Clear Channel Checks Options

Clear Channel Communications, the former parent of Live Nation, has retained Goldman Sachs as a financial adviser and announced it is “evaluating various strategic alternatives to enhance shareholder value.”

The October 25th announcement triggered speculation about just what those alternatives might be – from a leveraged buyout of the company to a spin-off of the remainder of its Outdoor division – causing stock prices to spike $3.05, or 9.4 percent, to $35.40 in afternoon trading that day on the New York Stock Exchange.

While CCC said that there could be no assurance that any specific transaction will come as a result, it would have no further comment until one is approved by its board. While the family owns only about 7 percent of the company’s stock, its directors are topped by longtime chairman Lowry Mays, chief exec Mark Mays and president/chief financial officer Randall Mays.

All three are also board directors of Live Nation behind president and chief exec Michael Rapino.

For about two years, shares have traded in a narrow range as investors soured on radio companies because of slowing advertising revenue. Many listeners have also traded in their radios for iPods or other portable MP3 players. Satellite radio, which is commercial-free, has also poached a few listeners.

“We are not surprised at the announcement given the stock price performance,” said Wachovia analyst Marci Ryvicker, pointing out that the stock is down 20 percent since the company began an aggressive share buyback strategy in March 2004, while the broader market is up nearly 25 percent.

“It is understandable that management is frustrated with this performance and is looking to make changes that would reverse this trend,” she said.

Analysts have said there are several forms a sale could take. The Mays family, which founded the company, could lead a group of investors in taking it private, in a move similar to the Dolan family’s proposed takeover of cable operator Cablevision Systems Corp.

Clear Channel could also sell more of its outdoor advertising unit, Clear Channel Outdoor, and then take the remaining radio assets private. About 10 percent of Outdoor trades publicly, with Clear Channel holding the rest.

“We think an Outdoor spin-off or asset sale are more likely than a leveraged buyout (by the Mays family) at the time,” Ryvicker said.