Apr
23
Clearchannel Teetering…
Filed Under Advertising, Digital Signage, digital ooh
Wow – this has gotta suck. Isn’t it a little weird how everyone is saying that the little, unstable guys will go bankrupt? This kinda turns the tables doesn’t it?
read away
NEW YORK (AP) — Shares of Clear Channel Outdoor Holdings Inc. slumped Wednesday after a Goldman Sachs analyst downgraded the stock to “Sell,” citing a deteriorating outdoor advertising market, a recent jump in the company’s stock price, and the likelihood of default at its parent company.
Goldman analyst Mark Wienkes cut the stock from “Neutral” in a note to clients Wednesday.
Shares fell 26 cents, or 5.3 percent, to $4.63 in afternoon trading.
The company’s stock closed Tuesday up about 50 percent since the beginning of March, when it reported a fourth-quarter loss of $3 billion because of an impairment charge. Revenue fell 16 percent.
Wienkes said the rally is unjustified. “In the near term, Clear Channel Outdoor will likely continue to experience sizable revenue declines,” he said, adding, “Faster expense growth has and, we expect, will continue to shrink cash flow margins.”
On top of that, parent company CC Media Holdings Inc. looks more likely to default on its debt, Wienkes said.
The parent company, which also owns Clear Channel Communications Inc., was taken private last July by Bain Capital Partners and Thomas H. Lee Partners. It has about $21 billion in debt, according to a securities filing this week, and has drawn concern from credit rating agencies that the recession may drive it into violation of its financial obligations.
The report from Goldman said a violation of its debt terms could push CC Media closer to a bankruptcy filing next year.
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