Clear Channel Media's Impending Demise: Sirius Consequences

By Brandon Matthews

I never imagined myself spending this much time writing about a thirty-four cent stock. I cannot begin to describe the insanity that the current stock price represents. As I am researching Clear Channel’s (CCMO.PK) impending demise, I am again forced to recognize the potential advantages this represents to Sirius XM Radio (SIRI).

Unfortunately for Clear Channel, there will be no government intervention to speed up bankruptcy proceedings. Clear Channel Communications owns and operates more than 1200 radio stations in the United States. As we have learned from the recent restructurings of both General Motors (GMGMQ.PK) and Chrysler, restructurings tend to cause, at a minimum, fallout in the form of weak links. The 1200 radio stations owned by Clear Channel are no different than Chrysler or GM’s network of dealerships.

In the likely event that Clear Channel does seek bankruptcy protection later this year, and the unlikely event that the company can reemerge from that bankruptcy, there would inevitably be a substantial loss in the 1200 Clear Channel-owned radio stations across the nation. This will inevitably lead to less terrestrial radio coverage. Many faithful local radio listeners will be left in silence. This will, by default, lead to new opportunities for Sirius XM Radio to increase its subscriber base.

As we have discussed on multiple occasions on Satwaves, this may be the event that leads Sirius XM Radio to adopt an ad-based service to complement its premium subscription service in the future. It will also likely provide a substantial subscriber base increase in the form of a’ la carte programming. Of course, the game still has to play out to its final outcome.

However, I cannot help wonder:

If the market is supposedly forward-looking, why can it not see the forest in front of it? It must be those darn trees.

Position: Long SIRI

Comments

[Moedawg:]

Clear Channel owns around 800 radio stations pared down afte the buy-out. The writer is also assuming that hundreds of radio transmitters would be turned off in the event of of bankruptcy.

With or without Clear Channel the radio staions will continue to operate. This is required by the FCC.

Jun 16 03:19 PM

[IBuriedtheU...:]

The demise of Clear Channel can't come soon enough and it illustrates years of Mel Karmizan's philosophies... and how they are bad news for the future of Sirius XM.

Jun 17 08:35 AM

[muscbdy1:]

You are absolutely right, Clear Channel is dead in the water. With overwhelming debt and declining revenues, there is no way for Clear Channel to meet it's debt obligations notwithstanding the fact that the Company has bought back about 2 billion in debt. The highly leveraged buyout was a huge mistake, notwithstanding the value of Clear Channel out-door sign business. Now even that is losing revenues. Finally, Clear Channel employes too many high priced, valueless "radio personalities". When cutting staff, Clear Channel failed to address this issue. It fired low level, low paid staff, and kept the high paid "talking heads". Clear Channel should get rid of all those "personalities" and voice track everything. After all, AFTRA is useless and powerless to stop them.

Jun 19 10:44 AM

[Content seeker:]

Well they went after the high price idiot, loud mouth Russ L. who is the most bios political person there is, so they deserve what they get.
Regular radio sucks

Jun 28 07:09 PM

[muscbdy1:]

Yet again Clear Channel is id deep trouble. Just looking at the New York Market, they have over paid radio "personalilities" like Diane Prior who are a complete and total waste. With her salary of $186,000 per year with bonuses and endosements, they could replace her with a trained monkey. They have cut her talk time down to nothing. Whos cares what she says ober 8 seconds of a song intro for $186,000 per year. They should get rid of her and all the other overpaid radio "personalities" and maybe clear channel can make some head way against the mountain of debt.

Sep 14 03:13 PM