One of America’s largest owner’s of U.S. radio stations is looking for another tune to play.
Chancellor Media Corporation, which is on track to become the No. 1 owner of U.S. radio stations, has retained investment banking firm BT Alex. Brown Inc. to explore a possible sale or spinoff of all or part of its company.
Analysts estimated the company could fetch at least $22 billion.
In New York, Chancellor owns some of the top radio stations, including WLTW-FM, WKTU-FM, and Z100.
Also in the local area, Chancellor owns WAXQ-FM, a classic radio station, and the recently relaunched WBIX-FM, “jamming oldies,” and two adult contemporary stations on Long Island, WALK-AM and WALK-FM.
The Dallas-based company made the announcement yesterday, saying BT Alex.Brown will “assist in developing, reviewing and structuring a range of strategic alternatives intended to maximize shareholder value.”
Alternatives include the sale, merger or consolidation of one or more of its operating divisions or the entire company.
“The Board…believes that initiating a formal review of strategic alternatives to maximize shareholder value is warranted at this time,” said Jeffrey Marcus, Chancellor’s president and CEO.
The company’s media assets include radio, outdoor advertising and television.
After Chancellor completes its acquisition of Capstar it will own 476 stations in 105 markets reaching over 65 million people a week.
After some other pending deals, Chancellor will own or manage 13 network-affiliated TV stations in eight markets.
The company’s largest shareholder is buyout firm Hicks, Muse, Tate & Furst.
Chancellor was formed last year when two companies owned by Hicks Muse were combined.
Analysts were somewhat surprised by yesterday’s announcement.
“I thought their plan was to stay in the business a little longer, three or four years,” said Jim Duncan, of Duncan’s American Radio, a consulting firm.
Potential buyers include CBS, Clear Channel, Walt Disney Co. or General Electric, analysts said.
The company could spin off one of its media businesses, following the example of CBS, which had a public stock sale of Infinity Broadcasting Corp. for $2.87 billion last fall.
ABC, he said, hasn’t shown interest in expanding; GE has no interest in radio, and CBS and Clear Channel might have to sell too many of their radio station in certain markets if they were to buy Chancellor stations in the same market.
Chancellor jumped 93/16 to close at 543/4, a gain of 20.16 percent. Infinity rose 15/16 to 263/4. Clear Channel rose 11/8 to 641/4.
with Bloomberg