Clear Channel: Merger, TV-group sale both on track

SAN ANTONIO – Clear Channel Communications Inc. (NYSE: CCU), whose properties include local radio stations WHJY-FM, WHJJ-FM, WSNE-FM and WHJJ-AM, today announced that its merger with a private equity group led by Bain Capital Partners LLC and Thomas Lee Partners LP is expected to close early next year.
“The remaining material conditions to be satisfied are obtaining the requisite FCC consent and the expiration or termination of the waiting period under the Hart Scott Rodino Act,” the national media and entertainment company said. “Clear Channel is confident that the necessary regulatory conditions will ultimately be satisfied. However, it is not expected that these conditions can be satisfied in time to allow for a closing of the merger prior to the end of 2007.”
The company therefore intends to exercise its right to extend the contract term from the current termination date Dec. 12 to a new termination date of June 12. “Subject to the receipt of the requisite regulatory approvals and customary closing conditions, Clear Channel expects the closing of the merger will occur during the first quarter 2008.”
The new company, owned by Thomas H. Lee Equity Fund VI and Bain Capital IX LP, would continue to operate as Clear Channel Communications Inc., Federal Communications Commission filings indicate.
Meanwhile, Clear Channel’s $1.3 billion sale of its 35-channel TV Group to Newport Television LLC – a private equity group that the FCC said was established for this transaction by Providence Equity Partners, and “is wholly owned by investment funds that are commonly controlled affiliates of Providence Equity” – appears to be back on again. In a regulatory filing last month, Clear Channel had said it had been informed that Providence Equity “is considering its options under the agreement, including not closing the acquisition.” (READ MORE)
But the sale received tentative approval Thursday night from the FCC.
In its order, the agency granted the companies’ petition for a continuation of the waiver that allows the studio of station KSAS-TV in Wichita, Kan., to also be used as the main station for KAAS-TV in Salina, Kan., and KOCW-TV in Hoisington, Kan.
The companies also had requested six-month waivers of the FCC’s limit on the number of stations a company can own in one market for the nine markets where – as a result of its ownership stakes in Univision Communications Inc., Freedom Communications Inc., Entravision Communications Corp. and Newport Television – Providence Equity would be in violation after the transactions.
The FCC granted those waivers to Providence Equity for eight markets – Bakersfield, Fresno, Monterey, San Francisco and Santa Barbara, Calif.; Jacksonville, Fla.; San Antonio; and Salt Lake City – but denied the waiver request for the Albany market.
The agency cited Providence Equity’s failure to comply with conditions for its purchase of an ownership stake in Univision and Freedom Communications. That purchase put the equity firm in violation of newspaper-broadcast cross-ownership regulations in five markets, and the firm has not yet completed the divestments it pledged. Providence Equity must regain compliance before it may purchase the Clear Channel stations, the FCC said.
Although the TV Group sale and Clear Channel’s pending merger with the Bain Capital-led equity group are not contingent upon each other, the FCC cited the merger as a factor in granting approval of the TV Group sale.
In a dissenting statement that is part of the FCC’s “Order Concerning Sale of TV Station[s],” Commissioner Michael J. Copps wrote: “No one should be under any illusion that Clear Channel’s sale of its 35 full-power television stations strikes a blow for de-consolidation. After this transaction closes and all divestitures have occurred, Providence Equity Partners will have attributable interests in a whopping 86 television stations and 99 radio stations in the United States, as well as interests in media companies around the world …. You will search this order in vain, however, for any mention of the scope of Providence’s holdings or how they potentially affect our public interest analysis.”
Copps added: “In the Univision Order last March, I urged the commission to examine the impact of private equity on our ability to ensure that licensees protect, serve and sustain the public interest. Unfortunately, that has not happened. … We proceed without knowing how segments of the conglomerate are controlled and managed. How, amid such murky shadows, does a regulator protect the public interest? … When we proceed without adequate information to approve this new kind of media consolidation, we are heading into dangerous waters.”
In other news today, Clear Channel said its board of directors has declared a regular quarterly cash dividend of 18.75 cents per share of its common stock, payable on or before Jan. 15 to shareholders of record at the close of business on Dec. 31.
San Antonio-based Clear Channel Communications Inc. (NYSE: CCU) is a global media and entertainment company whose properties include local radio stations WHJY-FM, WHJJ-FM, WSNE-FM and WHJJ-AM. Additional information is available at www.clearchannel.com.
Providence Equity Partners Inc. is a $21 billion global private investment firm specializing in media and entertainment, communications and information companies. Additional information is available at www.provequity.com.