Calling this the "Year of the buyout," Bear Stearns analyst Victor Miller sees Radio One and Cox Radio as likely candidates to join Clear Channel and Cumulus Media in going-private buyouts of public shareholders, but he doesn't think Emmis is a candidate anymore. The view from Jonathan Jacoby at Bank of America is quite different. Among the companies he covers, he sees only Emmis as likely to go private, with Cox Radio unlikely to do so.
"Radio stocks likely will rally over the next few days, as the speculation will be that others can follow," Jacoby told clients in a research alert. But he added, "this rally likely won't last." Even though he thinks CEO Jeff Smulyan may make another buyout attempt at Emmis, Jacoby also said there is no rush for Smulyan to make a move, especially when there is a run-up in the stock price. In Jacoby's view, Citadel is already highly leveraged and Cox Radio has a 60 million bucks option to purchase some stations in early 2008, so he doesn't think either is a buyout candidate. Entercom management might think about going that route, but he thinks they will instead focus on acquisitions.
At Bear Stearns, Cumulus wasn't even on the previous list that Miller put out of potential buyout candidates, due to its high leverage. "In our April 2007 note, we cited Clear Channel, Cox Radio, Emmis, and Radio One as likely to pursue privatization in the next year. To date, Clear Channel and Cumulus have made go-private bids. We still believe that Radio One and Cox Radio are candidates for a take-out. We wonder if Entercom would consider a move, but think Emmis will not likely go private due to its precipitous decline in cashflow," Miller told clients after the Cumulus deal was announced.