Clear Channel to Buy Eller for $1.15 Billion

Clear Channel Communications Inc. said it agreed to buy outdoor advertising company Eller Media Corp. for $1.15 billion in cash and stock, boosting the radio and television broadcaster’s ability to sell ads in markets where it has stations.

Clear Channel agreed to pay about $750 million in cash and $400 million in stock for closely held Eller, which, as the largest outdoor advertising company, sells ads on billboards and other outdoor displays in 15 metropolitan markets, including cities in Southern California, Texas and the Midwest.

The acquisition comes as radio broadcasters seek to increase their share of local ad revenue by selling packages of radio air time and billboard space to advertisers. Broadcasters are also looking to expand their operations beyond simply owning stations, analysts said.

“Radio broadcasters already know the advertisers in a given market and this way they can grow their overall advertising by selling packages,” said Frank Bodenchak, analyst at Morgan Stanley & Co.

Shares of San Antonio, Texas-based Clear Channel rose $2.25 to close at $44.125 on the New York Stock Exchange. The news was released after the markets closed.

Phoenix-based Eller, founded in 1901 as Foster & Kleiser, is owned by the company’s management team, led by Chairman Karl Eller, and investment partnerships managed by Hellman & Friedman.

Eller in December proposed an initial public offering, which would have raised about $200 million, based on documents filed in mid-December with the Securities & Exchange Commission.

The company had earnings of $6.06 million on revenue of $65.3 million in the three months ended Sept. 30, according to documents. Eller had long-term debt and capital lease obligations of $398.3 million.

San Antonio-based Clear Channel, with revenue of $352 million last year, will own about 105 radio stations and 18 television stations in 33 markets after completing pending transactions.

The acquisition follows a series of similar purchases by radio broadcasters. Infinity Broadcasting Corp., now owned by Westinghouse Electric Corp., bought TDI Worldwide for $300 million last year.