"We have accelerated this call because of very negative rumors that are being suggested in the marketplace," Chairman-CEO Lowry Mays said during the conference call. "Despite the recent performance of our stock, our business is very sound and we expect it to be very sound for the third quarter and the fourth quarter."
Clear Channel's stock
But the company emphasized that the mutual decision to shift Mr. Michaels was not due to any negative-performance issues at the radio unit, whose revenue increased 5% in the second quarter and is expected to rise 4% to 6% in the third quarter, President-Chief Operating Officer Mark Mays said in the call. Radio revenue totaled $991.2 million on the second quarter, up from $940.8 million in the year-earlier period.
"I want to emphasize that there has not been a sudden event or any poor performance within the radio group that has led to Randy's and my mutual decision," Mark Mays said. "This is a decision that has been contemplated for a long time."
Mark Mays will be interim head of the radio group, and the company expects to name a successor around Labor Day.
Mark Mays said the company's continued optimism for radio comes from the wide range of advertising categories using the medium, including retail, package goods, automotive, fast-food, entertainment, telecommunications and professional services.
"There are many categories," he said, "all showing a broad-breadth recovery."
Most analysts believe the market panic surrounding the news of Mr. Michaels' departure was overblown.
"While we view his departure as a negative, we believe that the market is ... overreacting," said Lehman Bros. analyst William Meyers in a report issued Tuesday. "Notwithstanding his operating prowess, we do not believe that [Mr.] Michaels is worth $4 billion," the market capitalization Clear Channel lost in Tuesday's trading.
Clear Channel's overall net income was $238 million, or 39 cents a share, an improvement over its $110.5 million loss, or 40 cents per share, in the second quarter of 2001. Total revenue was flat at $2.17 billion.
Despite the turnaround in the radio sector, Clear Channel's outdoor and entertainment divisions have not yet rebounded. The company expects domestic outdoor to pick up the third quarter but said overall outdoor revenue will be down as the international market remains soft. The entertainment division, suffering from lagging attendance at concerts, is expected to turn around in the 4th quarter, Mark Mays said in the call.
Clear Channel operates approximately 1,225 radio and 37 TV stations in the U.S. and has equity interests in over 240 radio stations internationally. The company operates roughly 776,000 outdoor advertising displays worldwide.