Soft quarter for Clear Channel


CEO Mark Mays says Clear Channel Radio outpaced the industry with revenues up 1% to 918.4 million bucks. CC Outdoor did much better, with revenues up 12% to 836.7 million. On the bottom line, earnings were 42 cents per share, missing the Wall Street analysts' consensus by two cents. The results had little impact on Clear Channel's stock price, since investors are focused on the pending buyout by Thomas H. Lee Partners, Bain Capital and the Mays family. Because of the pending transaction, Clear Channel executives did not conduct a conference call with analysts.

Clear Channel credited the increase in radio revenues to gains by its syndicated radio programming, traffic and online businesses, with its mid-size radio markets also contributing to growth. Looking ahead, though, the company said radio is pacing down 1.5% for Q3 and 0.2% for all of 2007.

Bank of America analyst Jonathan Jacoby told clients that while Q2 radio revenues were better than expected, the outlook is weak and showing a weakening trend. Based on the guidance in Clear Channel's Q2 release, he sees Q4 pacing down around 3% following the 1.5% down trend for Q3. But he maintains his buy rating because it appears the buyout deal is still on track.

SmartMedia observation: What about Less is More, you ask? It is getting a bit more difficult to compare current quarters to the pre-LIM numbers because of radio divestitures – 389 stations under contract thus far which are now counted as discontinued operations and excluded from the quarterly revenue tally. The pro-forma number for Q2 a year ago was down 73.5 million from what was actually reported. If we subtract that from Q2 2004, before LIM, the target for the quarter was 923.3 million, so Clear Channel Radio revenues were still down nearly five million from pre-LIM levels.