Clear Channel’s 4th-Quarter Slide Stuns Observers

Radio giant Clear Channel Communications Inc. reported a dramatically wider fourth quarter loss because of an advertising slump and across-the-board restructuring, and the news helped drive down shares by almost 10% in after-hours trading.

The nation’s biggest radio broadcaster reported a net loss of $365.6 million, or 61 cents a share, for the quarter ended Dec. 31, compared with a net loss of $192 million, or 33 cents a share, in the year-earlier period. Sales in the latest quarter fell 8%, to $1.86 billion.

The company also said it will take a pre-tax charge of $15 billion to $25 billion in the current quarter because of a change in accounting rules. Companies now are required to more accurately account for goodwill, or the amount they overpaid for assets. Clear Channel has grown dramatically since the mid-’90s with a string of acquisitions and now owns about 1,225 radio stations and 19 TV stations.

Clear Channel’s quarterly earnings before interest, taxes, depreciation and amortization, a critical measure of media companies’ performance, plunged 46% from the year-earlier period to $344 million, or about $90 million below some Wall Street estimates.

“This is as big a miss from a cash-flow perspective as I’ve seen in the media space” in about a year, said Jordan Rohan, analyst at SoundView Technology group.

Shares of Clear Channel, based in San Antonio, fell 27 cents to $49.09 in regular trading on the New York Stock Exchange. But the stock fell as low as $44 in after-hours trading.

Clear Channel said it had hired 600 salespeople to solicit radio advertisers amid the economic slowdown, but it had also fired about 2,000 employees from radio programming, engineering and other operations during the last quarter to cut costs. The company said the cuts resulted in severance and restructuring expenses totaling about $80 million.

Company President Mark Mays said the radio advertising market was showing signs of improvement, but cautioned that sales in the conglomerate’s billboard operation and live-entertainment division are likely to pick up more slowly.

For all of 2001, Clear Channel posted a net loss of $1.14 billion, or $1.93 a share, compared with net income of $248.8 million, or 57 cents a share, a year earlier. Revenue jumped 49% to $7.97 billion last year, due to a series of acquisitions.

At year’s end Clear Channel had $9.5 billion in debt, but May said the firm’s $3 billion in available bank credit would cover its debts during the next two to three years.

Mays also said a federal court ruling last week that opened the door to further consolidation in the cable and television industries. He suggested the court decision wouldn’t necessarily spur Clear Channel to acquire additional TV outlets in the short term. But he said the company is focused on increasing its market share in radio.

“We’re continually buying more radio stations,” he said.

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Times wire services were used in compiling this report.