createpositivechange

Tag: Angelo Mozilo

  • Mays and McCombs, the original Radioheads

    The radio business has been very good to Lowry Mays and Billie Joe “Red” McCombs.

    In 1972, they formed the San Antonio Broadcasting Company to buy an FM station for $125,000.

    Thirty-five years later, that company is called Clear Channel Communications and it owns more than 1,000 stations. Its shareholders recently approved a $19.5 billion private equity buyout that values Mays’ stock at more than $1.1 billion and McCombs’ shares at about $190 million. The deal is expected to close before the end of the year.

    In early 2000, when Clear Channel shares hit $95, the founders’ stock would have been valued at more than twice as much as now.

    Still, not a bad rate of return, especially when the founders’ families hold a significant stake in Live Nation, spun off from Clear Channel in 2005. Live Nation is trying to perform the same consolidation magic in the entertainment industry that Clear Channel did in radio.

    Another affiliate, Clear Channel Outdoor, trades publicly, but most of its stock is held by Clear Channel.

    In addition to making money, Clear Channel has made important connections.

    Along with Mays, his two sons, Mark and Randall, and McCombs, current board members include former Oklahoma congressman J.C. Watts and Ted Strauss, a former senior managing director of Bear, Stearns & Co. Strauss’ brother, Robert, was a long-time adviser to presidents, Republican and Democrat. Ted Strauss’ late wife, Annette, was mayor of Dallas.

    Former directors include Dallas billionaire Tom Hicks and Vernon Jordan, a presidential adviser to Bill Clinton.

    Live Nation’s directors include movie producer Harvey Weinstein and Henry Cisneros, the former U.S. secretary of housing and urban development, and a former mayor of San Antonio.

    In San Antonio, McCombs may be best known as a car dealer, but his business dealings range widely. He is a past owner of the Minnesota Vikings of the NFL and the San Antonio Spurs and Denver Nuggets of the NBA.

    Both McCombs and Mays have top-ranked business schools named after them, the McCombs School of Business at the University of Texas at Austin and the Mays Business School at Texas A&M.

    Clear Channel has been criticized for homogenizing radio across the country. Some of its controversies have involved Rush Limbaugh, Howard Stern, the Dixie Chicks and Madonna.

    Critics link Lowry Mays’ conservative politics to company decisions, such as when some Clear Channel stations stopped playing Dixie Chicks songs after they criticized President Bush because of the Iraq war.

    Clear Channel disputes that. “The radio company that banned the Dixie Chicks was Cumulus Media, not Clear Channel,” the company says in a “Know the Facts” section of its Web site. Some Clear Channel stations, in fact, increased their airplay of the Chicks, the company says.

    Live Nation’s recent $120 million deal with Madonna certainly belies any notion of retribution against the Material Girl and her politics.

    For Mays and McCombs, the original Radioheads, business seems to trump partisanship.

  • Dui is a Death Sentence for Lost Cast Members

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  • Hearst needs a re-write on TV takeover

    TV can be a goofy business, but this couldn’t be the script the boys in Hearst Tower had in mind when they offered $600 million a few weeks ago for the small piece of Hearst-Argyle Television they don’t already own.

    A special committee of Hearst-Argyle directors advised against the deal last week, calling it “inadequate” and saying it is “not in the best interests” of stockholders, other than Hearst.

    That’s the same argument made by nine class-action lawsuits filed against Hearst-Argyle and Hearst Corp. since the buyout offer was made Aug. 24.

    The stock market certainly agrees. Hearst’s tender offer is $23.50 a share for the nearly 27 percent of Hearst-Argyle shares held by others. The stock closed Friday at about $26.

    Privately held Hearst Corp., founded by legendary newspaperman William Randolph Hearst, is one of the nation’s largest media companies. Based in New York City, it owns newspapers (including the San Francisco Chronicle and Houston Chronicle), magazines (Cosmopolitan, Esquire, O), interactive media and 20 percent of ESPN.

    Hearst-Argyle owns 26 TV stations in markets reaching about 18 percent of the nation’s households. Stock analysts say the company should benefit by record spending on political advertising and by new retransmission agreements for its standard and high definition TV signals. Some analysts value Hearst-Argyle stock at $28-$32 a share.

    Hearst-Argyle detailed the takeover saga, including information on the lawsuits, in a long filing with the SEC last week. The filing said:

    In April 2006, at Hearst’s request, Hearst-Argyle executives first prepared a takeover scenario. At the time, the stock was trading at $23.23. The project was put on hold.

    Independent Hearst-Argyle directors David Pulver and Caroline Williams are each being paid $150,000, plus expenses, to be the sole members of the special committee considering the offer. The committee met 19 times.

    The special committee believes 2008 could be stronger financially than the company forecasts.

    Pulver, Williams and director Bob Marbut do not intend to tender their shares to Hearst Corp.

    Directors Frank Bennack Jr., John Conomikes, Victor Ganzi, George Hearst Jr., William Randolph Hearst III and Gilbert Maurer do intend to tender their Hearst-Argyle shares. Each is also a director of Hearst Corp. Ganzi is Hearst Corp.’s CEO; Bennack is its vice chairman.

    One name conspicuously absent from the lawsuits is that of Florida investor Bruce Sherman. As of April, his Private Capital Management owned 8.4 million Hearst-Argyle shares. Sherman is the investor who put newspaper publisher Knight-Ridder in play, leading eventually to the sale to McClatchy.

    Some of the lawsuits question the independence of Pulver and Williams. Both have been directors of Hearst-Argyle and its predecessor since 1994 and are included in the company’s medical insurance plan.

    Pulver runs an investment company and is chairman of Colby College’s investment committee. He received $145,461 in compensation from Hearst-Argyle last year.

    Williams, who works with the Nathan Cummings Foundation, received $140,961 in compensation from Hearst-Argyle last year. One lawsuit said the Cummings Foundation works frequently with the William Randolph Hearst Foundations.

    Some of those filing the lawsuits worry that Hearst is holding so many cards that it could still force the transaction, leaving those who didn’t go along with illiquid shares.

    As they say on TV, stay tuned.

  • Legality of Hunt Oil deal “uncertain”

    Hunt Oil’s controversial production-sharing deal with Kurdistan is “legally uncertain” and has “needlessly … Baghdad told The New York Times.

    Dallas-based Hunt Oil is run by Ray Hunt, a close friend and advisor of president Bush.

    Speaking anonymously, the official told The Times that the State Department advised Hunt before the… American and international oil companies.

    On the web
    Official Calls Kurd Oil Deal at Odds With Baghdad – New York Times

    Related stories on Muckety
    Why Ray Hunt is so powerful

  • Burkle’s new pied-a-terre

    Billionaire Ron Burkle has a new crash pad in New York, complete with a heated swimming pool and a panic room.

    Burkle, one of former President Bill Clinton’s best friends, has purchased a swank Manhattan apartment for a whopping $17.5 million, plus nearly $100,000 a year in maintenance fees. Burkle already owns the lavish Green Acres estate in Beverly Hills, where frequent Democratic fundraisers are held.

    The three-level apartment with 5 bedrooms and 5.5 bathrooms doesn’t have a doorman and is situated in a fairly uninteresting part of lower Manhattan.

    But, according to the Real Estalker, the 11,000-square-foot “behemoth has ridiculously high ceilings, 50+ windows, walls of glass, a panic room behind the library bookcases, and a carpet of green grass and a small forest on the eastern terrace. But by far the most remarkable and notable feature of the aerie is the heated swimming pool that hangs over the city with 360 degree views as far as the eye can see.”

    The apartment is said to be exquisitely detailed with massive Danish Tudor wood-burning fireplace, two separate sound systems controlled from every room with speakers throughout. Perfect for more Democratic fundraisers.

    Burkle is best known as Clinton’s pal and as a major donor to the Democratic party. He earned his fortune buying and selling grocery chains; Forbes magazine calculates that he has been involved in 17 major business deals worth $15 billion – 11 of which involved grocery stores. He recently expressed interest in buying the Tribune Company, or the Los Angeles Times, but was beat out by real estate magnate Sam Zell.

    Venture capitalist Jonathan Leitersdorf reportedly purchased the entire building at 700 Broadway for about $2.5 million before gutting it and renovating. Burkle’s new home was first put on the market in 2002 for $27,500,000, but was reduced to its final asking price of $18,750,000. Burkle apparently cut the price even more.

    On the web: Ron Burkle’s Swimming Pool in the Sky – Real Estalker

  • Senate reviews Google-DoubleClick deal

    Execs from Google and Microsoft are scheduled to appear before the Senate today to argue the merits of Google’s proposed acquisition of DoubleClick.

    Google announced the $3.1 billion deal in April, but the plan requires approval of the Federal Trade Commission and regulators abroad.

    As CNet notes today, this will be the first time that Congress has scrutinized the Internet behemoth. Microsoft, with years of experience in arguing antitrust issues, has mobilized a legion of lobbyists to block the deal, saying it would create an online advertising monopoly.

    Consumer privacy groups have also raised concerns. Marc Rotenberg, executive director of the Electronic Privacy Information Center, is scheduled to testify today as well. His group says the deal would give Google too much information about web users.

    Google is expected to argue that it respects users’ privacy, and that its current business focuses on text-based advertising, while DoubleClick specializes in banners.

    In his prepared testimony, released before the hearing, Google Senior VP David Drummond says Google and DoubleClick offer complementary services. “DoubleClick is to Google what FedEx or UPS is to Amazon.com,” he said.

    Those of us who have been running Google AdSense banners for ages find this argument a bit puzzling.

    On the web:
    Microsoft, Google square off in Washington – CNet

    Related stories on Muckety:
    Advantage Microsoft in flap with Google?

  • Times concedes error with Moveon.org ad

    The New York Times is backing down – somewhat – on a controversial ad placed by the liberal advocacy group MoveOn.org that infuriated conservatives.

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    Under the headline “General Petraeus or General Betray Us?” the full-page ad contended that the American commander in Iraq was “constantly at war with the facts” in giving upbeat assessments of progress and refusing to acknowledge that Iraq is “mired in an unwinnable religious civil war … Today, before Congress and before the American people, General Petraeus is likely to become General Betray Us.”

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    But on Sunday, the New York Times admitted it “made a mistake” by charging MoveOn a discount rate to run the ad. Some conservative groups had criticized the Times for playing favorites with MoveOn by charging the lower price.

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    The lower rate of $64,575 is normally reserved for ads that can be placed at any time – a standby rate – but MoveOn had requested a specific date for the ad to run. The Times said it should have charged $142,083 for running the ad on that specific date, and that it would collect the difference from MoveOn.

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    Did the Times violate its own ethics rules by running the ad in the first place?

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    Yes, according to Clark Hoyt, the newspaper’s public editor. “The ad appears to fly in the face of an internal advertising acceptability policy that says: ‘We do not accept advertising that is gratuitously offensive on a personal nature,’ ” Hoyt wrote in the Times on Sunday.

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    “Steph Jespersen, the executive who approved the ad, said that, while it was ‘rough,’ he regarded it as a comment on a public official’s performance of his official duties,” Hoyt added.

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    The Times public editor wasn’t the only critic of the ad. Conservatives were outraged and flooded the Times with complaints. President Bush called the ad disgusting and Vice President Dick Cheney called it “an outrage,” and even the Democratic-controlled Senate overwhelmingly condemned the ad in a 72-25 vote.

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    But even under this assault, MoveOn.org isn’t backing down. It was still promoting the “General Betray Us” ad on its home page Monday. “We are very happy that the Times has revealed this mistake for the first time, and while we believe that the $142,083 rate is exorbitant, we will pay it,” the group said in statement.

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    On the web
    \nBetraying Its Own Best Interests – New York Times
    \nMoveon.org press release – PR Newswire

  • Why Ray Hunt is So Powerful

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  • Send All Lawyer Jokes to Marc Andreessen

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  • Blackwater’s protective web

    Blackwater USA, the State Department’s largest private security contractor, is under siege on several fronts.

    Iraq’s state minister for national security affairs announced today that the firm would face criminal charges for the fatal shootings of Iraqi citizens. Blackwater, based in Moyock, N.C., is also under investigation on the home front.

    But a tight web of political and business connections helps shield the company from the most formidable of attacks.

    Erik Prince, the former Navy SEAL who founded Blackwater in 1996, is a major contributor to the GOP. Federal Election Commission records show that he has given more than $200,000 to Republican committees and candidates in the last decade.

    His sister, Betsy DeVos, is the former chair of the Michigan Republican Party and wife of Amway co-founder Dick DeVos, unsuccessful candidate for governor.

    Prince is also on the board of Christian Freedom International, a nonprofit whose aim is to help persecuted Christians around the world. Fellow board members include former Sen. Don Nickles and former Swiss ambassador Faith Whittlesey.

    The group’s president, Jim Jacobson, was a policy analyst with the Reagan White House. Its vice chairman, Paul Behrends, was a partner in the once-powerful lobbyist firm, Alexander Strategy Group, which represented Blackwater. The group closed shop in January 2006, citing unfavorable publicity from its ties to Jack Abramoff.

    Blackwater’s vice chairman, Cofer Black, is former director of counterterrorism for the CIA and also a top adviser to the Mitt Romney presidential campaign.

    Officers of Blackwater’s parent company, Prince Group, include Joseph Schmitz, former inspector general of the Defense Department and the son of a congressman. (An irrelevant but interesting connection here: Schmitz’s sister is Mary Kay LeTourneau, the former school teacher who was prosecuted and imprisoned for having sex with an underaged student. The two were married after her release in 2004.)

    Blackwater resumed guarding American diplomatic convoys in Iraq on Friday, after Iraqi officials backed away from plans to expel the company. The Iraq ministry said Blackwater guards had fired on a Baghdad square without provocation, killing 11 people.

    Secretary of State Condoleezza Rice has ordered a review of security practices in the wake of the shootings. Federal prosecutors also are investigating whether company employees illegally smuggled weapons into Iraq.

    On the web:
    Iraq Probe of U.S. Security Firm Grows – Washington Post