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Tuesday, October 24, 2006

Clear Channel Gets An Upgrade And It’s Sirius (CCU)(SIRI)

Brokerage Stifel Nicolaus upgraded Clear Channel, the big radio company, from “hold” to “buy”. The market had lost faith in over-the-air broadcasters, so the move was a bit unusual.

Clear Channel is also showing up in more institutional portfolios.

Perhaps the death of old line radio is being oversold. If so, the future for satellite radio may not be as bright as once was believed. Drivers who listen to the car radio are almost certainly less likely to need the satellite version..

After some tough quarters, Clear Channel is beginning to bounce back. In Q2 revenue moved up 7% to $1.85 billion. The company had net income of $198 million. Morningstar shows estimated EPS for Q3 to be flat at $.38, and to rise to $.40 in Q4. In the fourth quarter last year, EPS was $.34.

Clear Channel has a market cap of $15 billion and $6 billion in long-term debt. Sirius has a market cap of $5 billion and debt of over $1 billion.

The old radio guys were out of it for awhile. At least now it’s a horse race.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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