This wasn’t supposed to happen.
It looks like still another deal’s going south for the Mays family.
On Friday, Clear Channel filed a complaint against Newport Television, a subsidiary of Providence Equity Partners, for backing out of a $1.2 billion deal to buy 56 television stations.
To avoid tipping off Wall Street, the filing was done late Friday afternoon in Delaware Chancery Court.
According to the complaint, “Newport has no right to walk away from this deal. Buyer’s remorse is not Clear Channel’s problem.”
I’ve said it before and I’ll say it again. When one realizes it’s best to back out of a deal with Clear Channel it’s buyer’s morose.
Providence would rather pay $46 million to kill the deal than get stuck with Clear Channel’s underperforming properties.
Even worse for Clear Channel – that $46 million could end up a write-off for Providence.
The deal was put together last April – but reality reared its ugly head – and Providence came to grips with the fact that the cash flow multiples just didn’t add up in this brave new world of 2008.
The Wall Street Journal revealed that Clear Channel had attempted an under-the-radar eleventh hour “prices slashed” renegotiation – but Providence opted to walk. Clear Channel pathetically told the Journal, “The private equity firm wasn’t serious about completing the transaction.”
This doesn’t fare well for deal of doom – the $19.5 billion buyout of Clear Channel by BainCapital and Thomas H. Lee - getting done by their mid-March deadline – if ever.
If Clear Channel gets stuck with those 56 TV’s they’ll be forced carry those properties into the Bain/Lee buyout, which will critically alter the distressed deal.
And should it ever, ever, ever close it won’t be even close to that inflated $39.20 share price.
Since Wall Street is off for the holiday it gives the banks caught up in this mess a day to ponder their impending disaster.
Bain/Lee has to rethink this one, too. Even a python’s digestive tract has a threshold.
The poor Mays family. They set up a week of manipulation and maneuvering, calling in every favor, to goose their stock back into the 30’s – and got it closed on Friday at 32.35. It had traded over 30 million shares on Friday – triple the average volume for that troubled stock.
Now, those Friday arbitrageurs have to feel screwed, blewed, and tattooed.
That seems to be the end result for anyone trying to do a deal with Clear Channel these days.
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12:21 PM update –
It gets better.
Reuters reported that Providence Equity Partners responded, calling Clear Channel’s lawsuit “Baseless.”
They’ve also told Clear Channel that if they’re expecting that $46 million back-out payment – fugghetaboutit!
Here’s what Providence said: "The contract clearly states that if all the conditions to closing are satisfied and the buyer does not perform, Providence's sole obligation is to pay the $45.9 million reverse break-up fee," the Providence spokesman said. "Furthermore, under the terms of the contract, this fee is no longer payable because Clear Channel has commenced this litigation."
You’re Mark Mays and you feel like a jilted suitor – again.
How many deals can’t he close?
Just falling short of admitting defeat, Clear Channel issued an e-mail statement reading, “…if for some reason the deal does not close, we would look forward to keeping these terrific assets in the Clear Channel family."
You’re Mark Mays – and you don’t have a choice.
Those terrific assets are yours to keep.
Who’d want them? Tarnished, distressed merchandise?
Terrific? Didn’t you mean terror-ific?
14 comments:
Clear Channel is a victim of the laws of physics. For every action there is a reaction. They have screwed enough people, places & vendors that it is only right that they get screwed right back when they need it the least. This could not have happened to a nicer bunch of shysters.
John...
You have mentioned the "greater fool theory" in the past. I believe this shows who the greatest fools really are. No sympathy here.
To be a fly on the wall in San Antonio on Friday - priceless!
They deserve whatever happens negatively that comes their way financially. The ‘last one holding the bag” scenario is coming to fruition now. What a bunch of arrogant putz's they have been-ruined a great medium on a national-even multi national scale and countless careers of gifted broadcasters. Not to mention actually trashing great call letters of real CLEAR CHANNEL stations like WLW 700 kc and WOAI 1200 kc-the only two left in the US.
I actually worked for them for a year-I also spent over 10 years at WMMS with John, so I know what I am talking about-they have ruined a lot of my friends who had radio flowing through their arteries-and I hope the Mays are reading this-they have no integrity. PUTZ's!!!
You deserve this-
The Mays family have finally exhausted their bag of magic tricks. Now reality sets in.
The Mays family have finally exhausted their bag of magic tricks. Now reality sets in.
Gorman I don't know how you do it. You were "on the case". I was about to comment that Reuters had an update on the CC/Providence story. Then I went back to your site and saw your update.
Mark Mays has run out of places to hide. His company is a disaster. His radio and TV stations are shells of their former selves. His other investments have gone sour. No one even wants to buy what is left of his properties.
I do hope Dan Mason, Peter Smyth and other radio heads are taking note. If you devalue your people you will devalue your property.
Whatever happens to Clear Channel will happen to the other chains too unless you begin a rebuilding and reinvestment process. Run the stations like you want to hold on to them and you will see your true values increase.
Laugh at me now and I willlaugh at you later.
Cluck Cluck Cluck. That is the sound of that chicken Mark Mays.
His barnyard of burned out properties are worth less and on their way to being worthless. I have to admit that I was a little surprised at Mark Mays backing down with little cluck when Providence responded to his law suit. His quote makes you believe that he has already given up. I wonder if BainCapital and Thomas Lee are giving up on him?
Mark Mays I have one good thing to say about you. You are restoring my faith in the business for all the reasons you think are wrong.
I know there are those who will be paid handsomely to see this deal to its fruition. I wonder what the chances are now of that happening. Clearly, Clear Channel has had a number of deals both radio and Tv fall apart or fall short. The laws of supply and demand are in place. I believe a domino effect is also in place and as Clear Channel falls so will other overvalued radio chains. If I were with Enterom, Greater Media, Citadel and Cumulis I would be concerned.
We can't wait to see what happens after the bell rings tomorrow. I wonder what kind of spin Clear Channel will put on it? I think Mark Mays blew it when he conceded defeat this afternoon.
Mark Mays has no negotiating skills obviously. I see Providence coming back to the table and getting Clear Channel to take a serious hair cut just to avoid the Bain - Lee thing from evaporating.
Whatta wuss.
The wheel of the mill grinds slowly but it always grinds fine. Clear Channel is one of many 90s hangovers.
Clear Channel and fellow traveller monopoly kronykasters fired talent, consolidated, and ignored local audiences.
They jam AM and FM with HD They insist this is necessary to save radio, despite rampant consumer apathy and increasing listener antipathy arising from HD's incessant raucous jamming.
Ah, yes. That pesky domino effect. Of course there will be more, to quote an old friend. BigRadio defines greed. Greed makes one stupid. The stupid always fare badly. Always.
Years ago I went to school with a principal of Providence Equity Partners. Knowing that person even in that slight capacity affirms the problem lies not with Providence Equity Partners.
The problem lies with those who shift blame to them, another poxy, tiresome 90s gag pulled with tedious regularity by those who are caught, out of lies, and staring consequences in the face.
They earned the rising tide of opprobrium which swirls about them like a maelstrom in a cesspool.
One can chart their next move. Some of BigRadio's shill parrots are already alleging that 'anti-HD conspirators' are causing BigRadio's problems.
Oh please. Spare us. Haven't they a gift for self-abasement?
Crack addicts say as much about their long suffering families and law enforcement authorities who eventually pay for their messes.
Paul Vincent Zecchino
Manasota Key, Florida
19 February, 2008
"Who’d want them? Tarnished, distressed merchandise?"
No one wanted ABC Radio's stations either. Or Susquahana's. Or Lincoln Financial's.
It doesn't matter who owns the stations. No one with money is buying radio stations.
When a company like Disney, who has no shortage of money, is looking to get out of radio, that tells you that it's about more than content. They have lots of content at Disney. They just see no reason in owning transmitters and antennas.
You don't have to buy radio stations when you can access the same audience for free. THAT is the real problem that faces broadcasters. The guy who works in his pajamas is as powerful at the guy with the 100K stick. And the guy in his pajamas doesn't have the huge overhead.
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