CC Media Holdings, the parent company of Clear Channel Communications, reports its Q4 and full year 2011 financial results on Tuesday morning (2/21). The thinly traded “pink sheets” stock is not followed officially by any equity analyst (although they do participate in the quarterly conference call to gauge radio trends and/or because they do officially analyze Clear Channel Outdoor). But there are other analysts who follow the company with intensity.
We’re referring to bond analysts, since CC Media and its Outdoor subsidiary have over $20 billion in debt outstanding.
At Wells Fargo Securities, high-yield bond analysts Bishop Cheen and Davis Hebert are expecting an up quarter for the radio giant.
“For Q4, we project total revenue of $1.683 billion (+3.0%) and total EBITDA of $532 million (+5.7%), reflecting management’s commentary on the Q3 call and preliminary outdoor results provided in January. Management said on its Q3 earnings call that Q4 radio revenue was pacing flat including political (+4% excluding political), and in Outdoor, the Americas division was pacing flat, while the International division was pacing up 2%. On Jan. 24, the company said that its outdoor business finished the quarter with 2.9% top-line growth, outperforming the company’s pacings number. We think pro forma radio revenue growth could be up only slightly, excluding the contribution of Westwood One [Metro Traffic], which was acquired during Q2 2011 (contributed $41 million in Q3 revenue),” the analysts wrote in a preview of the expected earnings.
Of course, debt leverage is extremely important for this company. “At Q4, we believe CCMO’s total leverage will be 11.2x, with secured debt covenant leverage of 6.8x. Liquidity should remain in good shape with more than $1.3 billion in cash, nearly offsetting the revolver borrowings. Clear Channel has minimal maturities until 2014, when its revolver and $1.1 billion Term Loan A come due,” Cheen and Hebert told clients.
Clear Channel Outdoor Holdings, whose stock is traded on the NYSE, will also report Q4 results with its parent company.
“In conjunction with announcing Bill Eccleshare as the company’s new CEO, Clear Channel Outdoor announced preliminary results for Q4 on Jan. 24, the analysts noted, so there should not be any surprises on the Outdoor side.
“The company reported that revenues increased 2.9% in Q4 and 7.4% for FY 2011. That would imply revenue of close to $816 million (we were looking for just north of $800 million), although excluding currency movements, revenue growth was more moderate at 2.4% for Q4 and 4.2% for FY 2011. It appears Clear Channel Outdoor’s momentum is carrying over into 2012; using CCO’s implied revenue number, we are now looking for EBITDA of close to $234.7 million. Aside from the concerns about the sustainability of outdoor ad growth domestic and international, digital and analog, we think investors are also wondering if CCO’s parent would attempt to leverage up CCO to use the proceeds to reduce CC Media’s large bank debt obligations. CCO heads into Q3 results leveraged at only 3.6x EBITDA,” said the Wells Fargo analysts.
RBR-TVBR observation: Clear Channel is a much better proxy for the radio business as a whole than Emmis Communications and is likely to post better financial results. The best news is that core business is picking up, even if the latest report from the RAB indicates that the gains are uneven. CBS Radio has already reported its Q4 results and we’ll hear from Entercom next week.