More on Clear Channel

["pete lee" <sunshine@angelfire.com>]

In response to the many requests, here is the story as it appeared in the Rocky Mountain News column "up and down 17th street" by David Milstead on 1 June 2002.

"Critics of radio behemoth Clear Channel often complain about the quality of the stations' programming. But if you want to see real junk, look up the company's first quarter earnings press release.

"The Texas company, owner of nine Denver stations, including FM stations KBCO, KBPI, KTCL, KFMD (KISS) and KRFX (the FOX), and AM stations KHOW, KOA, and KKZN-failed to tell investors that it had a net loss of $16.9 billion, or $27.85 per share, thanks to a $17 billion non-cash asset write-down.

"Instead, its MAY 7 earnings release said its "EBITDA as adjusted" was $370 million, down from $404 million in the first quarter. EBITDA is an acronym for "earnings before interest, taxes, depreciation, and amortizion" and is not recognized under generally accepted accounting principles.

"Clear Channel put a one-sentence acknowledgment of the $17 billion charge in a paragraph on new accounting rules, but-unlike the fourth quarter results released in February-provided no income statement that showed the company's bottom line.

"Before the Enron fiasco focused Wall Street's attention on accounting principles, Clear Channel's report would simply have been dishonest. Now, though, the move is also dumb.

"The Securities and Exchange Commission is cracking down on exactly the kind of "pro forma" financial reporting Clear Channel employs. Denver's Qwest Communicatons sais the SEC plans an enforcement action against the telco for not providing investors with GAAP results for its fourth quarter 2000 earnings. Qwest says the action is without merit.

"the agency also is pursuing Trmp Hotels & Casino Resorts for the way it calculated earnigs in a 1999 press release.

"Dean Krogman of Financial Executive International Inc, an association of corporate executives, told Bloomberg news that "anybody who makes misleading announcements in the press releases does so at their own peril. Its in the middle of the SEC's radar screen now."

"Clear Channel spokeswoman Diane Warren said the company has been "overly communicative about the whole (writedown) issue. We've been talking about and showing this information in releases and conference calls." She said the company's director of investor relations would call to explan to me why the company, in this environment, didn't just go ahead and include the GAAP earnings.

"I am still waiting, and Clear Channel stations have probably played Britney Spears 16.9 billion times in the interim.

"Clear Channels write-down - like othe massive losses from companies such as AOL Time Warner - come from Financial Accounting Standard 142 on "good will".

"Good will shows up on the balance sheet when a company makes an acquisition and pays a price higher than the value of the acquired company's hard, easily valued assets.

"Companies must now evaluate whether their balance-sheet values for good will are appropriate or whether they, whoops, overpaid. If the value needs to be reduced, the company must write it down and take a loss.

"Clear Channel argues the $17 billion write-down is unimportant to Wall Street types, who are so forward-looking they're unable to remind you how horribly overvalued these stocks were. "Analysts and investors don't care about that number" Chief Operating Officer Mark Mays told Bloomberg News when it reported Clear Channel's obfuscation.

"Instead Clear Channel gave analysts and investors seven other figures for first-quarter earnings, profits or cash flow: $26 million, $73 million, $90 million, $191 million, $370 million (twice) and $381 million.

"The only figure missing was the most honest one of all."


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