CCC Profits Drop In 4Q

Clear Channel Communications profits dropped 54 percent during the fourth quarter, the company reported February 23rd, while an $18.7 billion buyout offer from a private equity group still awaits a shareholder vote at the end of March.

The company’s net income fell to $211.3 million, or 43 cents per share, during the quarter, from $461.6 million, or 86 cents per share, a year earlier. The 2005 results, however, included earnings from CCC’s spinoff of entertainment division Live Nation.

CCC reported fourth-quarter revenues of $1.94 billion, as opposed to $1.75 billion in 2005, an 11 percent increase. Thomson Financial analysts had reportedly anticipated earnings of 41 cents per share and revenue of $1.89 billion.

The radio and outdoor divisions again proved to be the company’s most profitable sectors. CCC radio increased ad revenue through the sales of shorter spots, focusing primarily in the top 100 media markets. Domestic outdoor ad revenue increased in both large and small markets, and through CCC’s acquisition of airport-advertising company Interspace.

Miller Tabak & Co. analyst David Joyce told Forbes the upcoming buyout deal won’t be resting on this earnings report alone.

"This alone won’t affect the deal one way or the other," Joyce said. "One data point doesn’t move the deal needle."

Instead, the analyst explained that the deciding factor in the buyout would more likely be the fact that many of the CCC’s top investors have indicated opposition to the buyout.

The company’s board of directors approved Thomas H. Lee and Bain Capital’s bid of $37.60 per share in November. At the time, the offer represented a premium of nearly 25 percent more than the company’s average closing share price of $29.99 during October.

CCC’s largest holder, Fidelity Management & Research, has apparently said it won’t vote to approve the current offer. Fidelity owns nearly 11 percent of CCC’s shares. The company needs a two-thirds vote by shareholders to approve the deal.

"The company is going to be as mum as possible," Joyce told Forbes. "And I think behind the scenes, investors might be banding together and planning to vote against the merger."

Clear Channel stock rose 2 cents to close at $36.47 the day of the fourth quarter report. It tumbled about a dollar on February 27th, when the Dow dropped more than 400 points, but at press time it was at the $36 mark.