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Chancellor Media And Capstar Broadcasting To Merge, Creating Nation's Largest Radio Broadcasting Company With Enterprise Value Of More Than $17 billion.

DALLAS & AUSTIN, Texas--(BUSINESS WIRE)--Aug. 27, 1998--

463-Station Group Will Rank First Nationally In Revenue,

Broadcast Cash Flow, Station Count, and Listenership

Merger Creates Significant Market Overlaps Among Combined

Entity's Radio, Outdoor and Television Operations

Transaction to be Accretive To Chancellor's 1999 Results

Chancellor Media Corporation (Nasdaq: AMFM) and Capstar Broadcasting Corporation (NYSE: CRB) today announced that they have entered into an agreement to merge in a stock-for-stock transaction that will create the nation's largest radio broadcasting entity. The proposed transaction values Capstar at $4.1 billion, representing a purchase price of approximately 15.5 times Capstar's projected 1999 broadcast cash flow (defined as operating income excluding depreciation, amortization, and corporate, general and administrative expenses), and is expected to be accretive to the combined entity's 1999 after-tax cash flow. The $4.1 billion Capstar valuation is inclusive of approximately $1.785 billion of Capstar's debt and PIK preferred stock.

Under the terms of the agreement, Chancellor Media will acquire Capstar in a reverse merger in which Capstar will be renamed Chancellor Media Corporation. Each share of Chancellor Common stock will represent one share in the combined entity. Each share of Capstar Common Stock will represent 0.480 shares of Common Stock in the combined entity subject to an upward adjustment not to exceed 0.025 shares to the extent that Capstar's 1998 cash flow from specified assets exceeds certain specified targets. As a result of the merger, the new Chancellor Media Corporation will have approximately 237 million fully diluted common shares outstanding.

With 463 radio stations (pro forma for all transactions announced by both companies) in approximately 105 markets across the country; 1998 pro forma aggregate net revenues of $2.3 billion; 1998 pro forma aggregate broadcast cash flow (BCF) of approximately $1.0 billion; weekly listenership of over 65 million; and a total enterprise value of approximately $17 billion, the combined enterprise will be the nation's largest radio company.

The new Chancellor Media is expected to achieve significant operating and financial synergies based on the combination of the two companies' respective radio assets as well as from the ownership of other media assets including Chancellor Outdoor Group, Chancellor Television Group, the AMFM Radio Networks and Chancellor's Katz Media media representation operations. The combined Chancellor/Capstar entity will have radio broadcasting operations in 11 of the 23 markets currently served by Chancellor Outdoor (representing the assets of Martin Media, L.P., which Chancellor acquired in July) and approximately 60% of Chancellor Outdoor's revenue and cash flow are derived from markets in which Chancellor/Capstar will have radio stations. Similarly, the combined entity will have radio operations in four of the eight markets currently served by Chancellor Television (representing the assets of LIN Television Corporation, which Chancellor agreed to acquire in July), and over 60% of Chancellor Television's revenue and cash flow are derived from markets in which Chancellor/Capstar will have radio stations.

Hicks, Muse, Tate & Furst Incorporated is currently the largest shareholder of both Chancellor Media and Capstar Broadcasting, with equity ownership of approximately 15% (assuming completion of Chancellor's acquisition of LIN Television Corporation from affiliates of Hicks, Muse, Tate & Furst Incorporated) and 59%, respectively. After giving effect to the Capstar and LIN transactions, Hicks Muse's ownership will increase to approximately 25% of Chancellor's fully diluted outstanding shares. Excluding shares held by Hicks Muse, current Chancellor shareholders will own approximately 66% while current Capstar shareholders will own approximately 9% of the combined enterprise.

The merger has been approved by the Board of Directors of both Chancellor and Capstar following recommendations by special independent committees of both Boards composed of disinterested members of Chancellor's Board of Directors including John H. Massey, Perry Lewis, Thomas J. Hodson, Vernon E. Jordan, Jr. and Otis Winters and the disinterested member of Capstar's Board, director R. Gerald Turner.

Salomon Smith Barney and Wasserstein Perella & Co. have rendered opinions to Chancellor's special committee that the merger with Capstar Broadcasting is fair to Chancellor and to Chancellor stockholders from a financial point of view. Bear, Stearns & Co. Inc. rendered an opinion to Capstar's special committee that the applicable exchange ratio is fair to the holders of Capstar Class A Common Stock (excluding Hicks Muse). In addition, Goldman, Sachs & Co. and Morgan Stanley & Co. Incorporated served as financial advisors to Chancellor Media and Credit Suisse First Boston Corporation and BT Wolfensohn (a division of BT Alex. Brown Incorporated) served as financial advisors to Capstar Broadcasting.

The transaction is expected to be consummated in the second quarter of 1999, subject to a vote by stockholders of both companies (including the approval of a majority of the voting stock of each company held by stockholders not affiliated with Hicks Muse) FCC and other regulatory approvals (including expiration of the applicable Hart-Scott- Rodino waiting period) and other customary closing conditions.

Thomas O. Hicks, Chairman of the Board of both Capstar and Chancellor, as well as Chairman and Chief Executive Officer of Hicks Muse, will serve as Chairman of the combined entity. Jeffrey A. Marcus, President and Chief Executive Officer of Chancellor Media Corporation, will retain this role at the combined entity. Capstar's Chief Executive Officer and President, R. Steven Hicks (the brother of Thomas O. Hicks), will be named Vice Chairman of the combined enterprise. James E. de Castro will continue as President of Chancellor Radio Group and will be joined by Gary R. Chapman, President of Chancellor Television Group and James A. McLaughlin, President of Chancellor Outdoor Group as senior operating heads of the combined company. Matthew E. Devine, Chief Financial Officer of Chancellor Media, and Eric C. Neuman, Chief Strategic Officer of Chancellor Media, will retain their positions. It is currently contemplated that other senior management and operating management of Chancellor Media Corporation will retain similar roles at the new Chancellor Media Corporation.

Capstar Board members R. Steven Hicks and R. Gerald Turner will join Chancellor's Board of Directors, increasing the size of the Board to fourteen members from twelve members (reflecting the completion of the LIN Television transaction).

Thomas O. Hicks stated, "It has been a long-term professional and personal goal of mine to create the nation's largest radio broadcasting entity by all measures, and today marks the beginning of a new and exciting era for Chancellor Media, its advertisers, employees and shareholders.

"As the representative of the largest shareholders of both Chancellor and Capstar, we have worked diligently over the last two and a half years to build each organization into the leader in its respective market niches. The outstanding strategic, operational and financial success of both entities is impressive and reflective of the depth of operating management in place at each organization. Combining the assets, management, personnel, programming and other world-class resources of these two organizations creates substantial near- and long-term synergies and growth opportunities for both companies and their shareholders."

Commenting on the transaction, Jeffrey A. Marcus, President and Chief Executive Officer of Chancellor Media, said, "Capstar is a premium, well-managed, strategically diversified radio broadcasting company and represents a tremendous addition to Chancellor's growing multimedia national advertising platform. Since the passage of the Telecom Act of 1996, Capstar has reinvented how radio can effectively operate in mid-sized markets. Capstar's highly clustered portfolio of stations, innovative `Star System' procedures and technology, and strong operating management is generating impressive year-over-year financial performance, which we expect to continue. As the country's largest radio group, the national reach of the combined Chancellor/Capstar is now unsurpassed and we can offer advertisers exposure in markets from New York to Victoria, Texas with virtually every meaningful market in between utilizing radio, television and outdoor mediums.

"Like each of the significant transactions announced since we implemented our strategy to utilize Chancellor's base of leading major market radio stations as the platform for broad growth, Capstar brings clear financial as well as strategic benefits. Financially, the merger agreement is structured such that it is expected to be accretive immediately upon closing to the new Chancellor Media's 1999 after-tax cash flow. We have already identified approximately $70 million of annual synergies, and our analysis indicates that these estimates may prove conservative as we fully exploit all of the operating cost savings, and opportunities to utilize our research and programming skills, to further improve results. We also expect to derive significant revenue growth from cross-promotion and cross-selling as well as from non- traditional revenue sources. The upside for this organization is spectacular, and as we integrate and add to this strong asset base we expect to generate significant incremental revenue and cash flow growth opportunities for many years to come."

Since its formation in 1989, Hicks, Muse, Tate & Furst Incorporated has completed or currently has pending more than 230 transactions with a total capital value in excess of $30 billion. Headquartered in Dallas, the firm also has offices in New York, St. Louis, Mexico City and Buenos Aires.

Capstar Broadcasting Corporation was formed in 1996 by R. Steven Hicks and by Hicks, Muse, Tate & Furst Incorporated. Capstar owns and operates more than 355 stations serving 83 mid-sized markets nationwide. Capstar manages its stations through its Star System composed of six regional operating companies: Atlantic Star Communications, Inc., based in Allentown, PA; Central Star Communications, Inc., based in Cedar Rapids, IA; GulfStar Communications, Inc., based in Austin, TX; Pacific Star Communications, Inc., based in San Diego, CA; SEAStar Communications, Inc., based in Nashville, TN and Southern Star Communications, Inc., based in Fort Lauderdale, FL.

Chancellor Media is a diversified media company with interests in radio, outdoor advertising and television. Currently, Chancellor owns 108 radio stations in 22 of the nation's largest markets that reach a combined weekly listener base of over 46 million people and a national radio network offering syndicated programming to over 60 million listeners weekly. Chancellor's outdoor advertising group currently operates 14,500 display faces in 23 markets. Chancellor's Katz Media operation is the only full-service media representation firm in the United States serving multiple types of electronic media. Upon consummation of announced transactions, Chancellor will also own: LIN Television which through ownership and local marketing agreements manages 12 network-affiliated television stations in 8 markets; a 50% interest in Mexico's Grupo Radio Centro, Latin America's largest, most successful and most profitable pure-play radio company with six FM and six AM radio stations; Primedia Broadcast Group, Inc. which owns and operates eight FM radio stations in Puerto Rico; Petry Media Corporation, a leading independent television representation firm; and, six radio stations in Cleveland, representing the leading cluster in the nation's 23rd largest radio revenue market.

This news announcement contains certain forward-looking statements that are based upon current expectations and involve certain risks and uncertainties within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Key risks are described in Chancellor's reports filed with the U.S. Securities and Exchange Commission. Readers should note that these statements may be impacted by several factors, including economic changes and changes in the radio broadcast industry generally and, accordingly, the Company's actual performance and results may vary from those stated herein and Chancellor undertakes no obligation to update the information contained herein.

CONTACT: Matthew E. Devine Lisa Dollinger

Chief Financial Officer Capstar Broadcasting Corporation

Chancellor Media Corporation 512/340-7800

972/869-9020

or

Joseph N. Jaffoni Roy Winnick

David C. Collins Mark Semer

Jaffoni & Collins Incorporated Kekst and Company

212/835-8500; amfm@jcir.com 212/521-4842/4802

or

John Buckley

Brainerd Communicators, Inc.

212/986-6667
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