Local Media

radio: Clear Channel Begins Sale of the Century
by katy bachman
Out of the biggest radio deal of the post-consolidation age came radio's biggest sell-off. Last week, Clear Channel, the largest radio broadcaster, with 874 radio stations, paved the way for its $23.5 billion acquisition of AMFM by selling off 88 stations that, by some estimates, have brought in more than $3 billion. Once all 100 or so spinoffs are announced, which could be as early as this week, analysts are betting Clear Channel will pocket close to $5 billion.
If they had been combined into a single body, the spinoffs would easily have ranked among the top five radio groups. But the stations were busted up into much smaller entities: Seventeen separate owners agreed to buy stations in 33 markets. The biggest change resulting from the sale is that Cox Radio--which is paying $380 million for seven stations--has replaced Entercom as the fourth-largest group, with an estimated $317.9 million in revenue, according to BIA.
A logistical nightmare, the process of selling off stations began in September, but Clear Channel kept a tight lid on all the details. Clear Channel radio president Randy Michaels, svp Jerry Kersting and CEO Lowry Mays were the top architects who carefully managed the process.
Clear Channel set up a central data room in a bank in downtown Cincinnati, where information about each of the 100-plus stations--from financials to personnel to signal contour maps--was compiled in notebooks that were made available to prospective buyers by appointment only. Bidders could not remove books from the room, although they were allowed to photocopy documents. Clear Channel invited groups to contact them for appointments, after which groups submitted sealed bids.
At first, Clear Channel claimed it would turn around the bids in 30 days. That didn't happen. In some cases, groups were asked to resubmit bids, in effect causing many groups to bid against themselves, since they had no knowledge of competing bidders. "It was a dogfight because everyone wanted stations. There was a lot of competition," said Tom Castro, owner and president of El Dorado Communications. Castro admitted he ended up bidding against himself, but in the end, he was happy winning the bid for five stations in Houston.
Not all the groups that participated in the buying process were happy with the process. One group exec, who requested anonymity, called it "a disgrace," and pointed out that the highest bids weren't necessarily the bids Clear Channel accepted.
"It's not just the higher bidder. There are a lot of considerations, including who would become a guerrilla. It's an absolute political balance," explained Bishop Cheen, media analyst for First Union Securities.
Clear Channel may have cherry-picked its future competitors, as some suggest, but it also