Clear Channel executives say proposed merger with investment group may not pan out

Clear Channel Communications Inc. on Friday released earnings for the media and entertainment company's first quarter at a critical juncture in its history.

The company had been set to finalize its merger with an investment group led by Thomas H. Lee Partners LP and Bain Capital Partners LLC by the close of the first quarter. That has not happened due to lenders' reluctance to provide financing for the deal.

Clear Channel and the investment group filed a lawsuit against the lenders on March 26 in Bexar County District Court to force them to fund the merger agreement. A trial date is scheduled for June 2.

Content Continues Below

Clear Channel officials said Friday they are not able to estimate a closing date for the deal and are "not certain that a closing will occur."

Clear Channel reported net income of $799.6 million, or $1.61 per diluted share, on revenues of $1.6 billion for the quarter ended March 31, 2008. This compares to net income of $102 million, or 21 cents per diluted share, on revenues of $1.5 billion for the same period a year ago.

The company's earnings benefited from the $1 billion sale of its television group to an affiliate of Providence Equity Partners Inc. in Rhode Island. The sale closed on March 14.

Meanwhile, executives with San Antonio-based Clear Channel (NYSE: CCU) are continuing to work on executing a strategic plan for the company during this challenging economic period, CEO Mark P. Mays says.

"While our results were affected by the soft advertising market, we continued to out-deliver the majority of our media industry peers," Mays says.

"Our radio operations out-performed the majority of our markets in the quarter, and we continued to invest in our content and online assets in an effort to strengthen our value proposition to both our listeners and advertisers. We believe our concerted investment strategy will position our businesses for growth over the long-term," Mays adds.

Clear Channel Outdoor (NYSE: CCO) also released earnings on Friday. The world's largest outdoor advertising company posted net income of $88.9 million, or 25 cents per diluted share, on revenues of $775.6 million for the first quarter of 2008.

During the first quarter a year ago, the outdoor advertising company reported net income of $16 million, or 5 cents per diluted share, on revenues of $690.9 million.

Clear Channel Outdoor's revenues increased 12 percent over the first quarter of 2007. The company's first-quarter 2008 financial results also included a $75.6 million nontaxable gain, or 21 cents per diluted share, on the divestiture of its 50 percent interest in Clear Channel Independent, a South African outdoor advertising company.

Excluding this gain, Clear Channel Outdoor's net income would have been $13.3 million, or 4 cents per diluted share.

"Our (Clear Channel) Outdoor results benefited from the global diversification of our footprint, as well as our ongoing efforts to expand our digital presence," Mays says. "We are solidly on track in rolling out our digital installation plan, which continues to strengthen our long-term growth potential."

Clear Channel Communications has operations in radio stations and outdoor advertising. The company is the majority owner of Clear Channel Outdoor.