HyPer50
04-29-2005, 06:20 AM
Looks like Clear Channel is on there way out. Sweet, maybe now we'll have a lil more variety on the radio. I didn't read through all the business mumbojumbo, but it looks like they are sinking.
(April 29) - In the latest example of a media company deconstructing an empire built during the late 1990s, radio giant Clear Channel Communications Inc. today plans to announce a spinoff of its entertainment division and an initial public offering of 10% of its outdoor-advertising unit.
More on Clear Channel
· Talk About It: Post
· Stock Quote: CCU
The moves are an acknowledgment of the difficulties Clear Channel, which is set to announce its first-quarter earnings today, faced in trying to build an entertainment juggernaut whose radio and concert operations fed off each other. Clear Channel thought its combination of assets would create a powerful, across-the-board platform for advertising sales on its billboards, at concert and sports venues and on its 1,200 radio stations.
Instead, the combination irked music fans, record labels and artists, who complained that Clear Channel used its might to punish artists who didn't play by its rules and contributed to the sharp rise in ticket prices at venues it controls. Clear Channel has denied such allegations, but it has never been able to shoo-away the notion that it had too much leverage in too many corners of the music world.
In addition to the structural moves, Clear Channel also is set to announce a special one-time dividend of $3 per share and a 50% increase in its annual dividend. In all, the company is trying to unlock the value of a giant media empire whose fortunes have tumbled in recent years. At 4 p.m. yesterday on the New York Stock Exchange, the company's shares were trading at $32 a share, 26% off their 52-week high of $43.44 and far below the $80-plus share price back in 2000.
"Our job ... is to create the environment for these businesses to grow as fast as they can, and that's what this realignment does," said Mark Mays, Clear Channel's chief executive and son of company founder Lowry Mays. The move "properly capitalizes them, and highlights the value of them."
Clear Channel is following a media-industry trend of deconsolidation that has picked up steam recently. Last month, Viacom Inc., another company that had bulked up during the late 1990s, said it was considering splitting its cable and film assets from its radio and television interests. Clear Channel's changes also come at a time when the company's core radio business, like the rest of the industry, faces big challenges. In February, Viacom and Clear Channel both took multibillion-dollar write-downs related to their radio operations, in part due to changes in how intangible assets such as radio licenses can be valued.
Clear Channel moved into the concert business five years ago, when the industry was undergoing a rapid transformation. SFX Entertainment, a company controlled by entrepreneur Robert F.X. Sillerman, had rolled up many of the local concert promoters who long controlled individual markets. Clear Channel bought SFX Entertainment in 2000 and touted the synergy it would derive from having a live-entertainment business in the fold.
Clear Channel figured its radio stations and billboards could shill upcoming concerts, and performers would gravitate to its venues for the extra marketing. The radio stations would push concert offerings in each market, and the concert and sports arenas could promote the radio stations.
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But Clear Channel didn't get the anticipated boost. Instead, its empire opened Clear Channel up to charges of monopolization and went on to become a public-relations disaster. Music fans -- already angry at the radio consolidation they believed had sucked the personality out of local stations and put too much control in the hands of a few big chains -- now latched onto the fact that the nation's largest radio owner now was also the nation's largest concert promoter. Rising concert ticket prices, to pay for larger artist guarantees, added to their disdain.
Mr. Mays said he believes the complaints stemmed from a vocal minority and insisted most of the public feels favorably toward the company.
Competitors complained that Clear Channel was trying to squeeze them out, and some sued. Just last month, a federal jury in Chicago awarded JamSports & Entertainment $90 million in damages following in a lawsuit Jam filed over unfair practices concerning the promotion of motorcycle dirt-bike races. Clear Channel is appealing the verdict. Meanwhile, the Justice Department is looking into Clear Channel's radio and concert business activities in two separate investigations. Clear Channel says it is confident the Justice Department won't find any wrongdoing.
Clear Channel's entertainment business, including concerts, has proved to be the company's biggest laggard over the past year or two. While revenue has grown slightly, expenses have ballooned, leading to a squeeze on profit margins.
Even before the planned spinoff, Clear Channel was trying to reverse problems in the concert unit. Coming off last year's concert season, considered one of the worst in years, Clear Channel has been taking steps to pay smaller upfront fees to artists. And it has revived the names of the local promoters whose businesses were bought up by SFX -- meaning concertgoers no longer see the Clear Channel name in advertising.
The company plans to distribute one share of Clear Channel Entertainment for every share of Clear Channel Inc. The new company's board will be composed of a majority of independent directors, not overlapping with directors of Clear Channel Inc. The Mays family, which currently owns 6% to 7% of Clear Channel's shares, will hold a proportionate amount of stock in the new company.
Clear Channel hopes to accomplish the spinoff by year end. Meanwhile, Brian Becker, chief executive of the entertainment division, will step down. Mr. Mays will serve as interim chief executive. The company says it plans to pay a one-time special dividend of $3 per share when the restructuring is complete. And it plans to increase its annual dividend by 50%, to 75 cents a share from 50 cents a share.
(April 29) - In the latest example of a media company deconstructing an empire built during the late 1990s, radio giant Clear Channel Communications Inc. today plans to announce a spinoff of its entertainment division and an initial public offering of 10% of its outdoor-advertising unit.
More on Clear Channel
· Talk About It: Post
· Stock Quote: CCU
The moves are an acknowledgment of the difficulties Clear Channel, which is set to announce its first-quarter earnings today, faced in trying to build an entertainment juggernaut whose radio and concert operations fed off each other. Clear Channel thought its combination of assets would create a powerful, across-the-board platform for advertising sales on its billboards, at concert and sports venues and on its 1,200 radio stations.
Instead, the combination irked music fans, record labels and artists, who complained that Clear Channel used its might to punish artists who didn't play by its rules and contributed to the sharp rise in ticket prices at venues it controls. Clear Channel has denied such allegations, but it has never been able to shoo-away the notion that it had too much leverage in too many corners of the music world.
In addition to the structural moves, Clear Channel also is set to announce a special one-time dividend of $3 per share and a 50% increase in its annual dividend. In all, the company is trying to unlock the value of a giant media empire whose fortunes have tumbled in recent years. At 4 p.m. yesterday on the New York Stock Exchange, the company's shares were trading at $32 a share, 26% off their 52-week high of $43.44 and far below the $80-plus share price back in 2000.
"Our job ... is to create the environment for these businesses to grow as fast as they can, and that's what this realignment does," said Mark Mays, Clear Channel's chief executive and son of company founder Lowry Mays. The move "properly capitalizes them, and highlights the value of them."
Clear Channel is following a media-industry trend of deconsolidation that has picked up steam recently. Last month, Viacom Inc., another company that had bulked up during the late 1990s, said it was considering splitting its cable and film assets from its radio and television interests. Clear Channel's changes also come at a time when the company's core radio business, like the rest of the industry, faces big challenges. In February, Viacom and Clear Channel both took multibillion-dollar write-downs related to their radio operations, in part due to changes in how intangible assets such as radio licenses can be valued.
Clear Channel moved into the concert business five years ago, when the industry was undergoing a rapid transformation. SFX Entertainment, a company controlled by entrepreneur Robert F.X. Sillerman, had rolled up many of the local concert promoters who long controlled individual markets. Clear Channel bought SFX Entertainment in 2000 and touted the synergy it would derive from having a live-entertainment business in the fold.
Clear Channel figured its radio stations and billboards could shill upcoming concerts, and performers would gravitate to its venues for the extra marketing. The radio stations would push concert offerings in each market, and the concert and sports arenas could promote the radio stations.
More From WSJ.com
· Clear Channel To Dismantle Media Empire
· Drilling for Natural Gas Faces A Sizable Hurdle, Fort Worth
· Questions Follow Buffett To the Mike This Year
But Clear Channel didn't get the anticipated boost. Instead, its empire opened Clear Channel up to charges of monopolization and went on to become a public-relations disaster. Music fans -- already angry at the radio consolidation they believed had sucked the personality out of local stations and put too much control in the hands of a few big chains -- now latched onto the fact that the nation's largest radio owner now was also the nation's largest concert promoter. Rising concert ticket prices, to pay for larger artist guarantees, added to their disdain.
Mr. Mays said he believes the complaints stemmed from a vocal minority and insisted most of the public feels favorably toward the company.
Competitors complained that Clear Channel was trying to squeeze them out, and some sued. Just last month, a federal jury in Chicago awarded JamSports & Entertainment $90 million in damages following in a lawsuit Jam filed over unfair practices concerning the promotion of motorcycle dirt-bike races. Clear Channel is appealing the verdict. Meanwhile, the Justice Department is looking into Clear Channel's radio and concert business activities in two separate investigations. Clear Channel says it is confident the Justice Department won't find any wrongdoing.
Clear Channel's entertainment business, including concerts, has proved to be the company's biggest laggard over the past year or two. While revenue has grown slightly, expenses have ballooned, leading to a squeeze on profit margins.
Even before the planned spinoff, Clear Channel was trying to reverse problems in the concert unit. Coming off last year's concert season, considered one of the worst in years, Clear Channel has been taking steps to pay smaller upfront fees to artists. And it has revived the names of the local promoters whose businesses were bought up by SFX -- meaning concertgoers no longer see the Clear Channel name in advertising.
The company plans to distribute one share of Clear Channel Entertainment for every share of Clear Channel Inc. The new company's board will be composed of a majority of independent directors, not overlapping with directors of Clear Channel Inc. The Mays family, which currently owns 6% to 7% of Clear Channel's shares, will hold a proportionate amount of stock in the new company.
Clear Channel hopes to accomplish the spinoff by year end. Meanwhile, Brian Becker, chief executive of the entertainment division, will step down. Mr. Mays will serve as interim chief executive. The company says it plans to pay a one-time special dividend of $3 per share when the restructuring is complete. And it plans to increase its annual dividend by 50%, to 75 cents a share from 50 cents a share.