Clear Channel Communications Inc. on Friday unveiled plans to split up its media empire by spinning off its entertainment business. The nation’s top radio broadcaster also said profit fell by more than half in the first quarter.
The company also plans to sell 10 percent of its outdoor-advertising unit in an initial public offering, and said it will pay out a special dividend of $3 per share to investors and raise its quarterly distribution by 50 percent, beginning July 15.
Following the breakup, Clear Channel Entertainment — which puts on concerts and sporting events — will have more flexibility as a separate and “largely unregulated” public company, Clear Channel said.
However, the radio giant will hold onto a controlling stake in Clear Channel Outdoor, which sold some $2.5 billion in billboard ad space last year. The company did not say when or at what price it is planning the IPO.
“We’re seeking to unlock the considerable value in our company, and create a strong foundation for future growth, by improving the strategic, operational and financial flexibility in each of our leading business units,” President and Chief Executive Mark Mays said.
Shares of Clear Channel rose on the news. The stock has been falling from a two-high of $46 reached in January 2004, and is well below levels of more than $80 five years ago.
The moves come as Clear Channel’s quarterly profit took a hit from an initiative, launched last year, that is aimed at reducing on-air clutter by shortening ads and commercial breaks during radio programming.
In the latest three-month period, income sank to $47.9 million, or 9 cents per share, from $116.5 million, or 19 cents, in the year-ago period. Results were below the mean estimate of 13 cents per share from analysts polled by Thomson Financial.
Prior-year earnings included about $58.6 million in pretax gains from selling its investment in Univision Communications, offset by a $31.4 million loss from the early extinguishment of debt, the company said. Aside from those items, adjusted income would have been $100.3 million, or 16 cents per share, in the year-ago quarter.
Revenue in the latest quarter totaled $1.88 billion, a decline of 4 percent from $1.97 billion a year earlier. Radio-broadcasting revenue dropped 7 percent to $773.6 million, which was somewhat offset by an increase in outdoor-ad revenue, which grew 11 percent to $579 million.
Meanwhile, live-entertainment revenue plunged 17 percent to $424.5 million amid a decline in ticket sales and the number of events during the quarter.
In July, Clear Channel will raise its quarterly dividend to 18.8 cents per share from the current level of 12.5 cents, boosting its annual distribution by a quarter to 75 cents per share.