From UPI

Clear Channel holders OK $19.5B buyout

2:41 PM EDT September 25, 2007

U.S. media firm Clear Channel Communications Inc. said Tuesday shareholders approved a $19.5 billion private-equity buyout nearly a year after it was proposed.

Shareholders approved a $39.20-a-share cash or stock offer from Thomas H. Lee Partners LP and Bain Capital Partners LLC, the San Antonio broadcaster, concert promoter and billboard advertiser said.

The buyers will also assume $8 billion in debt.

Current shareholders will be limited to a combined stake of 30 percent of the new, privately held company, Clear Channel said.

About 98 percent of the shares voted were in favor of the buyout, accounting for more than 73 percent of the total shares outstanding and entitled to vote, Clear Channel said.

Two-thirds of shareholders were needed to approve the buyout.

Major shareholders considered earlier offers of $37.60 and $39 a share too low.

The private-equity offer was first announced in November 2006.

The deal is expected to close by the end of the year, Clear Channel said.

From R&R:

Clear Channel Communication's merger adoption agreement was approved by shareholders at a special shareholder meeting on Tuesday morning (Sept. 25). Though still subject to regulatory approval, Clear Channel will be acquired by CC Media Holdings (co-led by Thomas H. Lee Partners and Bain Capital) for $39.20 per share, or $19.5 billion.

The number of shares voted in favor of the transaction amounted to roughly 73%, surpassing the over 66% required for approval under Texas law. Close to 98% of votes were cast in favor of the deal, according to a preliminary tabulation (with all votes not cast being considered not in favor of the deal). Final numbers are subject to a review by Mellon Investor Services, LLC, which accepted control of all proxy cards and ballots after the meeting for final tabulation and certification.

Clear Channel CEO Mark Mays commented, “We are pleased with the outcome of today’s vote. On behalf of Clear Channel’s Board of Directors, I want to thank our shareholders and hard-working employees for their support throughout this process. We look forward to completing this transaction with T.H. Lee and Bain as quickly as possible.”

Clear Channel Communications entered into a second amendment to its previously announced merger agreement with a private equity group co-led by Thomas H. Lee Partners, L.P. and Bain Capital Partners, LLC on May 18. Under the terms of the merger agreement, as amended, Clear Channel shareholders will receive $39.20 in cash for each share they own plus additional per share consideration, if any, if the closing of the merger occurs after Dec. 31, an increase from the previous cash consideration of $39.00 per share.

As an alternative to receiving the $39.20 per share cash consideration, Clear Channel's unaffiliated shareholders were offered the opportunity on a purely voluntary basis to exchange some or all of their shares of Clear Channel common stock on a one-for-one basis for shares of Class A common stock in the new corporation formed by the private equity group to acquire Clear Channel (subject to aggregate and individual caps), plus the additional per share consideration, if any.

A precise breakdown of how many shareholders are taking cash only and how many elected to take the stub equity has yet to be announced.

According to JP Morgan analyst John Blackledge, the deal should close sometime in the fourth quarter, since the new owners will not want to pay shareholders the additional cash compensation they’d be entitled to if the deal does not close by the end of the year.

Blackledge also notes that CC shares “now trade at a 6% discount to the final takeover price of $39.20, implying an annualized rate of return of 26% if the deal closes before year-end.”

Since the beginning of the year, the once-mammoth Clear Channel, which boasted nearly 1,200 radio stations in radio markets of all sizes across the nation, has been busily selling off nearly 500 small market outlets in order to get its arms around a newer, large-market, higher-return focused operation.

By Susan Visakowitz and Jeffrey Yorke

I wonder how this will trickle down to affect the programming of stations. Not having to answer to wall street is a definite plus, but this firm doesn't exactly sound like they're in it for the love of radio!

Investors are in it for the love of money. Return on thier investment.

Now, the people who actually produce , massage and develop the product are in it for the love of it, for the most part. Sometimes priorities change in a person's evolution through the business. But its a truism.

One aspect that we could say that " CC et al " learned from thier voyage into a 1200 radio station deep operation is.. that.. purchase of medium market radio station clusters was a looser.. for such an ambitious undertaking as they concieved in the first place. Attracting qualified investors to then buy up marginal markets in addition to the real productive larger markets didnt really work for them out in the long run. They still made money, but the learning curve took awhile. Now, they have been hassling over this buy out, finally coming to terms after trimming the deadwood and in the end, more medium market deadwood will be trimmed from the new company after the sale is complete.

Those stations of the medium market clusters are still in the mix and will be plucked up by the "smaller fry" who will in turn learn how to turn a more profitable buck in those markets and either be successfull or sell it off to some other corporate entity who will. I wouldnt count on a whole lot of 'Local Entity purchases", unfortunately. More corporate big company investors are just around the corner to purchase the medium market stations and have the money to pay the price asked.

As I surmised in another string, I believe that automation and networking have advanced to the point where a company of say as small as 50 stations can afford to build a central production Network type facility in a larger type Media Market someplace : LA, SFO, Portland, Seattle. The automations can be easily networked in several different ways. Talent hired in the major market central facility to be featured on say 8 or 10 different music based formats ,talent to also lend production voices for spot creation in satellite markets. Perhaps some AM formats could be provide for or managed in this facility as well.

Then hire some local talent in each satellite market to be production persons for the most part. Multitaskers, who can lend a local presence to augment the Network Talent, do local production assignments, with good chops and computer skills. Develop a local back up routine on the local automation that can 'fill' in an emergency or downtime situation from the Network facility. A full local sales and management staff and there you go. Profit ! Radio stations are really expensive to operate. Stations are just about as expensive to maintain in terms of all their hardware gizmos, keeping the lights on and real estate maintainence expenses in Chicago as they might be in Yakima, Wa. But there is a big difference in the rate card between the Windy City and Yakima ! And there in lies the problem ! It was a problem for CC and it will be a problem for the next ownership too. But, because of technology, it will be a lot easier for a smaller company than CC was to manage a medium market cluster in this way. And make it profitable enough for its investors to stay happy.

Gosh, I think this posting is long winded enough,I didnt realize, speaking of the Windy City. But this seems to me to be the direction of terestrial radio for the early 21 st century.