Clear Channel going private

There’s buzz today about a plan to take Clear Channel private. The New York Times reports that negotiations are underway to “sell” the company to an investment consortium for $18.5 billion.

The negotiations come as family- controlled media companies across the nation explore the possibility of selling their companies or taking them private. Cox Communications, the cable company based in Atlanta, went private in 2004. Cablevision, which is controlled by the Dolan family, is in the middle of negotiations to become private.
The idea is getting mixed reviews. Radio programming consultant and media historian Donna Halper told CBS Marketwatch that it makes sense.

“If you’re constantly worrying about where your stock is today, you’re going to make decisions that aren’t broadcasting decisions,” Halper said. “If they go private, it gives them the flexibility to turn a profit, but to also have the time to grow and develop new formats, and to perfect the ones they already have.”
Gary Bourgeault of The Biz of Show Biz blog also thinks pure radio companies have no choice.

During this time of disruption and turmoil, unless the management is willing to put up with shareholder anger and demand for short-term answers, I don’t see what else they could do.

Companies solely in the radio business aren’t set for growth in any way; they’ll be lucky if they don’t continue shrinking with the changing entertainment climate. They are still reeling from getting caught off guard from consumers’ demand for downloadable music.

I think they should go private and give themselves the breathing room to be able to see how they can strategically respond to the existing marketplace. If they don’t, they will endlessly have to deal with putting out brush fires as shareholders demand higher returns. The result would only be possible short-term spikes that do nothing for long-term success.

Jeff Jarvis takes the opposite perspective, however, and says taking companies private doesn’t fix what’s really wrong, it only delays the inevitable.

Clear Channel, the radio monster, is looking to sell itself to go private, according to the Times. Why? Because the radio business sucks.

This is why I have not feared media consolidation. Clear Channel, the poster child for evil media conglomerates, bought up stations and sucked cash out of them but now there’s not much left to suck. Consolidation is the act of a dying industry. Well, broadcast won’t die. But it sure as hell won’t grow.

The companies with which I work that are private are in MUCH better shape financially to do the types of things necessary to evolve to the digital world. I think this is the point for broadcasters, because you can’t invest in the future while trying to please Wall Street at the same time. It’s the old “two masters” thing (to say nothing of the handcuffs of Sarbanes-Oxley).

When I published my predictions for 2006, this was one of them, and it will only accelerate next year.

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