SFX AGREES TO BUYOUT.

Byline: Staff and Wire Services

NEW YORK - SFX Entertainment Inc. agreed Tuesday to be acquired by Clear Channel Communications in a nearly $4 billion deal that marries broadcasting, live entertainment and sports marketing.

SFX Entertainment Inc. is the nation's biggest promoter of concerts and other live events while Clear Channel is the nation's biggest radio company.

Locally, the deal brings together Clear Channel-owned Los Angeles radio stations KIIS-FM (top 40), KACD-FM (urban contemporary) and KXTA-AM (sports talk) with SFX's Avalon Attractions concert promotion business and its Irvine Meadows Ampitheatre venue. Los Angeles-based Ticketmaster has a long-term agreement with SFX to ticket all its events.

Terms of the deal are $2.9 billion in stock plus the assumption of $1.1 billion in debt.

New York-based SFX consolidated the long-fragmented concert promotion business over the past two years through a quick string of acquisitions totaling more than $1 billion. The Clear Channel deal marks a return to the radio business for SFX. It was originally spun off by Hicks, Muse, Tate & Furst when the Dallas-based leveraged buyout firm bought SFX Broadcasting for $2.1 billion two years ago.

Hicks, Muse, which owns the Texas Rangers and the National Hockey League's Dallas Stars, is also Clear Channel's largest shareholder.

Last year SFX put on more than 25,000 events at 120 venues. In addition to concerts, SFX is a major producer of touring theatrical shows and indoor motor sports events, such as Monster Truck racing. It also has become a major player in sports agentry and marketing. Through its purchases of such firms as Falk Associates Management Enterprises and the Marquee Group, SFX now represents nearly one in five Major League Baseball players and nearly 25 percent of National Basketball Association players.

In combining with a major radio company, SFX hopes to boost ticket sales for its events by using radio stations as well as billboards owned by Clear Channel to promote them. On average, SFX sells only about half of the seats at any given concert during the summer season, a company official said.

SFX will also be able to sell advertisers a broad array of opportunities, spanning sports, music, theater, radio, outdoor and television advertising. Sales could be on a local, regional or even national basis.

SFX sold its radio stations in 1998, capitalizing on the rapid consolidation in the radio industry. Freed up by looser government rules on ownership, radio companies combined at a frantic pace in the late 1990s into behemoths like Clear Channel and Infinity Broadcasting, in which CBS Corp. is majority owner.

Ironically, some of the radio stations sold off by SFX went to AMFM, which is soon to be part of Clear Channel under a merger agreement announced last fall. Including that deal, San Antonio, Texas-based Clear Channel has more than 800 stations across the country.

Despite his radio divestiture two years ago, SFX Executive Chairman Robert F.X. Sillerman, who based the company's name on a scrambling of his initials, never gave up on the idea of using radio stations and concert venues to promote each other.

``We believed that the complementary nature of the two businesses was very strong, and it worked like a charm,'' Sillerman said in an interview. ``The entertainment sells more tickets, and the radio stations get more listeners.''

Clear Channel reaches nearly all of the cities in which the New York- based SFX has venues for concerts and other events. In addition to running ads for concerts, Sillerman pointed to other promotional opportunities for radio stations, such as call-in ticket giveaways.

It was unclear whether Sillerman will remain with the company after the sale. At least one analyst said he expected Sillerman to leave.

Wall Street analysts were generally upbeat about the deal, but investors weren't applauding. Clear Channel shares slumped badly after the deal was announced, trading down 11.4 percent or $8.56 at $66.63 after regular trading on the New York Stock Exchange. SFX shares fared better, rising 50 cents to $38.50.

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Box: POOLING RESOURCES IN ENTERTAINMENT

The deal between Clear Channel Communications Inc. and SFX Entertainment Inc. would unite two ostensibly complementary entities. The thinking is that Clear Channel's network of radio and TV stations and billboards would go a long way in promoting SFX events.

Associated Press