Is Clear Channel Deal Collapse Tied to Radio Merger?

One cannot help but wonder. The day after the Department of Justice gives the green light to the merger of Sirius (SIRI) and XM (XMSR), Bain Capital and Clear Channel (CCU) part ways. According to the press, the deal collapsed because the parties could not come to financing terms. However, could it be possible that Bain, the buyer, was stalling the process all along to see the outcome of the merger of Sirius and XM?

Would a merged satellite radio company have an impact on the value of Clear Channel in the eyes of Bain Capital? Perhaps it would. While neither Bain nor Clear Channel would ever admit that this is the case, the timing of the issue, and statements of market insiders that Bain no longer wanted the deal, have to leave people scratching their heads.

One thing is certain. The audio entertainment landscape is no longer dominated by the Clear Channels and CBSs (CBS) of the world. Satellite, wireless, and many other players are now gaining market share. Granted, the theory that Bain backed out of the Clear Channel deal because of the Sirius/XM merger is pure speculation, but the timing is curious if nothing else.

Clear Channel has taken a virtual beating in after hours trading.

Position - Long Sirius, Long XM, No Position Clear Channel, No Position CBS

Comments

[J.P. Hannan]

Interesting speculation. Could be a factor into their desire to get heavier in the space.

Bain and TH Lee already own 25% each of Cumulus Media Partners, so they have a pretty sizable interest in the sector already.

You are definitely right, the radio industry is now a mixture of terrestrial, satellite, and internet... each with its own strengths, all vying for market share.

[phinsuntanning]

no money for the deal, just short it

[smizer]

User168240,

You might want to spend some time reading, with 17.3 million subscribers ( www.fool.com/investing... ) and synergies that result in cost savings of $7.2 billion a year.( www.fool.com/investing... ) I say, good by Clear Channel and so long to terrestrial radio... Instead of trying to fight the merger, Clear Channel should have tried to find a way to jump on board. If you think Bain bailing now was a coincidence, you need to think again...