Weak
ad revenue, restructuring costs leave earnings
$90million below estimates. After-hours
investors send stock down 10%.
TVI Magazine SmartClips
and the Los Angeles, reported tha radio giant
Clear Channel Communications Inc. reported a
dramatically wider fourth quarter loss because
of an advertising slump and across-the-board
restructuring, and the news helped drive down
shares by almost 10% in after-hours
trading.
The nation's biggest
radio broadcaster reported a net loss of $365.6
million, or 61 cents a share, for the quarter
ended Dec. 31, compared with a net loss of $192
million, or 33 cents a share, in the
year-earlier period. Sales in the latest quarter
fell 8%, to $1.86 billion.
The company also said
it will take a pre-tax charge of $15 billion to
$25 billion in the current quarter because of a
change in accounting rules. Companies now are
required to more accurately account for
goodwill, or the amount they overpaid for
assets. Clear Channel has grown dramatically
since the mid-'90s with a string of acquisitions
and now owns about 1,225 radio stations and 19
TV stations. Clear Channel's quarterly earnings
before interest, taxes, depreciation and
amortization, a critical measure of media
companies' performance, plunged 46% from the
year-earlier period to $344 million, or about
$90 million below some Wall Street
estimates.
"This is as big a miss
from a cash-flow perspective as I've seen in the
media space" in about a year, said Jordan Rohan,
analyst at SoundView Technology
group.
Shares of Clear
Channel, based in San Antonio, fell 27 cents to
$49.09 in regular trading on the New York Stock
Exchange. But the stock fell as low as $44 in
after-hours trading.
Clear Channel said it
had hired 600 salespeople to solicit radio
advertisers amid the economic slowdown, but it
had also fired about 2,000 employees from radio
programming, engineering and other operations
during the last quarter to cut costs. The
company said the cuts resulted in severance and
restructuring expenses totaling about $80
million.
Company President Mark
Mays said the radio advertising market was
showing signs of improvement, but cautioned that
sales in the conglomerate's billboard operation
and live-entertainment division are likely to
pick up more slowly.
For all of 2001, Clear
Channel posted a net loss of $1.14 billion, or
$1.93 a share, compared with net income of
$248.8 million, or 57 cents a share, a year
earlier. Revenue jumped 49% to $7.97 billion
last year, due to a series of
acquisitions.
At year's end Clear
Channel had $9.5 billion in debt, but May said
the firm's $3 billion in available bank credit
would cover its debts during the next two to
three years.
Mays also said a
federal court ruling last week that opened the
door to further consolidation in the cable and
television industries. He suggested the court
decision wouldn't necessarily spur Clear Channel
to acquire additional TV outlets in the short
term. But he said the company is focused on
increasing its market share in radio.
"We're continually
buying more radio stations," he said.
////
July 18,
2001
04Concerts
West Deal Getting Less Likely
According
to TIMES STAFF WRITER, JEFF LEEDS,
Prospects for
the possible sale of Beverly Hills concert
promoter Concerts West to rival Clear Channel
Entertainment have dimmed considerably,
according to sources familiar with the
negotiations.
The two sides, as of
July 18, 2001, could not agree on key deal
points such as how the combined companies would
be organized, sources said.
In addition, Denver
billionaire Philip Anschutz, Concerts West's
owner, is concerned about the increasing
consolidation of the $1.6-billion concert
industry, sources said. A sale would cement
Clear Channel's dominance of the live
entertainment industry, eliminating one of its
few U.S. competitors and clearing the way for
purchases of smaller rivals.
Clear Channel, formerly
known as SFX, has spent an estimated $2 billion
in the last four years buying up dozens of
venues and promotion firms, including Los
Angeles' Avalon Attractions.
The sale of Concerts
West, the negotiations of which were first
reported in The Times last month, would make for
an unusual reversal for Anschutz, who entered
the concert business less than a year ago.
Anschutz's investments include Staples Center,
the Los Angeles Kings hockey franchise and a
minority stake in the Los Angeles
Lakers.
The deal being
discussed would have provided Clear Channel with
the right to promote concerts in certain
Anschutz-owned venues, sources said.
Timothy J. Leiweke,
president of concerts and sports subsidiary
Anschutz Entertainment Group, said that his firm
is talking with Clear Channel, but that a deal
is not imminent.
"We are not getting out
of the live entertainment business," Leiweke
said. "Our desire in life is not to back down,
our desire in life is to grow, and that includes
the promotion of live events in the United
States."
Anschutz's concert
division has secured control of potential
moneymakers such as a three-year Las Vegas stand
by superstar Celine Dion. But it had lost out to
Clear Channel in the competition to promote
tours by such acts as Madonna and Sade. Clear
Channel's Dominance Obscures Promotions
Conduit
Music: Rivals say their
chance to compete is eroded by synergy between
the firm's radio and live-event
units.
////
March 9,
2001
Randy
Michaels, chief executive
of
the San Antonio-based broadcast giant,
acknowledged that the plan would probably rattle
some cages in the music industry, but he insists
the program is legal and not just a new
corporate version of payola.
"We're been
moving very slowly in launching this initiative,
trying to make sure we dot all the i's and cross
all the t's in terms of the legal issues," said
Michaels, who is scheduled to deliver the
keynote address Saturday at Radio & Records'
annual convention in Los Angeles.
"The fact is
the industry spends a tremendous amount of money
promoting records to our radio stations, and
what we have here is an opportunity to take some
of that money in right through the front door
and put it on our books," Michaels said. "We've
come up with some innovative ways to generate
new revenue streams for our shareholders'
benefit. And in the process, I think we can save
the labels money by cutting out all of these
middlemen."
Radio airplay
is the most powerful promotional tool for record
companies. Many people buy records based solely
on what they hear on the radio. Federal law
prohibits radio stations from taking money or
anything of value in exchange for playing songs
without disclosing the payment to listeners.
Record
labels have long skirted payola laws
by shelling out
millions of dollars each year to independent
consultants who can dangle money, audio
equipment, luxury cars and exotic vacations
before station personnel. Independent promoters,
who function as a buffer between labels and
radio personnel, typically do not pay cash for
airplay of specific songs but circumvent payola
law by providing stations with annual promotion
budgets.
Last fall, Clear
Channel issued an internal edict barring
programmers at its stations from renewing any
contracts with independent promoters. As the
company began kicking around ideas for its music
initiative, Clear Channel initially considered
installing an in-house promotion czar who would
act as the radio giant's exclusive liaison with
the music industry, Michaels said.
In recent weeks,
however, Michaels said the company has backed
away from running its own record promotion arm
and is now contemplating cutting an exclusive
promotion pact with a third party. Michaels
confirmed that at least two independent
promoters have put in bids that could add more
than $20 million to its bottom line.
The bet in the industry
is that Clear Channel will ultimately cut an
exclusive pact with Cincinnati-based Tri-State
Promotions, which is run by Michaels' longtime
friends Bill Skull and Lenny Lyons.
"We haven't made any
decisions yet," Michaels said. "Of course,
Tri-State is the devil I know, and on the trust
scale, they rate the highest in my book. I've
been doing business with them a long time, and
that's where the comfort zone is. But we are
still studying every option. Our plan is not
exactly ripe yet. It's a work in progress, but
we should be able to announce something within a
month."
Michaels
said the company's think tank
has come up
with a variety of revenue-generating ideas,
including selling research to labels based on
reaction to records played on its stations.
Clear Channel currently owns several research
firms that monitor the response of listeners and
program directors to new songs in most major Top
40, urban and adult contemporary radio markets
across the nation. The company hopes eventually
to charge labels for access to that information.
"We are trying to test
the appetite of the labels for real information
that comes directly from us, not just guessing
by some third-party independent," Michaels said.
"We don't have anything in mind that would tie
the payment from record labels to airplay for
specific titles. We may well sell information
about what we are playing. We may well also sell
research that would help guide labels to the
songs that we believe have the greatest hit
potential."
Michaels acknowledged
that the think tank has even considered selling
late-night commercial time directly to labels
for the purpose of promoting new songs.
"The argument would go
like this: Would you rather hear a couple
used-car commercials and carpet store ads in a
row or a song that the record companies believe
has hit potential?" Michaels said. "If we do it,
of course we would run all the appropriate
announcements required by law so that everyone
would realize we got paid to play the record."
Let's
launch its own record label!
some executives
inside of Clear Channel's think tank believe.
Michaels said he has already nixed that idea. He
said running a label would present too many
conflicts and possible problems for Clear
Channel with payola laws.
'Zero
Tolerance for Payola' Since
Clear Channel
was fined $8,000 last fall by the Federal
Communications Commission for a promotion
offered by a company it acquired that guaranteed
airplay of a song by pop singer Bryan Adams in
exchange for a series of free performances at
its radio station concerts.
Michaels said the
promotion occurred before Clear Channel
purchased the station and would never happen
again. In fact, he said the company's stiff
anti-payola stance recently resulted in the
dismissal of two program directors.
"We have zero tolerance
for payola here," Michaels said. "We had to let
a couple of guys go this year because their
effectiveness had been compromised. The fact is
the program director's job is a tough one. The
sales department is all over him. Corporate
management keeps pushing him. Sometimes, it's
like his only friend is the record promoter, and
occasionally they can be swayed by that.
"What I'm trying to do
here is ensure that our employees make decisions
based on objective data only," Michaels said.
Clear
Channel Communications,
tsays it wants
a share of the tens of millions of dollars in
record company promotional funds that go to
independent promoters-- which at times seems
like a touch of payola.
The move is sending a
shudder through the major labels, which see
legal and ethical problems with paying money
directly to broadcasters to help get their
artists on the air.
The initiative, which
the company expects to roll out around May,
reflects a fundamental shift of power in the
record business. In the past, powerful record
labels were accused of bribing deejays operating
at small, independent radio stations to
influence what songs got airplay.
Industry mergers have
moved the balance of power to radio groups,
which today have the clout to launch a song
simultaneously in scores of markets across the
country--or consign it to oblivion.
Clear Channel, which
controls 1,200 radio stations and owns the
world's biggest concert promoter, SFX, hopes to
generate more than $20 million annually by
selling chainwide advertising packages, research
and a variety of airplay data to labels whose
songs are played on its stations.
Clear Channel plans to
sell ads to labels that would air immediately
after the station plays the latest song by one
of their artists. The brief ad would identify
the artist who performed the preceding song, a
practice that many stations have dropped.
Clear Channel said it
would sell such an ad only if programmers had
already determined the song was a hit. Sources
say the company is pitching ads at $1,000 a pop
that would run on 60-some stations.
Critics contend that
the broadcast giant is using its newfound
leverage as the nation's largest chain to
extract deals from record labels that appear to
sidestep payola laws.
"Clear Channel is
trying to skirt the law, using its power to
shake down record companies in what amounts to
legal payola," said Steve Rendall, senior
analyst for the New York-based media watchdog
group FAIR.
Record company
officials say they are reluctant to buck Clear
Channel, with its dominant market position in
radio and concert promotion, but they are
uncertain how effective the new promotions will
be.
Radio industry sources
say there is another reason: Record companies
could lose the power they already have to
influence airplay at Clear Channel stations
under the current system with independent
agents.
And a direct
play-for-pay arrangement between record company
and radio broadcaster could be illegal.
///
About
The Rouse Company
Headquartered in
Columbia, Md., The Rouse Company was founded in
1939 and became a public company in 1956
(NYSE:RSE). A premier real estate development
and management company, The Rouse Company,
through its numerous affiliates, operates more
than 250 properties encompassing office, retail,
research and development and industrial space in
22 states. The company is also the developer of
the planned communities of Columbia, Md., and
Summerlin, Nev.
Regarding The Rouse
Company:
This release includes
forward-looking statements which reflect The
Rouse Company's current view with respect to
future events and financial performance. These
forward-looking statements are subject to
certain risks and uncertainties which could
cause actual results to differ materially from
historical or anticipated results. The words
"believe", "expect", "anticipate" and similar
expressions identify forward-looking statements
which speak only as of their dates. The Rouse
Company undertakes no obligation to publicly
update or revise any forward-looking statements
whether as a result of new information, future
events or otherwise. For a discussion of certain
factors that could cause actual results to
differ materially from historical or anticipated
results, including real estate investment risks,
development risks and changes in the economic
climate, see Exhibit 99.2 of The Rouse Company's
Form 10-K for the fiscal year ended December 31,
1999.
