WV Clear Channel Sale

The Interpreter · Post by **The Interpreter** » Mon Nov 12, 2007 8:57 pm

Any updates?

Has this fallen through? Still gonna happen?

Bar Rat · Post by **Bar Rat** » Mon Nov 12, 2007 9:18 pm

I have heard nothing. Then again, there will have to be two sales, won't there, since the cluster will have to be broken up?

Cameron · Post by **Cameron** » Tue Nov 13, 2007 5:45 am

The nation's largest radio broadcaster is having trouble unloading some of the nearly 400 stations it has made deals to sell.
Less than a month after terminating an agreement to sell 46 stations to a Chicago buyer, Clear Channel Communications Inc. is in Bexar County District Court suing another would-be buyer.

The San Antonio-based broadcaster claims Frequency LLC, which in April struck a $452 million deal to buy 187 Clear Channel stations, is in breach of its contract. Clear Channel also is suing Frequency consultant Jeffrey D. Warshaw (Connoisseur Media - WMGA/WRYV) for attempting to renegotiate the deal price.

Frequency, created to buy the stations and funded by the New York private-equity firm American Securities Capital Partners LLC, is refusing to complete the deal unless Clear Channel lowers its price by $102 million to $350 million, court documents said.

Warshaw has told Clear Channel his client "would not close at the previously agreed-upon price," according to the documents.

Clear Channel and Warshaw declined to comment for this article. American Securities Capital Partners and Frequency LLC executives did not return calls seeking comment. When the deal was announced, Frequency LLC was known as GoodRadio.TV.

On Nov. 16, Clear Channel announced it would sell 448 of its more than 1,000 stations. The same day, it announced an $18.7 billion buyout agreement with a pair of Boston private-equity firms. The company's buyout price since has risen to $19.5 billion, or $39.20 per share, following investor opposition.

As of June 30, Clear Channel had sold 29 stations for $75.8 million, the company said. A total of 389 stations, including the 187 at the heart of the Frequency suit, were under purchase agreements valued at a total of $871.5 million.

Clear Channel this month terminated a $62.2 million deal to sell 46 Midwest stations to Chicago-based Blue Point Media LLC, saying, "Not all buyers are able to complete their purchase."

Blue Point CEO Chris Devine, who could not be reached for comment on this article, told BusinessWeek this month that "the numbers just didn't work."

The sale already had gained approval from the Federal Communications Commission.

Tom Taggart · Post by **Tom Taggart** » Tue Nov 13, 2007 7:59 am

Note that the Clear Channel~Good Radio sales have never been approved by the Commission.

Another "good" indication that the sale is dead.

Looks like these stations will be in limbo for some time. Not that many group buyers interested in small markets; while the regional buyers who would be interested are not going to pay the multiples that Clear Channel wants. Which appear to have been inflated in the first place--the original Good Radio deal was supposedly 12 times cash flow, but if you break it down on a per-station basis that would indicate per station cash flow is close to $200,000.

Not likely for all stations in these clusters--maybe one or two per market.

genlock · Post by **genlock** » Tue Nov 13, 2007 8:22 am

Sounds like it is time for Clear Channel to make these stations appear more profitable. Perhaps another round of staff cuts is in order. Maybe make blocks if stations attractive to American Family Radio. I am still wondering how long it will take to pay for the new tower at WZZW with the income the station brings in. I don't think the ground radial system was replaced. WZZW once had an old Gates transmitter. Was that ever updated?

wlpatrick · Post by **wlpatrick** » Tue Nov 13, 2007 9:36 am

All of the CC stations that were "sold" are now being re-marketed. Everything that was once packaged is now available for purchase. Some clusters have more interested buyers than others.

genlock · Post by **genlock** » Tue Nov 13, 2007 10:01 am

Thanks, Larry.
The prices seemed high to me, but I just got back from Wal*Mart.

lastone · Post by **lastone** » Tue Nov 13, 2007 10:13 am

All of the CC stations that were "sold" are now being re-marketed. Everything that was once packaged is now available for purchase. Some clusters have more interested buyers than others.

Trying to understand this.....

The stations were sold as a "package" but the buyer then said they're overvalued....you lied ....and wants to change the condition of sale to a lower price.

OK

But then CC goes to court saying in effect "we have a deal....pay up" or you are in breach!

OK

So CC can now offer for sale those same stations that are now in court for breach of contract before it is determined if CC did mess with the numbers and is entitled to the breach determination?

What am I missing here?

and....if the stations are shown to really not be worth the CC asking price, who/why buy them?

wlpatrick · Post by **wlpatrick** » Tue Nov 13, 2007 10:37 am

You may have missed the news from last Friday saying that CC and Frequency License, LLC, the newly-named but original buyer, had settled their differences, that Frequency would not be purchasing the stations and that the stations were being remarketed. This means that the lawsuits and threats are over and that there was a settlement at some level over the $20.0 million escrow deposit.

What happens now is that many of the runners-up will have an opportunity to re-bid for the target stations and clusters. They may stay on their original bids but some will try to lower them a bit. We know of several deals that are back on the burner, but at numbers far less than the original Frequency bid.

Remember that the credit market, where broadcasters must go to borrow money, is substantially more expensive and difficult than it was six months ago when Frequency made its initial bid of $452.0 million for 187 stations. Rates are higher and the stock market has had a meltdown over the recent past. This makes it more expensive for anyone to buy a property with credit.

The other more interesting issue here may be the CC television portfolio. These stations were being sold for $1.2 billion to Providence Equity, another large money fund like Frequency. That deal appears to have hit the rocks over performance and financing. Providence Equity wants a price reduction, just like Frequency did, or else it threatens to walk.

CC says that it will keep the TV package if it needs to do so. Again, expect a fight over the escrow which is closer to $50.0 million here. The real impact of first, Frequency, and now, Providence, is that it calls into question whether the overall CC deal to sell the big market stations and the billboard company to Bain Capital and Thomas Lee. These two funds are committed to paying $20.0 billion for the main CC company. The stock is drifting lower than the announced sale price which means that this larger deal may also be re-traded.

It is a difficult time for the dealmakers, the credit providers and perhaps, most importantly, for those CC staffers who have been tossed about as these deals lurch forward. Stay tuned as what happens here is a big vote by Wall Street and the banks on the overall health of the broadcast industry.

Anytime a big deal does not close, it is bad for the industry as it weakens the confidence of lenders and investors in the industry. They begin to question the fundamentals. That then trickles down to the medium and small market stations deals.

The Interpreter · Post by **The Interpreter** » Tue Nov 13, 2007 8:19 pm

(always was good at knowing just when to ask a question, he was...)

(and now, what happens next?...that one isn't ripe yet...)

Bar Rat · Post by **Bar Rat** » Wed Nov 14, 2007 1:08 am

How can this sale go through legally (I assume the new owner can only have 6 of the stations) without three stations going dark potentially.

wlpatrick · Post by **wlpatrick** » Wed Nov 14, 2007 6:44 am

I assume that you are speaking of Huntington. The stations would not go dark. They would be sold to a second buyer. In fact, I believe that some of the stations that put CC over the limit there have already been transferred to the trust controlled by Matt Liebowitz, a Florida communications attorney.

genlock · Post by **genlock** » Wed Nov 14, 2007 7:05 am

Imagine the paperwork for just the Huntington cluster.
Lawyers and CPA types are having a feeding frenzy.
BMW dealers are open all night.

wlpatrick · Post by **wlpatrick** » Wed Nov 14, 2007 7:22 am

Trust me, in good deals or broker deals, there are always some who make money either way. The attorneys and advisory folks will make a fortune on the CC deals as they have to pay even for broken transactions.

As a broker, I have always said that we do well when the economy is good by selling properties to growing companies. In bad times, we also do well by selling the foreclosed stations and stations from companies soon facing hard talks with their bankers.

cgarison · Post by **cgarison** » Wed Nov 14, 2007 8:47 am

genlock wrote:Lawyers and CPA types are having a feeding frenzy.

I don't think the typical accountant is taking part in this frenzy because these are not publicly traded firms. Private Equity is less stringent than the SEC or the SarbOx regulators (which I think falls more into the D.o.J.) High powered analysts that work for the Masters of the Uninverse (Tom Wolfe reference) are crunching numbers in hopes of earning what appears to be a very meager bonus this year. The Masters are warming up the titanum, diamond, and black credit cards to purchase a new Masarati for Christmas. In fact, I have seen them at Kerbeck (with checkbook in hand) in Palmyra, NJ as I have been at looking to upgrade to a Lincoln or Caddy.

kentuckymedia · Post by **kentuckymedia** » Thu Nov 29, 2007 12:34 am

Basically everything here in a nutshell.

Frequency looked at it and said, this is too much of a mess, lets get out of dodge.

They brought in Warshaw who is a very very smart operator and he said, what the hell is this mess. Clear Channel has made this thing a complete mess and failure, now they want to sell them to us for this high of a price, they are barely worth half of that!

Clear Channel said, thats fine...we will repackage the sale.

So now Clear Channel is calling up all those people they turned down earlier this year and saying...that offer you made on these stations, you really want them...we can sell them to you.

West Virginia Radio Corporation wants Parkersburg and Huntington. Problem is, they cant swallow all of Huntington. They will most likely keep WTCR-FM, WKEE-FM and WAMX-FM with some AMs to follow suit. Connoisseur will pick up WBVB-FM, they really want that station!

WBKS has been sniffed upon by Hometown, they want to make way for another member in their Greenup family. WLGC gets lonely at night.

Wheeling is an interesting one. No one mentioned this, but you know who one of the bidders for these stations were? One Guess....oh come on, you know this name. CAROL LOGAN. Thats right! Carol Logan. Under a new name called Ohio River Broadcasting. Hmmmm....who is Carol Logan with? Burbach, 2510, Keymarket, Forever of Kentucky. Sound Familiar?

Oldiesdude · Post by **Oldiesdude** » Thu Nov 29, 2007 1:54 am

Would this be the one?

http://www.collegian.psu.edu/archive/19 ... 01-014.asp

kentuckymedia · Post by **kentuckymedia** » Thu Nov 29, 2007 2:10 am

yeah, you could say something like that

Hoosier Daddy · Post by **Hoosier Daddy** » Thu Nov 29, 2007 11:14 am

kentuckymedia wrote:WBKS has been sniffed upon by Hometown, they want to make way for another member in their Greenup family. WLGC gets lonely at night.

As a tie-in with a thread in the Kentucky section, offloading WBKS and WIRO to Hometown would be the closest thing to digging up Ken Auble and putting him back to work high atop Radio Plaza.

Rick Mayne, GM of Hometown's WNXT AM-FM in Portsmouth, cut his teeth at WIRO and is an Ironton native. Rick's dad, Don Mayne, was the longtime editor and former news reporter for the Ironton Tribune. Rick's sister, Cathy, was News Director for WIRO/WITO back in the day and later went on to work for the Dispatch owned WBNS stations in Columbus.

Having Hometown Broadcasting in the Radio Plaza building should mean only good things for the Big I stations and for Ironton. Mayne is more than capable of delivering a quality product there, and I think his heart would be in it for both sentimental and business reasons.

Bar Rat · Post by **Bar Rat** » Thu Nov 29, 2007 12:58 pm

genlock wrote:Sounds like it is time for Clear Channel to make these stations appear more profitable. Perhaps another round of staff cuts is in order. Maybe make blocks if stations attractive to American Family Radio. I am still wondering how long it will take to pay for the new tower at WZZW with the income the station brings in. I don't think the ground radial system was replaced. WZZW once had an old Gates transmitter. Was that ever updated?

Yes, it was updated. All their AM's were. I'm not sure what to, but I know that they were all changed the spring that WHRD started its nighttime broadcasting.