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Justice Department Requires Divestitures In Private Equity Funds' Acquisition Of Clear Channel

Feb.15.2008

DOJ Press Release February 13, 2008

The Department of Justice said that it will require Clear Channel, the largest operator of radio stations in the United States, to divest radio stations in four cities in order for a group of private equity investors led by Bain Capital (Bain) and Thomas H. Lee Partners (THL) to proceed with their acquisition of a controlling interest in Clear Channel.

The Department said that the transaction, as originally proposed, likely would have resulted in higher prices to purchasers of radio advertising in Cincinnati, Houston, Las Vegas and San Francisco because Bain and THL already have substantial ownership interests in two firms that compete with Clear Channel in those cities. Bain and THL have ownership interests in Cumulus Media Partners LLC (Cumulus), a large nationwide operator of radio stations, and THL also has an ownership interest in Univision Communications Inc. (Univision), a large nationwide operator of radio stations that broadcast primarily in Spanish.

The divestitures are required to assure continued competition in markets where the transaction would otherwise result in a significant loss of competition. According to the complaint, radio stations owned by Clear Channel and Cumulus compete head-to-head in Cincinnati and Houston. In addition, Clear Channel and Univision own competing Spanish-language radio stations in Houston, Las Vegas and San Francisco. THL and Bain's acquisition of a controlling interest in Clear Channel combined with their existing ownership interests in Cumulus and THL's ownership interest in Univision gives them the incentive and the ability to reduce competition between Clear Channel and Cumulus and/or Univision, which would result in increased prices and reduced levels of service in the sale of radio advertising time. Under the terms of the proposed settlement, Clear Channel must divest stations in Cincinnati, Houston, Las Vegas and San Francisco to buyers approved by the Department's Antitrust Division.

Bain and THL, either directly or indirectly through management teams, typically manage and operate the assets in which they invest. According to the terms of their agreement with Clear Channel, Bain and THL will have the right collectively to appoint two-thirds of the Clear Channel Board of Directors. Currently the companies appoint one-half of the Cumulus Board; THL currently appoints three of Univision's 17 Directors.

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