The new company—whose umbrella encompasses theatrical entertainments, concerts, sporting contests and many other live events—will be a separate, publicly traded company in which Clear Channel Communications will not hold any ownership. Its far flung interests will lie in North American, Europe, South American, Asia and Australia.
Brian Becker, the CEO of Clear Channel Entertainment, meanwhile, has decided to leave to "pursue alternative entrepreneurial opportunities outside of the company." Not entirely outside, however, because Becker and CCE have agreed to form a joint venture, which will "pursue entertainment content opportunities through acquisition and development." It could not be learned at press time what sort of properties and projects Becker might have in mind.
In Becker's absence, Randall Mays—Clear Channel founder Lowry Mays' son—will act as interim CEO of CCE. The new CEO, when appointed, will report to a separate board of directors made up of people not found on Clear Channel Communications' board.
Clear Channel simultaneously announced that it planned a public offering of about 10% of Clear Channel Outdoor, its outdoor advertising unit. The break up of the company follows a year of sliding profits and sales growth. The stock's two-year high of $46 was back in January 2004, and its all-time high of $80 was attained five years ago. Current business thinking has large entertainment and communications conglomerates faring better if lesser performing units are spun off, thus improving the health of other, more robust divisions. Other companies such as Viacom are also presently pursuing this approach.
According to Bloomberg News, Clear Channel's radio and live entertainment units have been dragging down profits of late. In the first quarter of this year, profits missed projections by 59 percent. "We expect these transactions to highlight the fundamental value of each of our leading businesses in a tax efficient manner, so that current and future investors can more clearly evaluate the company's overall inherent value," said president and CEO Mark Mays in a prepared statement.
Clear Channel has become a major player in the theatre world in the last few years. After some infrequent investments in Broadway shows in the late '90s, Clear Channel in 2000 bought SFX, the concert venue owner and promoter that had earlier swallowed the beleaguered Canadian producing and theatre-owning outfit Livent. Since then, it has had a hand in producing 42nd Street, Sweet Smell of Success, The Graduate, Thoroughly Modern Millie, Hairspray, Movin' Out, Wonderful Town, Fiddler on the Roof, Caroline, or Change, Dracula, La Cage aux Folles, Dirty Rotten Scoundrels, Spamalot, All Shook Up, Sweet Charity and Lennon.
Clear Channel also owns a large number of theatres across the continent, including New York's Hilton Theatre (formerly the Ford Center for the Performing Arts); Chicago's Oriental, Shubert and Cadillac Palace theatres; Boston's Colonial and Wilbur Theatres; Detroit's State Theater; Toronto's Pantages Theater.
Clear Channel was founded 30 years ago by Lowry Mays. He began with one radio station in San Antonio. The company went public in 1984, and, in 1996, after U.S. regulators loosened the rule regarding ownership of radio stations, it bought up many properties, becoming the dominant name in that field. Mays stepped down last May to undergo surgery.
According to Bloomberg News, Clear Channel has a market value of $17.94 billion.
The headquarters of Clear Channel Entertainment will remain in Houston.