Hicks, Muse duo tune cash to high frequency

Chancellor, Capstar revs to record heights in Q2

Chancellor Media and Capstar Broadcasting — two media consolidators controlled by investment firm Hicks, Muse, Tate & Furst — reported Wednesday that their respective radio operations drove second-quarter revenues and operating results before accounting deductions to unprecedented heights.

For Chancellor, based in Irving, Texas, the company’s broadcast cash flow — or operating income before depreciation, amortization and corporate overhead — soared 217.2% to $152.9 million as revenues climbed 202.5% to $321.7 million. The 47.5% margin produced by those results even managed to improve on the year-earlier’s impressive 45.3% margin.

The company nonetheless posted a net loss of $71 million for the quarter, which compared with net profits of $4.8 million in the year-earlier period.

Chancellor attributed its loss to one-time severance expenses and to its acquisition pace, byproducts of which include larger interest payments and greater amounts of amortization and depreciation.

However, even when the results are adjusted for the timing of acquisitions, Chancellor’s broadcast cash flow still increased a robust 27.1% to $140million radio as broadcasting revenues rose 19.1% to $285.8 million net radio.

Jeffrey A. Marcus, Chancellor’s recently installed president and CEO, said the results were “driven by ratings momentum and operating efficiencies.”

Marcus also recited a litany of “accretive and strategic transactions” since April, including an agreement to buy or the completed acquisition of several entities.For Capstar, based in Austin, Texas, the company’s broadcast cash flow jumped 206.9% to $44.2 million as revenues advanced 179.1% to $111.9 million. On a same-station basis, Capstar said its broadcast cash flow increased 20.3% to $71.1 million as revenues gained 11.4% to $288.9 million. Like Chancellor, Capstar posted a net loss for the quarter, citing pretty much the same reasons.

Capstar’s loss represented a widening to $20.9 million from $8.5 million in the year-earlier period rather than a swing away from profitability. R. Steven Hicks, Capstar’s president and CEO, noted the quarter included the company’s initial public offering, which he described as “the largest radio IPO in history,” and included the $2.1 billion acquisition of SFX Broadcasting, “our largest to date.”

Capstar’s stock lost 38¢ a share Wednesday to close at $23.50.

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