The year of yearning to go private


It seems most CEOs of publicly traded broadcasting companies wished in their hearts to leave Wall Street and go private in 2007. Of those who actually tried, not all succeeded.
The biggest, of course, closed just last week, as Sam Zell and a new Employee Stock Ownership Plan completed the 8.2 billion bucks, two-stage buyout of the former public shareholders of Tribune Company. Under pressure from the Chandler family, which founded the Los Angeles Times and years ago merged Times Mirror into Tribune, CEO Dennis FitzSimons sold off some of the non-core TV stations and sought to find a buyer for the entire company. But while some billionaire bidders came forward wanting parts, particularly the LA Times, Zell ended up being the only one to submit a firm bid for the entire operation. After many months of waiting, the FCC finally approved crosssownership waivers to keep Tribune’s broadcast-newspaper combinations intact, clearing the way for last week’s closing.
Still waiting for regulatory approvals to go private is Clear Channel Communications, which put itself up for sale back in 2006. The Mays family and bidding partner Kohlberg Kravis Roberts were outbid by a private equity team of Thomas H. Lee Partners and Bain Capital, but then, in a bizarre twist, the Mays family joined the winning team and Mark and Randall Mays signed on to continue running the company after it goes private. But that wasn’t the end. Major shareholders who thought the initial bid of 37.60 per share was too cheap held on and forced the buyout consortium to eventually raise the offer to 39.20 and give shareholders an option to hold onto a stake in the private company. Despite Wall Street concerns about the credit crunch which developed while this deal was pending, all appears to be in readiness for a closing of the 26.7 billion bucks deal – except regulatory approvals. Just what the holdup is isn’t clear, since Clear Channel has been selling off some stations and no new combinations will be created. We note though that FCC Commissioner Michael Copps has called for the Commission to examine the impact of private equity ownership of broadcasting stations, although such ownership situations have existed for several decades.

Also pending is a deal to take Cumulus Media private by CEO Lew Dickey’s family and a private equity fund managed by Merrill Lynch. That deal for 11.75 per share, or 1.3 billion, is expected to close in 2008 following shareholder and regulatory approvals.

Among pure play TV companies, the urge to go private was mostly unfulfilled. The only one to strike a going private deal was Ion Media Networks, where NBC Universal brought in Citadel Investment Company (not related to either the radio company or TV company with similar names) to buy the majority of Ion that NBC Uni can’t own itself. A few shares of common stock are still publicly traded, but the 2.6 billion bucks deal is pretty much done, just awaiting FCC approval of the license transfers.

Nexstar and LIN hired investment bankers and began looking for bidders, only to see the subprime mortgage collapse decimate the credit markets. Both have shelved their attempts to find someone to buy out their public shareholders. Hearst Corporation was rebuffed by some large shareholders and independent directors in its bid to acquire all of the shares of Hearst-Argyle Television that it doesn’t already own. Instead, Hearst has gone back to buying shares of Hearst-Argyle in the public markets and by privately negotiated transactions, indicating that it expects to boost its stake to over 80% of the broadcasting company’s shares.