Forbes: Clear Channel's Grim Prospects
April 4, 2008 at 5:23 AM (PT)
CNN MONEY/FORBES paint a bleak portrait of the state of the CLEAR CHANNEL sale, writing that as CLEAR CHANNEL limps away from what looks more and more like a failed attempt to sell itself, prospects for the nation's largest radio broadcaster -- not unlike most media companies -- look grim.
Apart from the legal mess and the slim possibility that a deal could still be completed, CLEAR CHANNEL is facing an uphill battle to grow revenues and enhance shareholder value. "There's a contraction happening in radio that is making lenders nervous," says DAVID W. MILLER, an analyst with SMH CAPITAL in LOS ANGELES. Indeed, radio industry revenues have been stagnant over the last five years. In 2007, ad sales in the sector fell 2% to $21.3 billion, according to the RADIO ADVERTISING BUREAU. "One year ago, the industry was looking forward to 2008," said MILLER. "With all the political ads and the Olympics in summer, money usually flows down to radio because of inventory constriction on TV. But a lot of other revenues have dried up this year."
One year ago, the industry was looking forward to 2008.
Although CLEAR CHANNEL was able to grow its overall revenues by 5.5% in 2007, net sales at the company's radio division fell 2% during the year. They are expected to fall by a similar measure in 2008. Much of CLEAR CHANNEL's revenue growth last year came from the company's outdoor advertising subsidiary.
Should CLEAR CHANNEL go unsold, controlling shareholders, the MAYS family, will be back to square one. They began entertaining buyout offers in 2006, after a number of efforts to boost the company's share price -- including aggressive share buybacks and some asset sales -- failed. Analysts speculate that a scuttled deal would mean that shareholders will likely pressure the MAYS family to take up those value-boosting efforts once again, possibly by selling off a handful of the company's lesser-performing radio stations.