Shareholders Expected To Approve Clear Channel Sale

Vote Is Tuesday

CLEAR CHANNEL COMMUNICATIONS INC. shareholders on TUESDAY are expected finally to approve one of the year's most contentious deals: the radio titan's $19.35 billion privatization, reports THE WALL STREET JOURNAL. Now, the question is whether CLEAR CHANNEL, as a closely held company, can successfully battle the tough conditions that have challenged the industry in recent years.

The CLEAR CHANNEL vote has been delayed four times since the original date in MARCH, and the price has changed twice since the original $37.60 a share. The current offer to shareholders from BAIN CAPITAL LLC and THOMAS H. LEE PARTNERS LP is $39.20 a share.

The Clear Channel vote has been delayed four times since the original date in March.

But if getting the deal through has been tough, building more value at the company may be tougher. The radio industry is suffering from lagging advertising revenue and competition from iPods and satellite radio, among other forces. Already, the new owners have run into delays with one of their first key tasks, selling off lower-revenue-generating stations in smaller markets. Unloading those assets is key to paying down the debt the company is taking on to privatize. In a worst-case scenario, failure to do so could delay CLEAR CHANNEL's return to public markets.

"It's tough to go public again at anywhere more than seven times leverage," says DAVID BANK, an analyst at RBC CAPITAL MARKETS, referring to debt as a multiple of earnings before interest, taxes, depreciation and amortization. He thinks the company's new private holders initially hoped to go back to public markets within two or three years. In current conditions, "the new owners have to be prepared to own the company for as long as five to six years," he says.

To a large extent, CLEAR CHANNEL has already reshaped itself, even before the votes come in. It is selling off its television stations and smaller-market radio stations, while its former concert business is approaching its second anniversary as a separate entity.

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