RBR-TVBR analysis
Bob Pittman’s elevation to President and CEO of CC Media Holdings, the parent company of Clear Channel Communications, has sparked speculation about what the private equity owners plan to do with the company they bought in a $27.6 billion leveraged buyout back in 2006.
Forbes magazine was quick to run a story suggesting that an IPO is the end-game for TH Lee Partners and Bain Capital. “To return the company to widespread public ownership – and I would note that Clear Channel hasn’t talked about that possibility publicly – it would help if the company can convince investors that there is a lot more to the business than a large collection of radio stations and billboards. Pittman, certainly, seems jazzed,” wrote Eric Savitz at Forbes.
Of course, CC Media does have public stock already, albeit a small float from the former Clear Channel shareholders who rejected the $36 per share buyout. The stock ended Q3 at $5.50, down 39% since the beginning of the year.
Bain and TH Lee wouldn’t likely be interested in selling more stock at anything close to that $5.50 price. And the IPO market is not particularly healthy right now anyway.
But RBR-TVBR has heard another rumor which could make some sense. That scenario would have the company do an IPO of only the digital media assets, primarily iHeartRadio. That would be a Wall Street competitor to Pandora Media.
Such an arrangement would not be different from what the company did with Clear Channel Outdoor, which is still 89% owned by Clear Channel Communications and, in turn, by CC Media Holdings. A similar option would be a tracking stock just for the digital portion of the company.
Our guess is that Pittman will first focus on growing iHeartRadio before trying to raise new money on Wall Street. Given the state of the economy, he’s not likely to be in any rush to try to sell any equity in the public market.
RBR-TVBR note: see CC Media spells out employment deal for Bob Pittman
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