Clear Channel Communications, the nation's largest radio group with more than 1,000 stations, will keep growing.
It is on a spree because, to claim tax deferrals, the company may reinvest in stations as much as it recently earned when it sold 108 radio stations. They were divested to secure FCC and Justice Department approval of Clear Channel's $23.8 billion merger with AMFM. The spinoffs brought in $4.3 billion.
"We're not going to spend near that amount," though no target has been set, says Clear Channel Chairman Lowry Mays. But when the deals are completed-Clear Channel has six months to do so-the company will continue to reinvest its free cash flow in new stations, he adds.
The company so far has spent $1 billion in spinoff proceeds. Randy Michaels, chairman, says Clear Channel is seeking to fill out station clusters in its current markets, acquire "substantial clusters" in new markets and round out regions where it is concentrating.
If Mays had his way, he would toss aside the concept of clusters and own every radio station in a market (congressionally ordered caps limit a broadcaster to no more than eight radio stations in major markets; fewer in smaller markets).
Another of Clear Channel's priorities now is establishing its Internet strategy.
Mays dismissed the recent decline in his company's stock price as being fueled by "doomsayers." The entire radio sector is suffering as ad spending by dotcom companies declines. But at Clear Channel, "we understood that [dotcom flurry] was not sustainable" and business was beefed up "in other sectors to replace that if it disappeared."