UPDATE 3-Clear Channel, Providence agree lower TV price

(Adds background, Clear Channel share price)

NEW YORK, Feb 25 (Reuters) - U.S. radio operator Clear Channel Communications Inc (CCU.N: Quote, Profile, Research, Stock Buzz) agreed to cut its asking price for 56 local television stations by $100 million to $1.1 billion to settle a dispute with the buyer, Providence Equity Partners, a person familiar with the situation said on Monday.

The deal was reported earlier on Monday by the Wall Street Journal.

But Wachovia Corp (WB.N: Quote, Profile, Research, Stock Buzz), one of the banks financing the deal, said it was filing a lawsuit to get out of the financing commitment, a move that could derail the deal.

"Providence told us it had renegotiated key terms of its deal with Clear Channel but then demanded that the lenders be held to the terms of the deal it had rejected," said a Wachovia spokeswoman on Monday.

"Our efforts to resolve the issue were unsuccessful and we felt it was in the best interest of our shareholders to ask a court to confirm that the prior commitment is no longer in effect," she added.

Shares of Clear Channel were down 3.6 percent to $31.20 in noon trading on Monday.

Banks, pressured by write-downs in leveraged loans and other securities, have recently balked at funding other mergers. Deals for mortgage and vehicle fleet company PHH Corp (PHH.N: Quote, Profile, Research, Stock Buzz) and Reddy Ice Holdings Inc (FRZ.N: Quote, Profile, Research, Stock Buzz), a maker of packaged ice, were terminated after financing concerns.

Providence agreed last April to pay $1.2 billion to buy the stations from Clear Channel but in November backed away from the deal saying it weighing its options. On Feb. 15 Clear Channel filed a lawsuit in Delaware to force Providence to clear the transaction.