Wednesday, March 01, 2000
Jacor's parent to purchase promoter
$4.4B deal has Tristate implications
BY CLIFF PEALE
The Cincinnati Enquirer
Imagine logging onto a radio station Internet site and getting a virtual backstage tour with the Backstreet Boys.
That could be just one of the results from the latest tremor
through corporate America, a $4.4 billion merger unveiled Tuesday between radio giant Clear Channel Communications Inc. and concert promoter SFX Entertainment Inc.
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CLEARLY DOMINANT
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Here's a look at what the new Clear Channel would control locally:
• Eight radio stations:
WLW-AM, WCKY-AM, WSAI-AM, WKRC-AM, WOFX-FM, WVMX-FM, WEBN-FM and WKFS-FM.
• One TV station:
WKRC-TV (Channel 12)
• Concert venues in which SFX books shows
• Riverbend Music Center: Capacity 20,500.
• Firstar Center: Capacity: 16,400.
• Taft Theater: Capacity: 2,490.
• Bogart's: Capacity: 1,464.
• Other events:
SFX also presents shows at the Nutter Center near Dayton, Ohio. It also produces the entertainment for the annual downtown Cincinnati music festivals, Pepsi Jammin' on Main and WorldJam.
• How it could work
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Because Clear Channel controls eight radio stations in Greater Cincinnati and SFX dominates the local landscape for live music, the deal will create huge tremors — and present huge growth opportunities — for the combined company here.
It follows a series of other deals across the spectrum that have merged content providers with distribution channels. The most recent was the marriage of America Online Inc. and Time Warner Inc. announced in January.
The deal announced Tuesday is sure to increase promotions on Clear Channel radio stations of groups promoted by SFX. It could increase the shows at SFX's four local venues — Riverbend Music Center, the Firstar Center, Bogart's and the Taft Theatre.
The combination probably will not increase concert ticket prices. But its biggest impact could be in the future, when hundreds of web sites operated by Clear Channel stations could become a massive promotional vehicle for SFX tours and venues, industry analysts said.
“I think you'll definitely see some of that,” said Randy Michaels, head of Clear Channel's Covington-based radio unit, Jacor Communications. Clear Channel bought Jacor in 1999.
“They're early in the curve of figuring that out, but there just can't help but be synergies.”
Another possible expansion onto the Internet could include an Internet link that gives the view from a specific seat before the ticket is purchased, he said.
For competing radio stations, the deal could mean bad news, as SFX-controlled acts move to consolidate their promotions to Clear Channel distribution, said Dan Swensson, general manager of WRRM-FM and WMOJ-FM, which are owned by Susquehanna Radio Corp.
“I hear Clear Channel has a bid on the table to purchase the U.S. Postal Service,” sneered Mr. Swensson after learning of the deal. “I mean, where does it end?”
“I fully anticipate they'll go out of their way to avoid partnering with us in their shows and content,” he added.
Nationally, Clear Channel operates — or soon will operate — 867 radio stations and 19 television stations. It also controls a large radio network and more than half a million outdoor billboards.
SFX owns or operates 120 entertainment venues in 31 top U.S. markets, and produced more than 26,000 live events in 1999. It also owns management companies that represent more than 650 athletes and broadcasters, including Michael Jordan.
Different classes of SFX stockholders will receive either 0.6 shares or 1 share of Clear Channel stock for each of their SFX shares. The purchase price includes assumption of about $1.1 billion of debt. The stock market reacted quickly to the deal Tuesday. Clear Channel stock fell $8.561/4 to $66.621/2, while SFX shares increased 50 cents and closed at $38.50.
The Greater Cincinnati market will provide an interesting incubator for the synergies between the two companies. Clear Channel owns the eight radio stations, including WLW-AM and WEBN-FM, and also WKRC-TV (Channel 12).
SFX's local operations include management or leases at Riverbend, the Taft Theater, Bogart's and the Firstar Center. It also owns a stake in the downtown arena.
There probably will be more promotion of musical acts or sports events promoted by SFX on stations owned by Clear Channel. But Mr. Michaels said the opportunities for growth there are limited.
There have been some local examples of mixing radio companies with marketing and promotional groups. Cincinnati-based Blue Chip Broadcasting announced Feb. 14 that it had bought Quantum Marketing Group in Columbus, a deal that could increase promotions for the Coors Light Festival that Blue Chip bought in 1998.
Ross Love, president and chief executive officer of Blue Chip, would not comment on the Clear Channel purchase.
But most industry watchers agreed that the main impact of the Clear Channel-SFX deal would be explosive growth in online opportunities.
In a statement announcing the deal, Clear Channel Chairman Lawry Mays said it “creates an exceptional platform for Clear Channel to pursue initiatives relating to the Internet and music.”
Clear Channel's pending acquisition of AMFM Inc. will include that company's respected New Media division, and Mr. Michaels is at the forefront of using the Internet, said Rob Riggsbee, president of Inside Media, a management and advertising company in Mount Adams.
Nationally, the combined Clear Channel also could use the deal to attract, manage and promote entire concert tours in groups of cities, like Cleveland, Columbus, Cincinnati and Indianapolis, he added.
How it could work
Merger likely won't increase concert prices
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