The Department of Justice is forcing Clear Channel to sell their radio stations in four cities in order to complete its $19.5 billion buyout deal with Thomas H. Lee Partners and Bain Capital.
San Francisco, Houston, Las Vegas and Cincinnati are the cities required by the DOJ to be sold out.
The agency said that the deal would result in higher prices to radio advertising purchasers in those markets. The reason? Bain and THL already have substantial ownership interests in two firms (Cumulus and Univision) that compete with Clear Channel in those cities.
[DOJ]
The extra divestiture in those cities was a settlement agreement between the DOJ and CCU. It's already been filed with the Courts. Once it is published in the Federal Register -- it will be done.
CCU has already created a Trust (Aloha Station Trust, LLC) to place the other stations, where CCU lost its "grandfather" status with regards to ownership limits. Theres some 50+ stations in 42 markets that will be placed into this trust... the stations in these four markets will be added to the trust now too.
CCU has signed off on the deal (thus why its already been sent to the Courts for approval) -- Mark Mays said tonight he's hoping to close this by the end of Q1.
CCU's stock was up 4.5% in afterhours... the Arb spread prior to this news was about 32%. Tomorrow is going to be a big day in the CCU name, though there is still negative sentiment that Bain will be able to close it. If they do, there is a LOT of money to be made very quickly with a short term trade.
BTW, the above is NOT an endorsement of CCU -- just "news and info" for those looking for a quick trade. I won't guarantee it -- but if you think that Bain can close the deal afterall...
Cincinnati? That means they will sell off, among others, 700WLW... XM Ch. 173 who was only on XM because of the deal with CC and XM. So will WLW leave XM? Man, that sucks. I like 700WLW...
The DOJ may as well let them keep the markets because the damage has already been done. I'm glad to see CC get out of Houston but I never listen to terrestrial anymore so to be honest I could care less about the local market anymore.
Ennis had to do the same thing a couple of years ago.
I agree about WLW...it's an exceptional station, and CC having to sell it will probably cause it to go off XM. But doesn't XM's deal with CC expire in '09 anyway? That will most likey mean the entire contents of the CC-programmed XM stations will no longer be there...not good.
I'd love to see CC leave Vegas. It will be interesting to see how long the city can really sustain 93.1 "The Party" and its other awful (mostly voice-tracked and Spanish) stations. I think not.
Randy In Vegas said:
>>>"I agree about WLW...it's an exceptional station, and CC having to sell it will probably cause it to go off XM. But doesn't XM's deal with CC expire in '09 anyway?
It is important to remember that CCU does not have to unload all of the stations in the listed markets -- only enough to get the combined market share down below the FCC's set limits. The number of stations that need to be sold is actually only 6 total in those 4 markets.
This is from allaccess.com:
THE HOUSTON CHRONICLE is reporting that under the terms of the settlement, which were filed in federal court in WASHINGTON, D.C., CLEAR CHANNEL will sell Spanish KLOL (MEGA 101) and either Hot AC KHMX or Alternative KTBZ.
A source familiar with the matter would not confirm the report, but indicated that "six stations in four markets" would be divested, and that in a couple of cases final decisions hadn't been made."
ALL ACCESS also hears that these stations are among those pending decisions:
- Spanish KSJO (LA PRECIOSA)/SAN FRANCISCO-SAN JOSE
- Talker WLW-A and Top 40 WKFS, or Classic Rocker WOFX and Hot AC WNNF (RADIO 94.1)/CINCINNATI
- Spanish KWID (LA PRECIOSA)/LAS VEGAS
Frankly, I'd be surprised if they unloaded WLW -- but it all comes down to market share. WLW is probably a pretty good biller, so it may not be the one to go.
As for CCU's deal with XM -- it expires in June... 4 months from now. CCU will need to deliver the shares or the cash to Bear Stearns.