Outdoor ads help Q2 profits increase
Radio and billboard giant Clear Channel Communications Inc. earned $236 million during the second quarter, 19 percent more than the same period last year, as outdoor advertising continued to post strong growth.
Revenue from the company’s radio business, which has faced stiff competition from satellite and digital music players in the last several years, continued to be nearly flat, but billboards and outdoor displays posted 12 percent gains, according to the earnings report released Friday.
The company said second quarter revenue totaled $1.8 billion, up from $1.7 billion last year.
The outdoor business was helped in part by the strength of foreign currency in non-U.S. markets and by Clear Channel’s July 2006 acquisition of Interspace Airport Advertising. But the company also saw rate increases for its signs across the United States.
Net income of $236 million, or 48 cents a share, was up from $197.5 million, or 39 cents a share.
Not including income from discontinued operations during the quarter, the company earned $208.7 million, or 42 cents a share. Analysts surveyed by Thomson Financial had projected 44 cents per share in earnings on revenue of $1.88 billion.
Clear Channel’s shares fell 8 cents to $36.67 in early trading.
The company said it expects billboard and outdoor advertising revenues to continue to climb, now on pace to increase 10.6 percent for the third quarter and 7.2 percent for the year. The radio business is expected to see a revenue decline of 1.5 percent during the third quarter, falling 0.2 percent for the year.
The company planned no conference call Friday on earnings because of a pending $19.45 billion buyout offer from a private equity group led by Thomas H. Lee Partners LP and Bain Capital Partners LLC.
The latest offer, made after several large shareholders expressed reluctance at accept earlier offers, allows up to 30 percent of them to keep a stake in the privatized company. The equity group has agreed to pay $39.20 per share and to assume $8 billion in debt.
A shareholder vote has not yet been scheduled, but most analysts believe the latest offer will be enough to win over the holdouts and get the two-thirds of shareholders needed in favor of the deal.
Clear Channel is the nation’s largest radio station operator, and it owns 90 percent of a billboard business that is the world’s largest. The other 10 percent trades as a separate stock and will continue to do so even if the buyout is approved.
The company has been divesting some of its broadcasting operation. Its 56 television stations were sold in April, and sales deals have been reached on 402 of its radio stations. It is still trying to sell an additional 46 stations but plans to keep about 675 stations, mostly in larger metro areas.