Chancellor Media Decides It’s Not for Sale

Chancellor Media Corp. said Monday that it has decided not to put itself up for sale and will scrap a proposed $1.64-billion takeover of Lin Television Corp., instead realigning its business to focus on radio broadcasting and billboard advertising.

The realignment, which includes a management shake-up and a hefty investment in the firm by its biggest shareholder--Hicks, Muse, Tate & Furst--comes after Chancellor spent two months talking to potential buyers of all or part of the company.

Dallas-based Chancellor, one of the largest radio station owners in the United States, said focusing on its 22-state radio station network and 37-state billboard advertising business is its best option, given “the current business and regulatory environment.”

Dallas-based buyout firm Hicks Muse has agreed to sell Chancellor Capstar Broadcasting Corp., in which Hicks Muse has a 59% holding. The deal will turn Chancellor into the largest U.S. radio group.

Chancellor said it had reached a joint agreement with Hicks Muse to keep Lin Television independent. Hicks Muse owns Lin.

Hicks Muse, which holds a 15% stake in Chancellor, has agreed to make an additional stock investment of up to $500 million, Chancellor said.

Under the management changes, Chancellor named Chairman Thomas Hicks, chief executive of Hicks Muse, to replace Jeffrey Marcus as chief executive. Marcus will continue to serve on Chancellor’s board.

James de Castro, president of Chancellor’s radio group, and Steven Hicks, president and chief executive officer of Capstar, were named vice chairmen of Chancellor. Together, they will lead Chancellor’s new radio and outdoor advertising unit.

Chancellor said it expects a first-quarter charge of $20 million to $25 million in connection with the realignment but does not expect any staff cuts.

Chancellor’s shares rose $1.19 to close at $45.56 on Nasdaq, after initially falling on the news.