Dealing for (mucho) dollars

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Clear Channel's frenetic deal-making pace may be slowing, but in the
past two months, the company has brought 55 new stations into the fold.

Clear Channel's spree was inspired not by its stock price but by a tax
incentive that allows it to buy up to $4.3 billion worth of new stations
tax-free [B & C, Sept. 25].

That is the same value ascribed to the stations that Clear Channel had
to sell to gain Justice Department approval of its $23.8 billion merger with
AMFM Inc. When that deal closed at the end of August, Clear Channel owned or
was buying some 1,018 radio stations, according to BIA Research. There now are
1,125 radio stations owned, operated or being acquired by the San Antonio-based
company.

In a company that big, price is not as big a consideration as it might
be for smaller firms, though Chairman L. Lowry Mays insists that any deals be
immediately accretive to Clear Channel's bottom line. Radio brokers interviewed
last week mentioned several recent transactions that raised eyebrows for their
higher-than-would-be-expected prices, including:

  • $24.5 million paid for four AM-FM combos and an FM construction
    permit (CP) in Poughkeepsie, N.Y., which is ranked the nation's 157th-largest
    radio market by Arbitron.
  • $20 million for a combo, two FMs and an FM CP in Binghamton,
    N.Y. (market No. 166).
  • Nearly $12.3 million for two combos and an FM in Sioux City,
    Iowa (market 250).
  • $7.65 million for two combos and an FM in Somerset, Ky.-so
    small it's not even ranked by Arbitron (see this week's Changing Hands, page
    30).
  • $6.5 billion for a combo and two FMs in Wichita Falls, Texas
    (market 243).

Clear Channel plans to spend about $500 million by the end of this
year to take advantage of the tax program, company spokesman Randy Palmer
says.

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