Clear Channel 3Q profit slides 11%

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SAN ANTONIO -- Clear Channel Communications Inc., which is examining whether to sell all or parts of itself, said Monday third-quarter earnings fell 11%, but the largest operator of radio stations in the country eked out higher-than-expected profits and revenues.

Clear Channel said net income fell to $185.9 million, or 38 cents per share, for the three months ended Sept. 30 from $205.5 million, or 38 cents per share, last year, which included profit of $33.6 million from discontinued operations.

Analysts were looking for earnings of 37 cents per share, according to Thomson Financial.

Revenue gained 7% to $1.79 billion from $1.68 billion last year, exceeding Wall Street's average estimate of $1.78 billion. Radio revenue rose 5% on higher selling prices for national advertising.

Revenue from Clear Channel Outdoor, which sells advertising on billboards and bus stops, rose 8% over the year-ago period, or 6% excluding foreign exchange movements. Outdoor revenues, mostly from bulletins and airports, grew 12% in the company's Americas segment. Outdoor revenues grew 4% internationally, the company said, with declines in billboard revenues in France and the United Kingdom offset by growth in revenues from street furniture, such as bus shelters.

Operating expenses rose at each of the company's divisions, with the total increasing 5% to $1.16 billion.

Last week the company's board said it hired Goldman Sachs to review "strategic alternatives," which analysts said could include a sale of the company to a private equity firm or the founding Mays family, which owns 7% of the company's shares.

The same day as that announcement, the company moved up the scheduled release of its third quarter report to Monday.

If the family decides it wants to take the company private, the share price could continue to rise, with some analysts saying a price of $37 to $40 per share is reasonable.

The company said in a conference call that it would not comment on the strategic alternatives and that no transaction is guaranteed.

Shares of Clear Channel rose 6 cents to $34.76 in early afternoon trading Monday on the New York Stock Exchange, toward the upper end of the 52-week range.

"We were extremely pleased with the third quarter results for both Clear Channel and Clear Channel Outdoor, and we hope to see that continue into the fourth quarter and into next year," said chief executive Mark Mays.

The company continued to tout its "less is more" advertising strategy, which has cut back on commercials but charges advertisers more in an effort to stem the loss of listeners to satellite radio and CDs. Clear Channel Radio chief executive John Hogan said erosion in ratings for some of the company's AC and Hispanic stations isn't attributable to the less-is-more strategy.

He cited statistics that the company sold fewer commercial minutes in 2006 than in 2005 but they had a better yield.

The company said the only drawback to the program is that it didn't start it sooner.

Analysts also were optimistic about the company's fourth quarter.

"In this quarter and the outlook for the fourth, Clear Channel has clearly distanced itself from most of the other radio broadcasters, which continue to struggle," said Frederick Moran, an analyst for Houston-based Stanford Group.

"Any growth is good growth in the radio sector right now," Moran said.

Analysts expect earnings per share of 40 cents in the fourth quarter and $1.31 per share for the full year.

"When you combine these favorable financial results with considerations of an LBO (leveraged buyout), it reinforces a positive outlook," Moran said.
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