News

The radio industry's frenzy of mergers and acquisitions has slowed down but hasn't stopped. San Antonio-based Clear Channel Communications Inc., one of the largest radio broadcasters in the US, has agreed to acquire AMFM Inc., another major player. The merger will give Clear Channel more than 850 stations nationwide. The deal hinges on Clear Channel unloading 72 of its stations in 27 markets to comply with Federal Communications Commission rules limiting the number of stations that can be owned by a single operator.

Clear Channel announced the divestiture of the stations the second week of March. The stations to be sold are estimated to be worth as much as $4.6 billion, and will be sold off to other broadcasters in batches—the largest of which is Infinity Broadcasting Corp. On Monday, March 6, Infinity said it will acquire 18 radio stations from Clear Channel for about $1.4 billion, including stations in Phoenix, San Diego, Denver, Cleveland, Cincinnati, Orlando (Florida), and Winston-Salem (North Carolina).

Several others will go to Radio One Inc. of Lanham, Maryland, which on the same day disclosed its intention to buy more than $1 billion of Clear Channel's assets. Of the selloff, Bear Stearns analyst Victor B. Miller IV told the Wall Street Journal, "These are beachfront properties people thought would never be sold."

A total of 13 buyers are taking advantage of Clear Channel's spring cleaning. Cox Radio Inc. will acquire three of Clear Channel's FM stations serving Houston, and one AM and three FM stations serving Richmond, Virginia, for $380 million in cash. Hispanic Broadcasting Corp. will acquire three Clear Channel stations (in Denver, Phoenix, and Austin) for about $127 million in cash. Other purchasers include Blue Chip Broadcasting Inc., Chase Radio Partners, Cumulus Media Inc., El Dorado Communications Inc., Entravision Communications, Mega Communications, Nassau Broadcasting Partners, Pecan Partners Ltd., Salem Communications Corp., and Urban Radio Broadcasting.

Clear Channel's tentative agreement to buy AMFM took place in October, when the stock-swapping arrangement was valued at $14.46 billion. Recent reports, however, place the value of the deal as high as $23.5 billion. Clear Channel will assume $6.1 billion of the acquired company's debt; AMFM holders will receive 0.94 of a Clear Channel share for each AMFM share held on the day the deal is completed, probably in the second half of this year. The combined company will be owned 63% by Clear Channel shareholders and 37% by AMFM shareholders.