Leading radio broadcaster Clear Channel Communications, which announced Feb. 29 it would be buying SFX Entertainment, in a $4.4 billion stock swap, will soon be selling 72 radio stations in preparation of a separate, $14.46 billion stock deal made last October to acquire radio broadcaster AMFM. The sell-off is meant to preclude federal opposition to the AMFM deal over concerns about antitrust matters.

Clear Channel's purchase of SFX has a bearing on the theatre community because SFX has extensive Broadway interests. Described by one Wall Street source as a "rabid consolidator," because of its prolonged acquisitions program, SFX develops and manages touring Broadway shows, and sells Broadway subscription series and individual productions in 55 markets. An integrated franchise that promotes and produces a broad variety of live entertainment events locally, regionally and nationally, at the time of the Clear Channel deal announcement SFX had 122 venues overall, and owned or operated venues in 31 of the top 50 domestic markets.

In the 72-station sell off, which is contingent on the AMFM deal going through, Infinity Broadcasting is buying 18 stations for $1.4 billion in Denver, Orlando and San Francisco; Cox Radio is purchasing seven stations in Houston and Richmond for a reported $380 million; and Dallas' Hispanic Broadcasting is purchasing three stations in Austin, Denver, Phoenix and Texas for $127 million. Taken together, the new Clear Channel will eventually boast 867 radio stations, 19 television stations and 550,000 billboards worldwide once the SFX and AMFM deals are completed.

In terms of overview, Clear Channel reported revenues of $2.68 billion last year while SFX's revenues were $1.68 billion, up from $888.9 million. Clear Channel is in radio and the fast growing outdoor advertising business and SFX is in live entertainment, considered a less predictable field with slower growth rates. Merrill Lynch characterized the difference between the companies in terms of margins --SFX operates with a 14 percent margin and Clear Channel a 36 percent margin. The companies also traded at different multiples based on their estimated pre-tax values. SFX was trading at nine times its EBITDA 2000 value while Clear Channel was trading at 24 times its EBITDA 2000 value.

Once the merger with SFX is complete, Clear Channel's businesses will be broken down into the following approximate percentages, according to the financial newspaper, Barron's: Radio-61 percent, outdoor ads/billboards 16 percent, music-8 percent, international-7 percent, television-4 percent, theatrical-2 percent, and sports-2 percent. Last year, SFX reported theatrical revenues of $289,671,000 which was up 92 percent from $150,970,000. The Wall Street Journal, Barron's and the CBS Market Watch all cited the possible downside of the Clear Channel-SFX deal, namely that the growth Clear Channel has enjoyed may be slowing. The cover story in Barron's (March 6) profiled Clear Channel's Mays family and assayed their long term strategy and the wisdom of the SFX deal.

-- By Murdoch McBride