Fear Channel

Clear Channel, or should I now say, Fear Channel, has rescheduled its vote on taking the company private from March 21st in just a few days to April 19th presumably to have more time to seek shareholder approval.

Mark Mays has already warned his employees that whether the deal goes through or not, there will be many changes ahead for them. Again!

So I ask, what's new?

On the radio side the poor people of Clear Channel have lived through the Randy Michaels era, John Hogan's stewardship and now the prospect of not knowing what the future may hold for them one more time. More change? That's all they've had at radio's poster child for consolidation. To announce that Fear Channel employees better be ready for change is liking telling a resident of Buffalo that they'd better be ready for snow.

This company has been its own worst enemy.

It had everything going for it -- everything a consolidator could ask for. All the top stations in the most important markets. A green light from regulators and legislators to go out and consolidate. Financial support from the public markets and a battery of attorneys to sue anyone who got in their way.

So how does this conglomeration of radio, TV, outdoor and other assets wind up in a situation where shareholders should be happy to vote "yes" for $37.60 a share plus dividends by the end of the year?

Maybe it's because many of those shareholders owned the stock when it was in the $90 range. Okay, maybe that's not fair. How about the $50 range. Still a drubbing no matter how you look at it.

Fear Channel, ever the sly fox, is postponing the "more is less" vote because arbitrage funds have been buying the stock since the former January 22nd voter eligibility date was announced and they are more likely to vote "yes". In other words, they bought in low not high like the other poor investors who preceded them. And some companies like Fidelity Investments are selling off their holdings -- considered a good thing for proponents of the deal.

This exit stage left by Fear Channel is not a slam dunk. In fact many analysts think the company is still worth more than the $37.60 share price it is offering and that en mass shareholders will see through the buy-out strategy.

So, longer term investors may fear that Fear Channel will sell off the 400+ non-essential radio stations (translation: the ones they can't run) and emerge with a private business that looks better the day after they get their $37.60.

I have a hard time believing Fear Channel would pull a fast one like that, don't you?

Obviously, some on Wall Street smell a skunk.

It's yet another example of great irony to me that Fear Channel, the company built on fear -- of employees losing jobs or status due to consolidation and the "benefits" of consolidation such as voice tracking -- could now have to fear a "no" vote by their investors. Another irony is that in the Fear Channel-friendly state of Texas all shareholders not voting will be counted as a "no" vote.

The company whose lawyers spread fear by suing or threatening to sue some of your friends and mine especially in the early days of consolidation now has lots to fear itself.

Fear Channel's employees -- well, they obviously can't be scared off any longer if they've lived through the implosion the company refers to as consolidation. They are a hearty and talented bunch -- and loyal -- they are victims not perpetrators of the rule of one.

So now, it's payback time.

Fear Channel has to fear that the shareholders are smarter than they looked when they first bought the company's stock and thought it would be a good investment.

And Fear Channel has to fear that even selling off their 400+ radio properties, they may have to actually continue running the company for a while selling depressed stock and unable to spike its value unless or until it can find another way to sell off the assets they can't run which right now is just about everything they own.

The whole thing is a damn shame.

It's a shame Mark Mays had to tell his employees even more change was coming when his departure and the departure of his cronies isn't one of them.