Cox Radio goes private; Who’s next?


The answer is Hearst-Argyle Television, where the pending tender offer by Hearst Corporation expires next month. But after that, the options for any public broadcasting company to go private are pretty limited.

The problem, not surprisingly, is financing – or rather, the lack thereof. Clear Channel Communications had to battle in court to force bankers to come to the closing table for its going private (more or less) buyout of most public shareholders. The credit markets had collapsed between the time that deal was put together in 2007 and when it was due to close in 2008. Since then, there has been no appetite by lenders to finance a going private buyout of public radio and/or television companies (much less, God forbid, a public newspaper company), even at deeply depressed stock prices.

Cox Radio and Hearst-Argyle Television were unique in that their majority shareholders were much larger companies with cash hoards and plenty of capacity in their existing credit lines. So they were able to offer cash buyouts to minority shareholders. In each case, the independent directors got the would-be buyers to up their offers. Cox Enterprises raised its original $3.80 per share bid to $4.80 and Hearst Corporation added a half-buck to make its offer $4.50.

Cox Enterprises still faces several lawsuits claiming that the buyout shortchanged minority shareholders, but that isn’t expected to interfere with closing the tender offer taking Cox Radio private under the Cox Media Group umbrella (which already includes the TV group).

Several lawsuits are also pending against Hearst Corporation over the Hearst-Argyle buyout bid. The tender offer is scheduled to expire on June 2nd. Shareholders balked when Hearst Corp. tried to take the TV company private at $23.50 per share in 2007. But much has changed in the economy since then, so we await the reception to the 2009 offer of $4.50.

No doubt lots of CEOs of publicly traded radio and TV groups salivate at the prospect of going private at current stock prices. But until the financing markets improve – a lot! – we don’t expect to see anyone try to take the plunge.