Clear Channel Communications

Clear Channel Communications (CCU) lost considerable valuation after the Wall Street Journal reported the planned takeover of the company by Thomas H. Lee Partners LP and Bain Capital LLC might fall through.

The original deal priced shares at $37.60 a share, but shareholders who considered that price too low convinced Lee Partners and Bain to raise their offer. After that, the deal began to sour. Growth in the company’s radio operations began to dwindle, and share prices dropped significantly.

Now, a dearth of liquidity has made it nearly impossible for banks to limit their risk by selling their loans to investors. The financiers of this deal have demanded more cash upfront and stricter payment terms, but the buyers have refused, leading to a standoff.

The banks are at risk legally, and may have to pay a "breakup fee" if Thomas H. Lee Partners and Bain Capital are forced to pull out of the deal. That fee could be as much as $600 million, but that would be substantially less than the $3 billion the banks stand to lose by actually going through with the deal.

Growth perspectives for the traditional radio industry are not good as emerging new media such as satellite radio and streaming radio sites like Pandora erode its audiences.

Clear Channel has a poor capital investment track record. For example, its live entertainment business was spun off for significantly less than the original purchase price.

In the short term, Clear Channel's efforts to sell its merger offer to its shareholders is diverting its management's attention away from its core operations.