Clear Channel Profit Rises on Investment Gain

Clear Channel Communications Inc., the largest U.S. owner of radio stations, said Tuesday that third-quarter profit rose to $636 million because of a gain on an investment.

Net income climbed to $1.03 a share from $212.5 million, or 34 cents a share, a year earlier. Sales climbed 8.7% to $2.54 billion, the San Antonio-based company said.

Sales in Clear Channel’s radio business fell slightly to $963.6 million amid reluctance by local merchants to buy time for commercials, the company said.

Clear Channel, which also has a billboard unit and an entertainment unit that produces live music concerts, lowered its profit forecast for the year.

“The disappointment is that fourth-quarter numbers are going to be a little light,” said Peter Mirsky, an analyst at Oppenheimer & Co. “It’s the advertising environment overall. It just isn’t picking up as quickly as they thought.”

Clear Channel said it now expected 2003 earnings before interest, taxes, depreciation and amortization, or EBITDA, to rise in the low-single digits, from about $2.2 billion last year. It previously forecast a mid- to high-single-digit rise.

In the latest quarter, EBITDA rose 5% to $649 million. Clear Channel expects profit on that basis for the fourth quarter to be little changed to slightly up from $574 million a year earlier.

Shares of Clear Channel fell 30 cents to $41.10 on the New York Stock Exchange.

In a conference call with analysts, Clear Channel President Mark Mays said the company avoided reducing advertising rates in its radio division.

“That probably hurt us in the third quarter as the advertising market remained soft,” Mays said. Avoiding discounts “is in the long-term interests of the radio industry and ourselves.”

Radio sales typically account for about two-thirds of Clear Channel’s profit, said Ed Atorino, an analyst at Blaylock & Partners.

Viacom Inc. said last week that weakness in advertising had cut sales at Infinity Radio 1% this year. Infinity owns about 185 radio stations, including WCBS in New York. Clear Channel owns 1,184 U.S. stations.

Adjusted for acquisitions and divestitures, revenue in the company’s entertainment unit rose 14% to $913.6 million, helped by events such as a John Mayer concert tour.

Revenue at the outdoor unit, which sells space on billboards and other outdoor displays, rose 4.6% to $507.2 million.

Clear Channel recorded gains related to a change in how it accounts for its investment in Univision Communications Inc. and the sale of shares of Univision and American Tower Corp.

Excluding those gains, Clear Channel said it would have had profit of $236.8 million, or 38 cents a share. On that basis, analysts had expected the company to report a profit of 39 cents, according to Thomson First Call.