Westwood One sells Metro Networks to Clear Channel
Westwood One announced it is focusing on its core network radio business and has sold its Metro Traffic division to Clear Channel Acquisition LLC, a division of Clear Channel Communications. The company will likely be merged with Clear Channel’s Total Traffic Network. Metro Networks currently has some 1,500+ affiliates across the United States. Total Traffic Network serves more than 100 metropolitan markets in four countries, including the US, Canada, Mexico, and New Zealand. The transaction value was approximately $104 million, from the 8-K that was just filed.
For now, Clear Channel Radio’s traffic operations, including Metro Traffic, will continue to be led by Rick Baran, Clear Channel Radio CFO. Steve Kalin will remain President of Metro Traffic on the radio side. Fred Bennett will continue in his current role as President of the Metro Television business.
“Going forward, Westwood One will focus strategically on expanding the company’s leadership position as the premium content provider of news, information, talk, music, and entertainment programming in network radio,” said Rod Sherwood, President of Westwood One. “The network radio marketplace is growing, and we are aggressively pursuing new opportunities in programming and distribution. Selling the Metro Traffic business, including Sigalert, allows us to focus on our network radio strengths.”
Sherwood tells RBR-TVBR: “We have tremendous momentum going into 2011, launching five new programs so far this year. Last year, we launched more new programs than any other network radio syndicator; and we just renewed our partnerships with the NFL and NCAA, underscoring our strenghts in the sports broadcasting side of things.”
He added, “This also eliminates all of the non-Gores senior debt, the most significant factor in our debt over time. It also eliminates the financial covenants associated with all of the debt. So in terms of future financial flexibility, it positions us well.”
We also asked Sherwood, was there an issue of profitability that led to the decision to divest Metro? “No, frankly, it was a business that needed to be turned around somewhat in 2008 and early 2009. But the business has grown very nicely in 2010 and 2011 and is doing well. I think the momentum associated with that has allowed us to make the decision that we’ve made over the last few days here.”
In 1998 Westwood One purchased Shadow Broadcast Services. In 1997 and 1998 Metro Networks began buying many smaller traffic reporting agencies. In 1999 Westwood One then purchased Metro Networks, and Shadow Broadcast Services and Metro Networks were merged together after that. In 2000 Westwood One purchased SmartRoute Systems, and merged it with together with Metro Networks/Shadow Broadcast Services.
Westwood One’s Chief Marketing Officer Chris Miller tells RBR-TVBR the buy from Clear Channel also includes the company’s Metro Source wire service, which provides hundreds of radio stations and websites with national, state, feature and local stories, including audio and photos.
She said the deal has already gone through, effective 4/29 and does not know how Clear Channel will be re-branding or merging Metro within its corporate structure.
In keeping with the network radio-focused strategy, this year Westwood One has launched The Daily Wrap (with the Wall Street Journal), The Robert Wuhl Show (sports talk), Urbanski, (conservative talk), Rocsi on the Radio and a new suite of Rick Dees programming.
Last year Westwood One launched more new products than any other network radio syndicator. Distribution expanded with new programs like Dr. Oz, VH1 Classic Rock Nights, Perez Hilton’s Fab 30 Countdown and a new Sports Prep Service. Billy Bush, Dennis Miller and BET’s 106 and Park continue to enjoy wide popularity, and anticipate further growth this year. In sports, Westwood One signed new multi-year agreements to continue as the exclusive network radio partner of each of the NFL and the NCAA. In addition, the company had record distribution for the NFL Sunday afternoon and NCAA football packages.
The move strengthens the company’s balance sheet and positions it for further organic growth and/or M&A activity. Westwood says some $104 million of the proceeds will be used to pay down 100% of the company’s outstanding 15.00% senior secured notes (notes held by the company’s controlling shareholder, Gores Radio Holdings will remain outstanding).
RBR-TVBR observation: There are other traffic providers out there, like Traffic.com, but this deal may raise some antitrust claims down the road. So many radio stations will now be using Clear Channel traffic services and may not have an alternative to choose from in some markets. Sherwood had no comment on that issue, but certainly attorneys on both sides looked into the issue before pulling the trigger.
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