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Chancellor considers sale idea
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January 20, 1999: 1:19 p.m. ET
Stock lackluster, radio giant's latest merger move may involve sale of itself
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NEW YORK (CNNfn) - Chancellor Media has launched a strategic review that could lead to the sale of divisions or the entire company.
Chancellor (AMFM)said Wednesday it hired investment bank BT Alex. Brown to explore alternatives, including a sale.
Shares of the radio and television broadcaster and outdoor advertiser shot up 9-3/8, or 20.6 percent, to 54-15/16 after the announcement.
The Dallas-based broadcaster, controlled largely by private investment firm Hicks, Tate, Muse & Furst Inc., has been at the forefront of a consolidation wave among radio companies.
Despite the rally on Wednesday, the top executive at Chancellor expressed frustration at a seeming inability to translate consolidation efforts into a boon for its stock on Wall Street.
In a statement, Chancellor's president and chief executive officer, Jeffrey Marcus, said: "each operating area has consistently achieved results which are the best, or are among the best in its respective industry, and each is poised to extend this record."
"However, there remains a substantial disparity between Chancellor's market valuation and those of its peers," Marcus added.
Last year, amid Chancellor's frenzied effort to gobble up radio properties, its shares climbed 25.6 percent. Only after the announcement Wednesday did the shares pierce the 52-week high tallied last July when its buyout wave gained speed.
(Click here for a look at Chancellor's stock)
Atop the list of its merger moves was last August's buyout of fellow Hicks, Muse holding Capstar Broadcasting for $4.1 billion in stock and debt.
Analysts said Chancellor is impatient that the company stock doesn't trade at price-earnings multiples comparable to rivals such as CBS (CBS) or Clear Channel Communications (CCU).
"What they said was 'we smell and taste like CBS and Clear Channel, but we don't trade like them,'" said Victor Miller, an analyst at Bear Stearns.
"I liken it to the Golden Gate Bridge," he added. "It's a great structure, but when the fog is in you don't know what's there."
Possible suitors for Chancellor, said Miller, include NBC parent General Electric (GE), even though it exited the radio business years ago, or the fellow Dow member Disney (DIS), which is easing into radio, Miller said.
But the chances are Chancellor, which will have 465 radio and 13 TV stations upon the completion of the Capstar deal, is likely to be divvied up.
"The odds are this one doesn't go in one fell swoop," said Miller. "And they could bust off the TV side." 
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Chancellor Media
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