Clear Channel to sell TV group for $1.2 bln

By Megan Davies

NEW YORK (Reuters) - U.S. broadcaster Clear Channel Communications Inc. (CCU.N) said on Friday it will sell its television group to private equity firm Providence Equity Partners Inc. for about $1.2 billion.

The sale comes as Clear Channel's shareholders consider a nearly $19.5 billion, or $39 a share, private equity buyout offer for the company.

Bidders Thomas H. Lee and Bain Capital raised their offer for Clear Channel earlier this week from the original bid of $37.60. It is still unclear whether they will persuade enough shareholders to support the deal at a scheduled vote on May 8.

In November Clear Channel announced plans to sell the television group as well as 448 of its 1,150 radio stations when it agreed to the original buyout deal with T.H. Lee and Bain.

It said on Friday it will sell to Providence Equity 56 television stations in 24 markets across the United States as well as their related Internet sites and wireless projects. The deal is expected to close in the fourth quarter, subject to regulatory approval.

Clear Channel said it continues to pursue the divestiture of 287 radio stations in 54 markets, having already reached agreements to sell 161 radio stations in 34 markets for a total of $331 million.

Some analysts have forecast the asset sales will bring in around $2.7 billion to $2.8 billion total.

VALUE OF RADIO

John Blackledge, a senior analyst at JP Morgan, said that while sales of the TV assets came in around the estimate, the radio asset sales were below some estimates.

Blackledge estimated that Clear Channel has probably been getting a reasonable multiple for the radio stations but that some analysts may have overestimated the earnings those stations were generating.

Part of the difference of opinion over how much Clear Channel is worth has been based on investors' and analysts' views on the radio industry. Some are more bullish than T.H. Lee and Bain on growth prospects for radio.

Blackledge said Friday's radio and TV sales highlighted the value of Clear Channel's assets but added: "Irrespective of the prices they got for the TV and radio asset sales, the fact remains that at $39 it is still up in the air whether they get support for the deal."

Thomas H. Lee and Bain Capital raised their bid on Wednesday after pressure from some shareholders and proxy advisory services, who said the initial bid undervalued the company.

The deal faces a particularly difficult hurdle, because under Texas law two-thirds of all Clear Channel shares must approve the transaction, not just two-thirds of votes cast.

One key persuader could be if influential proxy advisory service ISS changes its opinion. ISS had recommended that shareholders vote against the original bid. An ISS spokeswoman said on Wednesday it was monitoring the situation but declined further comment.