Clear Channel to buy SFX

Clear Channel Communications Inc., the acquisitive San Antonio-based broadcasting giant, said Tuesday that it's buying New York-based SFX Entertainment Inc., a leading concert producer, arena owner

Friday, March 3rd 2000, 12:00 am

By: News On 6

Clear Channel Communications Inc., the acquisitive San Antonio-based broadcasting giant, said Tuesday that it's buying New York-based SFX Entertainment Inc., a leading concert producer, arena owner and sports promoter, for about $3.3 billion in stock.

The purchase comes at a time when "old media" companies such as Clear Channel {mdash} relying on aging "Jammin' Oldies" radio formats {mdash} are scrambling to catch up with the fast-evolving Internet offerings of the "new media."

In this case, Clear Channel's purchase of the nation's No. 1 producer of live events raises the prospect of broadcasting concerts over the San Antonio radio company's nascent Internet radio operations and the ability to promote them.

The latest buy follows the October announcement that Clear Channel would merge with Dallas-based AMFM Inc., a large radio broadcasting chain that would collectively swell operations to about 870 stations.

That $23.5 billion purchase is expected to close in the third quarter of this year.
"The idea of adding the world's largest live entertainment company to the world's largest outdoor [advertising] and radio company is a great fit," said AMFM's high-profile chairman and CEO Tom Hicks. Mr. Hicks will be Clear Channel's vice chairman.

Mr. Hicks, also chairman of Hicks, Muse, Tate & Furst Inc. of Dallas, said his investment company would be Clear Channel's largest shareholder and would appoint five of the company's 13 directors.

Mr. Hicks also owns the Dallas Stars and the Texas Rangers. Clear Channel said it will use its vast network of radio and TV stations and billboards to promote the thousands of musical, theatrical and sports events that SFX puts on each year. Clear Channel said it will have radio stations and billboards in every market where SFX owns arenas.

When the AMFM acquisition is complete, Clear Channel will be able to reach more than 100 million listeners daily through its network of radio stations. It will also have 19 television stations and about 550 billboards.

Lowry Mays, chairman and chief executive of Clear Channel, said the deal also gives Clear Channel a chance to "pursue initiatives relating to the Internet and music."

SFX is headed by Robert F.X. Sillerman, who said it was a "surprisingly easy decision" to accept the offer after having watched Clear Channel's growth and stock performance.

"In the ever-expanding world of media and entertainment, the combination of distribution and content is becoming increasingly important," Mr. Sillerman said.

SFX currently owns or operates 120 live entertainment venues in 31 of the top 50 U.S. markets. Its marketing and management business represents more than 650 professional athletes. It also produces and promotes motor sports events in the United States.

Under the terms of the agreement, each SFX Class A share will be exchanged for 0.6 shares of Clear Channel common stock, while each SFX Class B share will be traded for one share of Clear Channel common stock. The purchase price represents a 63 percent premium over a 30-day trading average of SFX share price, said Mr. Mays of Clear Channel.

As part of the deal, Clear Channel will also assume about $1.1 billion of SFX's debt. The deal is expected to be completed early in the third quarter of 2000, subject to the vote of SFX's stockholders and regulatory approval.

Tuesday on the New York Stock Exchange, SFX stock rose 50 cents to $38.50 in trading that ended at 3 p.m. Dallas time, while Clear Channel's shares plummeted 11 percent, or $8.56, to $66.63.

AMFM stock dived nearly 11 percent, or $7.75 a share, to $60.74 after the company announced that it posted a fourth-quarter net loss. AMFM lost $105.9 million, or 50 cents a share, in the fourth quarter on revenue of $601 million. For all of 1999, it lost nearly $190 million, or $1.10 a share, on revenue of $1.98 billion.

The Associated Press contributed to this report.