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• • 102 Clear Channel
Profit Down 59% - Clear Channel confirms that it will
spin off its concert unit. A special $3 dividend is
planned.
• • 18th week 2005 / Clear Channel
Communications Inc., the nation's largest radio broadcaster,
announced Friday a 59% drop in net income in the first
quarter and confirmed that it would split up the media giant
by spinning off its live-entertainment
division.
• • The announcement is the latest evidence
that media empires constructed in the late 1990s are
rethinking their strategies because the whole has not proved
more valuable than the sum of its
parts.
• • Viacom Inc., another company that
gobbled up numerous media properties in the previous decade,
said last month that it might split its cable and film
interests from the company's radio and television assets.
• • The move also signals that Clear
Channel's plan to decrease the number and length of radio
advertisements in an attempt to lure more listeners -- a
strategy the company calls "Less Is More" -- is gaining
traction more slowly than expected, analysts
say.
• • " 'Less Is More' isn't taking off like
everyone expected," said Mike Kupinski, a media analyst with
A.G. Edwards & Sons. "Maybe the company is trying to do
something too radical too quickly. But over time I think it
will pay off."
• • The company tempered Friday's
disappointing news with announcements that it would give
shareholders a $1.7-billion special payout, or $3 a share,
and raise its quarterly dividend by 50% to 75 cents a share
annually.
• • "This is a mix of good and bad news,"
Kupinski said. "Now the market is trying to figure out which
is stronger."
• • San Antonio-based Clear Channel, which
owns radio stations, outdoor billboard advertising and live
concert interests, reported that first-quarter earnings fell
to $47.9 million, or 9 cents a share, from $116.5 million,
or 19 cents, a year earlier. The company failed to meet
analysts' earnings expectations, which averaged 12 cents a
share, according to Reuters Estimates.
• • Revenue stemming from the company's
radio broadcasting division fell 7% to $773 million while
revenue from outdoor advertising grew 11% to $579
million.
• • The company's most disappointing
performance came from the live-entertainment division, at
which revenue fell 17% to $424 million. Clear Channel
confirmed a report in the Wall Street Journal on Friday that
the company was spinning off the division by issuing new
shares to existing stockholders. The unit's chief executive
also is being replaced, the company
said.
• • "Some shareholders prefer not to own
Clear Channel Entertainment, so we're giving them that
choice," company Chief Executive and President Mark Mays
said. Randall Mays, the company's chief financial officer,
will take temporary control of the concert division while it
becomes a separate company.
• • Clear Channel entered the concert
business five years ago when it purchased SFX Entertainment
for $2.99 billion, claiming the company's radio stations and
billboards would complement live entertainment. But analysts
say the expected synergies failed to
materialize.
• • "They went after the holy grail, but
they weren't able to find it," said Leland Westerfield, an
analyst at investment bank Harris Nesbitt. "The market never
really rewarded the company for the concerts division, and
the unit's razor-thin margins were out of place alongside
radio and billboards, which have big
margins."
• • The company also said it would sell 10%
of the outdoor advertising division to the public. That
announcement and the dividend increase are designed to
signal the company's strength, management
said.
• • "This is a chance to highlight that our
business generates enormous amounts of cash," Mays said.
"Now, shareholders can decide if they want to use that $3 to
buy stock in Clear Channel, the outdoor company or the
entertainment company."
• • Shares of Clear Channel fell 6 cents to
$31.94 on the New York Stock Exchange.
•
///
ByLines:
Editors Note
More Articles
• Converging
News 182005 / TeleCom Buy Outs and Asset Seizure
Boom
Respectfully
Submitted
Josie
Cory
Publisher/Editor
TVI Magazine
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Press Releases, They Said It and SmartSearch were used in
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