Clear Sailing For Clear Channel Buyout
Clear Channel Communications Inc. shareholders approved a $19.5 billion buyout of the radio giant Tuesday, more than 10 months after the deal was first announced.
Of the shares voted, about 98 percent were in favor of the buyout of the San Antonio-based company, Clear Channel said.
The offer from a private equity group led by Thomas H. Lee Partners LP and Bain Capital Partners LLC was first announced in November but was sweetened several times after some large shareholders signaled they would oppose earlier offers.
The latest offer of $39.20 per share in cash or stock appeased at least some of the big holdouts against what could become a privately owned company. Current shareholders could end up with as much as 30 percent of the new company.
Those who choose to keep shares in the new company will be issued shares that are expected to trade over-the-counter and will not be listed on any major exchange, according to company filings last month with the Securities and Exchange Commission.
The buyers will assume $8 billion in debt.
Two-thirds of shareholders were needed to approve the buyout, and previous offers of $37.60 and $39 per share were deemed too low by some and weren't expected to pass. Analysts have said the latest offer will likely be enough to win over the holdouts.
"It appears that all the stars have aligned," Stanford Group analyst Frederick Moran said. "We also think that the credit crunch and the shaky stock market environment over the summer causes more comfort on behalf of shareholders to approve the deal."
The offer to allow shareholders to keep part of the newly private company is an unusual concession because private equity buyers pay a premium to get total control and fewer regulatory requirements than those required of public companies.
The deal is expected to close before the end of the year.
Among Clear Channel's biggest shareholders are Fidelity Management & Research, Highfields Capital Management LP and the California Public Employees Retirement System.
According to its Web site, the company was founded in 1972 by Lowry Mays and Red McCombs as San Antonio Broadcasting Company. It acquired its first "clear channel" radio station - a station that has exclusive use of a frequency - in 1975, when it purchased WOAI in San Antonio, and entered television with the purchased of a station in 1988. It also has outdoor advertising.
With powerhouse AM and FM radio stations, Clear Channel has some influence on national radio programming. In April 2004, the FCC fined Clear Channel $475,000 for indecency in the Howard Stern show (which was syndicated by a company then co-owned with CBS. As a result, Clear Channel dropped Stern from its six stations that broadcast his show, including San Diego and Pittsburgh. Stern then began to explore leaving federally-regulated broadcasting for satellite radio, and inked a deal with Sirius Satellite Radio.
The FCC that year also fined Clear Channel $755,000 for comments made by a Tampa, Fla., radio personality known as "Bubba the Love Sponge."
Earlier this year, a Clear Channel-owned Tampa radio station put up three billboards in the Tampa area featuring the paparazzi photos of Spears with a freshly shaved head and an angry sneer on her face. The ads also had pictures host Todd Schnitt along with the slogan s "Total Nut Jobs," "Shock Therapy" and "Certifiable." The billboards were removed after Spears threatened to sue.
Some Clear Channel stations are affiliates of the CBS Television Network and the CBS Radio Network, which, like CBSNews.com, are part of CBS, Inc.. CBS also produces outdoor advertising.