Clear Channel all but confirms buyout talks

Private equity groups Providence Equity Partners, Blackstone Group and Kohlberg, Kravis Roberts & Co. are in advanced discussions to buy the largest U.S. radio company, Clear Channel Communications Inc., a source familiar with the situation said Wednesday.

Clear Channel, which has more than 1,200 stations, earlier on Wednesday had responded to reports that it was considering offers to be taken private by saying it had hired Goldman, Sachs & Co. to help it evaluate strategic options.

The board, controlled by the Mays family, is evaluating alternatives to increase the share price and can’t assure that a transaction will occur, San Antonio-based Clear Channel said in a statement Wednesday.

Clear Channel is a major player in the Los Angeles radio market, owning KIIS (102.7), KHHT (92.3), KBIG (104.3), KYSR (98.7) and KOST (103.5) on the FM band and AM stations KFI (640), KTLK (1150) and KLAC (690). The appointment of Goldman Sachs brings the founding Mays family closer to a possible leveraged buyout. The Financial Times first reported Wednesday that the company had held discussions with Kohlberg Kravis Roberts.

“This is a process that will take some time,” said David Bank, an analyst with RBC Capital Markets. “There are a lot of options.”

KKR and Providence could not be reached for comment. Blackstone and Goldman Sachs declined to comment.

Clear Channel spokeswoman Lisa Dollinger declined to comment beyond the statement. The company said in its release that it wouldn’t comment anymore about the matter unless a specific transaction was approved by the board.

Shares of Clear Channel rose 15 cents to $32.35 in regular trading, then shot up as high as $35 in the after-hours market. Shares also rose Tuesday after CNBC reported that the Mays family was “warming” to the idea of a leveraged buyout.

Clear Channel has a market value of $16.1 billion, with $6.8 billion of long-term debt at the end of the second quarter.

The company has had “serious” talks with KKR about going private, the Financial Times said, citing people familiar with the situation. The Mays family previously had rejected approaches from private equity investors.

Chief Executive Mark Mays already has spun off the company’s live entertainment unit, Live Nation Inc., and sold shares of its outdoor advertising unit, Clear Channel Outdoor Holdings Inc., in an initial public offering.

Mays, 41, is a former Goldman Sachs mergers and acquisitions banker. His father, Lowry, is chairman of Clear Channel and his brother, Randall, is chief financial officer.