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Hicks Muse to buy SFX Broadcasting’s radio assets for $1.2 billion

August 26, 1997

NEW YORK (AP) _ Hicks Muse Tate & Furst Inc., already a sizable force in the media business, is paying $1.2 billion in cash for the radio stations owned by SFX Broadcasting Inc.

The Dallas-based buyout firm is making the purchase with its Capstar Broadcasting Corp. affiliate, which already owns more radio stations than anyone else with 243. SFX’s 71 stations will give Capstar 314 radio outlets.

Analysts estimated the deal that was announced Monday will make Capstar the third-biggest radio group in terms of revenue behind Westinghouse Electric Corp.’s CBS unit and the planned Chancellor-Evergreen Media combination expected to occur next month.

The SFX acquisition underscores the consolidation frenzy that has engulfed the radio industry since an overhaul of telecommunications laws last year freed companies to own more radio stations in a market.

Owners are trying to take advantage of their expertise in running radio stations by acquiring clusters of radio outlets in multiple markets, saving money by centralizing administrative functions and gaining clout with advertisers.

The deal will take Capstar into larger markets. More than half of SFX’s stations are in markets that rank among the 50 largest in the country, while Capstar traditionally has owned stations in markets ranking 50th to 150th.

New York-based SFX Broadcasting owns multiple radio outlets in Dallas, Houston, San Diego, Pittsburgh and Milwaukee, for example. It owns or has deals to buy five or more outlets in Hartford, Conn., Jacksonville, Fla., Richmond, Va., Albany, N.Y., and Greenville-Spartanburg, S.C.

SFX’s biggest shareholder, executive chairman Robert F.X. Sillerman, said while he believes the radio business remains attractive, ``the premiums being placed upon companies such as SFX have led us to respond to the flurry of acquisition offers we have received.″

John Reidy, analyst for Smith Barney, estimated Hicks Muse was paying 13 to 14 times SFX’s projected 1998 cash flow, which he said would be in line with recent radio deals for stations considered well-run.

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