Trouble at Clear Channel
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Trouble at Clear Channel
KAI RYSSDAL: Nowhere else but on Wall Street would $1.8 billion be met with a yawn. That was the earnings report from Clear Channel Communications today. A tidy sum. But 9.5 percent less than the company made during the third quarter last year. Still, private equity groups are swirling around the company since last week’s news it might put itself up for sale. Marketplace’s Lisa Napoli looks at what’s happening at the media giant.
LISA NAPOLI: On Wall Street, good isn’t good enough. Even though Clear Channel owns more radio stations than anyone in the country, and even though its outdoor advertising business is booming, the company’s stock has tumbled by two-thirds since the year 2000.
Richard Morgen of the magazine The Deal says investors look at Clear Channel and think “brontosaurus.”
RICHARD MORGEN:“Right, they’re looking at the Googles and the sort of seductive Internet companies by comparison. And these old media companies, even though they’re steady performers, just don’t excite investors.”
Clear Channel’s tried to excite them by selling off its concert division. That was a part of the company that underperformed. As a whole, profits may have been down over this time last year. But the company still earned $185 million for the quarter.
That’s why Sarah McBride of the Wall Street Journal says things are by no means dire.
SARAH MCBRIDE:“They generate a lot of cash flow. And they’re not in trouble in the way that a company that’s losing money would be.”
And she says that’s one reason Clear Channel is floating the notion of a sale now.
MCBRIDE:“If they’re not proactive about it, they could become the target of an unfriendly buyout.”
Whatever happens with Clear Channel, the founder of the company and his family win. They could make well over a billion dollars if they sell and are asked to leave the company. But they could make even more if they sell and stick around.
In Los Angeles, I’m Lisa Napoli for Marketplace.
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