Let’s recap the recent events and set the stage for tomorrow’s legal sitcom in Bexar (“that’s pronounced ‘bear,’ boy”) County.
First there was that odd temporary restraining order by Texas Judge John Gabriel against the six banks trying to back out of the $19.5 billion buyout of that bureaucratic morass known as Clear Channel by private equity firms BainCapital and Thomas H. Lee. As a rule, judges rarely issue a restraining order prior to holding a hearing to discuss the case.
But we’re talkin’ the Mays family/Clear Channel adaptation of justice here.
Dickum, Drownum, and Screwum.
First there was that odd temporary restraining order by Texas Judge John Gabriel against the six banks trying to back out of the $19.5 billion buyout of that bureaucratic morass known as Clear Channel by private equity firms BainCapital and Thomas H. Lee. As a rule, judges rarely issue a restraining order prior to holding a hearing to discuss the case.
But we’re talkin’ the Mays family/Clear Channel adaptation of justice here.
Dickum, Drownum, and Screwum.
The restraining order was followed by a decision from U.S. District Judge Orlando Garcia to turn the banks down and send the case back to give Clear Channel home field advantage.Failing to get Clear Channel made a party to the New York lawsuit next week will put a staid squeeze on the banks to do the deal rather than risk a long and costly trial in the hostile-to-outsiders Texas state courts.
That’s the way the Mays boys like it - one huge cluster- beep, filled with blame shifting, finger pointing, and misinformation – and it’s all on their home turf.
Given the state’s record on comparable lawsuits, chances are somewhere between slim and none for the decision to go to the banks’ favor.
True, the six banks involved can certainly afford the best lawyers money can buy to represent them– and in almost any other court the Clear Channel-Bain/Lee deal of doom would get undone.
But even a Great White – the world's largest predatory shark –removed from its salt water ocean element and placed in one of the fresh water lakes surrounding landlocked San Antonio would die a painful death. 
That’s the Mays’ game plan. Get the lawyers out of their comfort zones and into unfamiliar and hostile territory.*
How hostile? You’re in a state where a business school is named after the Mays family patriarch.
Now, let’s take a moment to judge the judges.Shall we begin with Judge John Gabriel? We know that he and the Mays family are what one would politely call “close.” But everyone knows everyone else in Bexar county. Siding with Clear Channel? A mere coincidence, wouldn’t you say?
Though locked and loaded in tight with the Grand Old Party – all the way to Pennsylvania Ave. – the Mays family is non-partisan when calling in political chits.
Just ask Judge Orlando Garcia.
It starts with a call to Vernon Jordan.You may know Vernon as a former aide to President Bill Clinton. You may, however, not know that he also sat on Clear Channel’s board of directors until 2003 – the result of being part of a deal that brought the former Chancellor Broadcasting – renamed AMFM – into the Clear Channel fold. That one happened during the go-go catch and swallow days that followed the 1996 Telecommunications Bill’s radio revisions being signed into law by – you guessed it – Bill Clinton. It might’ve been Bob Dole’s “midnight rider” – but it was Vernon Jordan who handed Clinton the pen to sign it into law.
Vernon was called into action to reach Clinton since Judge Orlando was his appointee and Mays needed a swing in his direction.
And it was done.
As an added bonus, the good Judge's web site bio was removed from the Internet late yesterday. *
We’re talking high stakes in a game that lacks written rules.
*
And, coincidentally, it was another high stakes game that postponed Tuesday’s initial legal showdown.
Jayhawks-Tigers. The final game of the Final Four.
There were no hotel rooms available in San Antonio – at least in the élan the Bain/Lee principals and the bank’s lawyers are accustomed to.
The day in court was put on hold until tomorrow by “mutual agreement.”
Are they going to sweep the rooms for bugs? Not accusin', just askin'.
Clear Channel and Bain/Lee will push to make permanent the temporary restraining order.
The Mays family dropped another bombshell, which made the banks realize they’ll have to do a lot more than just bare their fangs to get through this one.
And, coincidentally, it was another high stakes game that postponed Tuesday’s initial legal showdown.Jayhawks-Tigers. The final game of the Final Four.
There were no hotel rooms available in San Antonio – at least in the élan the Bain/Lee principals and the bank’s lawyers are accustomed to.
The day in court was put on hold until tomorrow by “mutual agreement.”
Are they going to sweep the rooms for bugs? Not accusin', just askin'.
Clear Channel and Bain/Lee will push to make permanent the temporary restraining order.
The Mays family dropped another bombshell, which made the banks realize they’ll have to do a lot more than just bare their fangs to get through this one.
They hired notorious Joe Jamail as its lead lawyer.Never heard of Joe? His web site says, “He’s been called a savior, a good ol’boy, and a S.O.B.” Some say he has an abscess where his heart should be.
He has over $12 billion in jury verdicts and over $13 billion in verdicts and settlements notched on his belt.
The case Clear Channel loves to reference is the $10 billion verdict Jamail won for Pennzoil in a tortuous interference suit against Texaco back in ‘84. Pennzoil had a deal in place to buy Getty Oil – but Texaco swept in and bought the company. Jamail took it to court and forced Texaco into bankruptcy.
In the end, Pennzoil got a mere $3 billion after Carl C. Icahn, Texaco's largest shareholder, settled with Jamail. The New York Times reported the settlement was the result of a “…. fight punctuated by thousands of hours of fruitless negotiations, legal wranglings, dashed hopes and charges by executives of both companies accusing the other side of greed, arrogance and duplicity.” *
Save that line. We may need to recycle it.
But let’s not judge all lawyers bythe way Jamail does legal. After all, it’s that 99 percent that give the other one percent a bad name.
But let’s not judge all lawyers bythe way Jamail does legal. After all, it’s that 99 percent that give the other one percent a bad name.
22 comments:
Yeah, the tea leaves are looking better for CC today. Some of the guys invested in the buyout are threatening to pull business from the banks if they don’t do the deal. Citi is freeing up cash, which would let it proceed. The Wall Street drumbeat can definitely be heard pushing to get this done. Another win in Texas would, of course, pile on even more pressure.
you are handsome man. I liked!
fran
Law will definitely swing Clear Channel's way. Once again they have stacked the deck. The banks will get royally screwed on this one. Open and shut.
The Mays family wield a lot of power in Texas though their star has faded slightly since Randall took over from Lowry. Lowry may still be calling the shots. Randall falls short on the follow through. The family is fortune that they got the trial moved here where they have the juice to make the decision go in their favor. The banks went a long with the deal and it will be difficult for them especially in Bexar court to get any sympathy for the court. This one could end in one of those backroom deals Lowry used to love holding court in.
John, There is a whole world's watching problem. If the courts side on CC's side it will show them as reckless and obviously on CC's payroll. The banks have legitimate concerns. CC is not worth even close to those dated and inflated figures. If forced these banks could suffer billions of dollars in losses. I cannot see a judge willing to put his neck on the line for that result.
Hey Gorman -- two things. Number one. I don't know how you knew but everyone else wrote off CBS radio's Psychic Network as an April Fools Joke. Even some people inside CBS said it was and that you were dumb enough to fall for it. Now I find out it really is for real. How do you know this stuff? Second. This Clear Channel trial and error is gut wrenching for those working for the company. Screw the big guys. It is the poorly paid no benefits people that feel the screws turning. They deserve better. I am sure that Mark Mays will say let them eat cake.
"The banks have legitimate concerns. CC is not worth even close to those dated and inflated figures."
That's not CC's fault. If you buy a house at an inflated price, and a bank backs your mortgage, then that's the deal. The banks can't back out, and neither can you, even if the market changes and the value of your house drops. That's the way it works. The banks screwed themselves by agreeing to this deal in the first place. They should be forced to follow through. If it was any one of us on the receiving end, the banks would force us to pay.
Jamail has to be in his 80s by now. He has to be doing this strictly for sport.
I think CC calling in the favors paid off.
It is good news for CC. It will be a disaster for the banks and everyone working for that company.
According to Tom Taylor those leaving CC for Tribune gave up their golden parachutes. That is how quickly they want out of there plus Zell and Michaels can make up the difference by firing a few more people on the Tribune staff.
We should have let Mexico have Texas, way back when. Texas has done more than it's fair share to give the U.S. a bad name. It gave us George W Bush which is reason enough to throw them out of the union.
Does the Mays school of Business teach a course called "ethics optional?"
Vernon Jordan huh? I did not know. Let me get this right. Jordan is an advisor to Bill Clinton at the same time he owns a piece of Chancellor. He had to have made a few bucks on that deal. The radio revisions on the telcomm bill get me. How could those have been added without any public hearings or discussions? Never mind. I answered my own question.
If CC/Bain/Lee win & the deal goes through more jobs will be cut in favor of vt/syndication/network. If CC/Bain/Lee loses & the deal falls apart more jobs will be cut in favor of vt/syndication/network. Either way the employees that have kept their wretched stations on the air will get the shaft. I don't care who wins or who loses. I just want whatever CC ends up to be to sell their stations to people that will know how to run them.
For Jan heres what radio insiders are thinking.
"I predict that half of America’s morning drive jocks will soon be replaced by 10 or 12 syndicated morning shows beamed in from somewhere else. This will happen in other dayparts as well.
Frankly, I’m in favor of it.
Wait! I hear the voices of broadcasters clamoring, “But radio is local. Our listeners want local. Syndication is anti-radio.”
I respond, "Listen to the people of your town. Are they saying, 'We don’t want Desperate Housewives, Grey’s Anatomy, American Idol, and Lost! We want the local TV shows?'”
"Are they saying, 'We don’t want Spiderman, Pirates of the Caribbean, and Lord of the Rings in our theaters! We want the local movies?'”
"Are they saying, 'We don’t want Rush Limbaugh and Howard Stern, we want a local political pundit and a local shock jock?'”
Ten years ago, radio’s consolidators cut costs by cutting the fat. Then, when pressured for more profits, they did the only thing they knew to do; they cut deeper, but this time into muscle. Radio was crippled. Occasionally they cut arteries and radio stations began dying. Wall Street prices dropped cold and hard, icy hail on a barren landscape.
There were plenty of heroic efforts in the emergency room. Not all radio group heads were selfish. Not all were shortsighted and stupid. I’ve watched from the sidelines as good men and women did the best they could under impossible circumstances.
Now radio is going private again. Deconsolidation has begun. The age of syndication is upon us."
Roy Williams The Wizard of Ads.
Either way CC is on the ropes. I agree that the end result will be the same. More will lose jobs, quality of programming will continue to decline. CC's downfall will cause other chains, even those few that are attempting to improve product, decling revenue and value. The sooner this wraps the better. The sooner CC parcels out stations at a realistic multiple (try five maximum) it will allow broadcasters back into the fold. Say goodbye to chains beginning with the letter C. Your greed got the best of you. Like that Spoon song: You will not survive.
I am not in the financial business. I do have an interest in Clear Channel as an employee not knowing what today or tomorrow will bring.
Even in the United State of Texas I think the courts have to look at a larger picture. This country's economy cannot afford to have banks suffer more losses on obvious bad deals. It serves the banks right in the way for jumping into a deal without knowing all the facts about how poorly the radio industry is performing. The other side of the story is the question of whether Clear Channel provided accurate financial statements and projections.
If the courts were to supoena financial records from various clusters they would show a lot of time **sold** and not a lot of money collected.
This appears to be a deal that was written with pure greed in mind. The timing was wrong. The bottom fell out before it could be concluded.
Whatever may be the outcome the apathy here is thick enough to cut. We are dependent on Clear Channel for employement. We are also as loyal to the company as they are to us.
The courts should take note of that.
I suggest an old fashioned shoot out. Ten paces, turn around, fire.
That silver-spoon trust funded Randy Mays will be dead before he can get the gun out of his Coach holster.
If you are going to have Texas justice you should take it all the way.
In the movies, the banks always got back their money from the black hatted thieves.
from what i read the banks stand to lose between $2.7 and 3 billion dollars if forced to do this deal.
i am not sure if the courts can force the banks to complete the deal especially if they can show that clear channel misrepresented their fiscal health.
if the texas courts side with clear channel the end result will not be pretty for radio. what bank would ever want to do business with a radio chain again?
you are right when you say the outcome does not matter. it is what will happen after that and clear channel could be on its way to effing over its radio bretheren.
this wil not sit well for citadel, cumulus and the other public chains.
the radio chains should be rooting for the banks if they know what is good for them.
John...
FYI.
I thought a Texas Attorney friend of mine would enjoy your blog on the Mays style of Texas Justice.
She did, and wrote to me:
"Funny, but not likely true.
"The Supreme Court belongs to the Banks, and a Mandamus might be in order if they screw around at the District Court level."
Whatever the heck a Mandamus is. I thought that was the Russell Crowe slave guy in Gladiator. Maybe not.
Enjoying your Blogs a lot ... even though they don't have any regular Mandami in them.
I looked up "mandamus" in a legal dictionary and this is what it said. My mother was right. I should have gone to law school. These lawyers can really confuse an issue:
MANDAMUS - The name of a writ, the principal word of which when the proceedings were in Latin, was mandamus, we command.
It is a command issuing in the name of the sovereign authority from a superior court having jurisdiction, and is directed to some person, corporation, or, inferior court, within the jurisdiction of such superior court, requiring them to do some particular thing therein specified, which appertains to their office and duty, and which the superior court has previously determined, or at least supposes to be consonant to right and justice.
Mandamus is not a writ of right, it is not consequently granted of course, but only at the discretion of the court to whom the application for it is made; and this discretion is not exercised in favor of the applicant, unless some just and useful purpose may be answered by the writ.
This writ was introduced io prevent disorders from a failure of justice; therefore it ought to be used upon all occasions where the law has established no specific remedy, and where in justice and good government there ought to be one. Mandamus will not lie where the law has given another specific remedy.
The 13th section of the act of congress of Sept. 24, 1789, gives the Supreme Court power to issue writs of mandamus in cases warranted by the principles and usages of law, to any courts appointed or persons holding office, under the authority of the United States. The issuing of a mandamus to courts, is the exercise of an appellate jurisdiction, and, therefore constitutionally vested in the supreme court; but a mandamus directed to a public officer, belongs to original jurisdiction, and by the constitution, the exercise of original jurisdiction by the supreme court is restricted to certain specified cases, which do not comprehend a mandamus. The latter clause of the above section, authorizing this writ to be issued by the supreme court to persons holding office under the authority of the United States, is, therefore, not warranted by the constitution and void.
The circuit courts of the United States may also issue writs of mandamus, but their power in this particular is confined exclusively to those cases in which it may be necessary to the exercise of their jurisdiction.
you guys are so funny
when the smoke clears the mays fam are still in the tall grass, still got more in the bank than any of you
they get the last laugh
you get to read this crappy blog
John, You called it.
Court Denies Banks' Motion
To Dismiss Clear Channel Suit
By SHIRA OVIDE
April 11, 2008 12:23 p.m.
NEW YORK -- A Texas state court has denied a request by a group of banks to dismiss litigation against them in the disputed sale of Clear Channel Communications Inc.
The ruling in Bexar County, Texas, deals an early win to Clear Channel and its proposed buyers, Thomas H. Lee Partners LP and Bain Capital Partners LLC. In a pair of lawsuits filed last month, Clear Channel and the buyout firms accused the banks of illegally reneging on their commitments to provide financing for the $19.5 billion deal.
At a hearing Friday, the Texas court said Clear Channel and the buyout firms can pursue charges that the banks -- Citigroup Inc., Morgan Stanley, Credit Suisse Group, Royal Bank of Scotland Group PLC, Deutsche Bank AG and Wachovia Corp. -- improperly interfered with the closing of the sale.
The court hearing is continuing to hear other deal-related matters, including a request for a temporary injunction against the bank group.
"the radio chains should be rooting for the banks if they know what is good for them."
No one is rooting for the banks.
If you buy a house, and the bank and the mortgage company give you the money, and five years later the housing market goes in the toilet, you are still expected to pay back the full purchase price of the house. Not what the house is worth.
That's the situation here. A year ago, the banks and the investment companies agreed on a price. Now, as a result of the home loan crisis, the banks are chickening out. Sorry, but you guys agreed on a price. Time to pay up. They would make the same demand of you if you were in debt to them. It's the banks' fault for agreeing in the first place.
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