Radio: Let's make a deal

It’s not a perfect world.

Is FCC Chairman Boy Kevin Martin about to pull off another scam for his buddies at Clear Channel, Cumulus, and their private equity partners BainCapital and Thomas H. Lee?

Let's follow the paper trail.

Last week, the FCC rubber stamped the $27.4 billion buyout of the number one radio chain Clear Channel Communications by Bain and Lee.

Lucky sperm clubbers Mark Mays and Randall Mays stay put and get to keep their seats on the modified company's 12-person board of directors.

Routine stuff.

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The FCC made their usual strong but unenforceable suggestions that were heavy on the blah blah woof woof, light on the follow-through about selling surplus properties to women and minorities.
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The approval was predicated on Bain and Lee’s divesting or converting their stakes in Cumulus Media Partners chain, a collaborative formed by Cumulus Media to acquire Susquehanna Radio.

Bain and Lee each have 25 percent of the privately-held company. They don’t have to sell their stake but will have to give up their right to appoint two members of the eight-member board of directors at Cumulus Media Partners.

Or so they claim.

There’s a black cloud over Cumulus’ go-private deal.

But now there are tittle-tattle circulating that the FCC will grant waivers to BainCapital and Thomas H. Lee. It’s one of the reasons Clear Channel stock was up in the rarified air of $31.77 on Friday.
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Rumor or fact?

Boy Martin controls the FCC. That we know. We don’t know who’s controlling the Boy.

In addition to Sam Zell, that is.

Cumulus’ privatization deal with Merrill-Lynch was done for $11.75. On Friday, Cumulus closed at $6.59.
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Considering Merrill-Lynch’s $8.6 billion hit combined with everyone connected with the Cumulus deal on the M-L end are no longer under their employ puts that deal in jeopardy.

One would think.

So is Boy Kevin, who never met a waiver he didn't push through, about to play the hardship card for Cumulus?

The Boy may be a lame duck at the FCC but, for now, it’s his party and no one’s standing in his way.
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Let’s add the Boston-based Highfields Capital Management fit to the mix.

They were against the buyout of Clear Channel before they were for it.
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Earlier this year, Highfields, which is Clear Channel's third-largest shareholder, opposed the proposed $18.7 billion buyout offer by Bain and Lee.
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But April showers brought May flowers when Bain and Lee cut a deal with Highfields, giving its shareholders equal treatment in all dividends and other distributions, as well as representation by a minimum of two members on the board. Clear Channel’s board bought it and since then it’s been a cozy relationship between the two and Highfields just can't keep its hands off of Clear Channel.
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Last week Highfields increased its holdings with Clear Channel from 6.4 to 7.7 percent, which has, at least for now, kept the buyout deal in life support.
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It's true that a dead bird in the hand is worth more than a kick in tush.

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