Blair: Clear Channel Starts Strong In 2004

In an analysis prepared for investors, financial services firm William Blair & Co. shows Clear Channel Communications posting a solid financial performance early in 2004.

In an analysis prepared for investors, financial services firm William Blair & Co. shows Clear Channel Communications posting a solid financial performance early in 2004.

The report says CCC's Estimated Earnings Per Share (EPS) have increased 33% to $0.16. Willam Blair has now upped its 2004 and 2005 projections by $0.04 and $0.06, respectively, to $1.48 and $1.49, due primarily to "a more robust operating outlook."

CCC's radio division increased revenue by just under 5% to $832.9 million, according to the report, with spot advertising growth driving the performance.

The news was less positive for CCC's concerts division, Clear Channel Entertainment (CCE). According to the report, better-than-expected revenue growth was offset by higher-than-expected expense growth for the division. CCE revenue increased about 14%, while expenses grew just over 13%. Foreign currency translation was partly to blame, the report says.

An early William Blair report cast a critical eye on the prospects of CCE, with the firm saying it would "view favorably a sale of the division." (Billboard, Oct. 25, 2003). William Blair research analyst Alissa Goldwasser, who spearheaded both reports, does not back off last fall's assessment of CCE.

"I still don't think [CCE] is really what Clear Channel does best, or is an asset that complements the core asset of their business," she tells Billboard.biz. "There just aren't as many opportunities as I think they really hoped there would be for joint programs of the two divisions."

Still, the report is optimistic about CCE's future performance, based on management's expectation of double-digit cash-flow growth for the year. The third quarter is deemed critical for CCE, given that "high-grossing, low-margin tours will limit margin expansion in the second quarter."

According to Goldwasser, "If they're going to meet their [projections] for that division this year, it will happen in the third quarter."

The report projects revenue growth of 6% for CCC's radio division for 2004.

In the spirit of full disclosure, William Blair & Co. has received compensation for investment banking services from CCC within the past 12 months, or expects to receive or intends to seek compensation for investment banking services in the next 3 months from the company.
THE BILLBOARD BIZ
SUBSCRIBER EXPERIENCE

The Biz premium subscriber content has moved to Billboard.com/business.


To simplify subscriber access, we have temporarily disabled the password requirement.