Clear Channel Beats Forecasts

Clear Channel Communications Inc., the biggest U.S. radio company, had a first-quarter loss of $16.9 billion after writing down the value of acquired assets. But the company’s sales and profit before the write-offs beat forecasts, boosting Clear Channel’s shares.

Clear Channel’s loss widened to $27.85 a share from a loss of $309.2million, or 53 cents, in the year-ago period, Chief Financial Officer Randall Mays said. Sales in the latest quarter rose 4% to $1.7billion. Excluding the acquisition costs, Clear Channel’s profit would have been $90.3million.

Clear Channel, the owner of 1,200 radio stations in U.S. cities including New York and Los Angeles, said the advertising market is beginning to recover after the recession crimped spending last year. Radio ad sales are forecast to rise at a low- to mid-single-digit percentage rate this quarter, Chief Executive Lowry Mays said.

“The most important thing is that they pushed up guidance for the second quarter,” said Angela Kohler, who manages about $450million for the Federated Large Cap Growth Fund, the owner of 150,000 Clear Channel shares. “Certainly, it casts a good halo over the entire industry.”

Clear Channel shares rose $1.54 Tuesday to $46.66 on the New York Stock Exchange. They have fallen 15% in the last year. The San Antonio-based company also is the world’s biggest concert promoter, and its programming assets include Rush Limbaugh’s syndicated talk show.

Clear Channel is the latest in a string of media businesses taking merger-related write-downs. AOL Time Warner Inc. last month reported the biggest quarterly loss in U.S. history after reducing the value of acquired assets by $54 billion.

Clear Channel became the biggest U.S. radio company when it bought AMFM Inc. for almost $24billion in stock and assumed debt in August 2000. The company wrote down the value of acquired assets by $17 billion in the recent quarter after adopting an accounting rule change.

The rule change requires companies to review periodically the value of goodwill, or the difference between the purchase price of an asset and its fair market value. Companies record an expense if the value has declined.

“Everyone understands it as an accounting change,” Chief Operating Officer Mark Mays said, referring to the write-down. “It’s an irrelevant number.”

Mays said the firm pared its debt to $9 billion in the first quarter from $9.5 billion at the end of 2001.

Excluding the write-down and a gain of 3 cents a share from the sale of a TV license and debt repayment, Clear Channel would have had profit of 12 cents a share in the quarter. On that basis, the firm was expected to earn 8 cents on sales of $1.57 billion, the average estimate of analysts surveyed by Thomson Financial/First Call.