Thursday, November 02, 2006

If Google Does Buy Clear Channel, I Have Some Advice For Them

"Google's stock closed today at $467.50. The stock, which dropped below $350 last winter, has been on a tear because investors believe its expansion into new markets holds promise. Google could play a role in a buyout without putting up much cash. Clear Channel has an enterprise value of about $25 billion, suggesting that a "club" of private equity firms and other investors might put in a total of $5 billion to $6 billion in equity. Any one of them could get a small but strategically important stake of, say, 5% or so, by investing $250 million in cash. Google may be gearing up to acquire a large chunk of advertising inventory, as part of a plan to expand beyond its core search business."

David Bank, RBC Capital Markets analyst

It would be sad to watch two years' of disciplined attempts at cutting inventory to try to push average rates up by stressing radio's strengths end with a national cram down of highly-discounted commodity business.

Hopefully, the folks at Google will be smarter than that. If not, it would be sad to see all of the downsizing that has been the last decade of radio industry consolidation come to an end with nothing more than a giant online auction/inventory clearance sale.

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