Chancellor Turns Up The Radio

Chancellor Media has changed strategies and now seems to be focusing almost all its attention on its radio business, a move that should be greeted with enthusiasm from the buy-side, sources said last week.

Chancellor could not be reached for comment, but analysts and investors alike said last week that the sale of its billboard business to Lamar Advertising will help Chancellor in two main ways: The $1.6 billion in proceeds from the sale will help pay down debt, and it will allow management to focus more on the high-performing radio segment.

Chancellor has $2.5 billion in outstanding debt in five issues, with coupons ranging from 8% to 10.5%.

The billboard sector is not as attractive right now as other segments of the media industry, partly because of the ban on cigarette advertising as part of the legal settlement reached by tobacco companies, which had been an anchor in outdoor ads, analysts said.

Last year, Chancellor had aimed at becoming a one-stop shop for advertising, combining TV, radio and billboard assets for a package deal for its clients. But earlier this year, it was reportedly looking to sell its TV businesses, and last week's announcement further trimmed its focus.

Another plus for the company, noted one analyst, was the fact that it got slightly more than it paid for the billboard business, which was slightly more than $1.5 billion for two different companies that it combined into one entity.

On the flip side, Infinity Advertising seems to be bulking up on outdoor advertising, recently acquiring Outdoor Systems, sources said. That will make Infinity the largest billboard company in the industry.