks Muse sister company Capstar Broadcasting (CRB), will head the new Chancellor Media Services Group, which includes a new Internet initiative.
The stock (AMFM) fell 4 1/4 to 40 1/8.
These moves come less than two months after Chancellor put itself up for sale due to concerns that its stock traded at a discount to its radio industry peers. Some observers were baffled by the decision, which seemed to be an abrupt abandonment of Chancellor's growth philosophy.
Chancellor also said Monday that it's decided not to proceed with its multbillion-dollar purchase of LIN Television, another Hicks Muse subsidiary.
Chancellor wanted to use the eight network-affiliated LIN stations as part of a multimedia platform (with radio and outdoor properties) that could be packaged to advertisers. "My colleagues and I at Hicks Muse, Chancellor and LIN believe that there would have been advantages in having major radio, television and outdoor advertising assets under a single corporate umbrella," said Tom Hicks in a statement.
"We also believe, however, in listening to the views of our fellow investors," he said. "In this instance, a number of those investors have made it clear that they prefer Chancellor Media to remain focused on the radio and outdoor advertising businesses, and prefer LIN Television to continue as the strong, successful standalone company it is today."
Chancellor expects to take first-quarter restructuring charges of $20 million to $25 million. Hicks Muse will invest up to $500 million in the reconstituted Chancellor through the open market or negotiated deals "beginning shortly," Chancellor said.
Chancellor still intends to pursue its $4.1 billion purchase of Capstar, which is expected to close later this year. Capstar shares slipped 13/16 to 18 13/16.
Written By David B. Wilkerson, CBS MarketWatch