Clear Channel stock buyback puzzles Wall Street


Monday’s announcement that the board of directors at Clear Channel Communications had authorized a stock buyback of up to $100 million was a surprise to Wall Street. Few details have been offered, but the company says it may buy back shares of the parent company, CC Media Holdings, or the majority owned subsidiary Clear Channel Outdoor, which has its own public stock.

“We were surprised to see the parent company authorize a $100-million buyback of either CCO or CCMO shares, when clearly there is a substantial amount of discounted debt maturing at the parent company level. Presumably, the parent company will utilize the buyback to continue to reduce the outstanding equity in CCO, which over time could clarify the capital structure and make it easier for the parent company to benefit from the cash generative nature of its CCO subsidiary,” wrote Barclays Capital analyst Anthony DiClemente in trying to explain the buyback move to clients.

While CC Media Holdings, “CCMO,” is thinly traded on the “pink sheets” and does not conduct quarterly conference calls, CC Outdoor, “CCO,” is an NYSE stock and does conduct analyst conference calls. Try as they might, analysts didn’t get much of an explanation from CCO officials about why they’re doing the stock buyback, except for Clear Channel CEO Mark Mays saying that the stocks appeared to be undervalued.