Battle Of The Clear Channel Buyout

The sale of Clear Channel Communications to a group composed of private equity firms Thomas H. Lee and Bain Capital Partners appears all but dead with the rejection of a binding arbitration proposal submitted by the six banks that agreed to finance the nearly $20 billion buyout.

The banks and private equity partners have been at odds for some time, with the Bain / Lee group and Clear Channel suing the banks, accusing them of breaching their agreements to fund the deal.

The banks made the arbitration offer April 21st to break the standoff, but Bain and T.H. Lee quickly rejected it.

"The banks want to move this case into the back room because they fear that a public trial will clearly expose their misconduct," the firms said in a statement reported by the New York Times.

The banks fired back with accusations of their own.

"By rejecting our proposal, Bain and T.H. Lee are placing the transaction at risk and have demonstrated once again that they have no genuine interest in seeing this transaction close," the banks said in a statement, according to the Times.

What was potentially one of the largest media buyouts in history has disintegrated since it was first floated about two years ago. In the meantime, a crumbling economy and faltering radio industry have combined to make Clear Channel a far less attractive proposition than it once was.

Until recent years, the Clear Channel empire was composed of more than 1,200 radio stations, a clutch of television stations, a national billboard advertising unit and an entertainment division that was spun off in 2005 to become Live Nation.

Part of the billboard unit was also spun off, and the television stations and many of the radio stations have been sold as well.

A hearing on motions for summary judgment in the battle of the buyout was scheduled in New York state court on April 24th.