Yesterday’s news is that Clear Channel Outdoors (owned 90% by iHeart) has sold some outdoor billboards in the US for in excess of $400 million, and another similar deal may happen today. CCO owns a lot of tangible assets, which means lenders give the subsidiary better interest rates.
The lenders are getting unhappy at the way iHeart has been using CCO as a piggy bank. This deal is essentially selling the collateral out from under the lenders. Naive investors might buy stock in Clear Channel without understanding what the stock isn’t.
Billboard companies are not regulated by the FCC and not subject to foreign ownership rules. Much of the debt is probably owned by European banks. My guess is iHeart will sell off their US assets and trade their equity in the remaining company (they own a lot of bus stop shelters in Europe) for debt relief.
Cleaning up the situation with CCO might make it easier to launch an iHeart IPO, for instance.
The news has arrived – it is a fundamental reorganization of their business, splitting the company into regional operations. Given the history of Bob Pittman at AOL, there are probably creative accounting reasons behind this move – like valuing the assets of each region together based on the overall cash flow, rather than trying to place a value on each license. It might also be a prelude to spinning off each region as a separate IPO, but still organized under the iHeart brand, with some services still coming from the main company – like Premiere talk radio – or spin that off as an IPO so people can buy and sell Rush Limbaugh and Glenn Beck.