Clear Channel Makes Its Case

Clear Channel Communications owns an enormous number of radio stations and billboards, but apparently believes that U.S. Postal is the best way to amplify its pro-buyout message. The company today is sending out a letter urging shareholders to vote in favor of a $19 billion offer from Bain Capital and Thomas H. Lee Partners, despite some loud complaints that the $37.60 per share offer is too low. Among the naysayers is Fidelity Investments, which is Clear Channel’s largest institutional shareholder with an 11% position.

The letter rehashes how it was a competitive auction and that not voting actually works as a vote against the deal. It also says that Clear Channel contacted 22 potential buyers — both strategic and private equity — during its go-shop period, but didn’t receive any interest.

The letter reads as follows:
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Dear Fellow Shareholder,

At the March 21st special meeting of Clear Channel shareholders, you will make a critical decision regarding the future of your company. If shareholders approve the Company’s agreement to be acquired by funds sponsored by Bain Capital Partners, LLC and Thomas H. Lee Partners, L.P., you will receive $37.60 in cash for each share of common stock you own. The disinterested directors of your Board have unanimously determined that the merger is fair and in your best interests. WE URGE YOU TO VOTE FOR THE PROPOSED MERGER TODAY.

THE PROPOSED MERGER IS THE RESULT OF A HIGHLY COMPETITIVE PUBLIC AUCTION CONDUCTED BY THE DISINTERESTED MEMBERS OF THE BOARD

The disinterested directors carefully managed the auction process to maximize the competitive dynamics of the bid process to obtain the highest price available:
• Multiple rounds of robust bidding
• Firm, fully financed offers submitted by two separate consortiums of private equity funds
• Virtually every leading private equity sponsor participated—no strategic buyers emerged
• During the “go-shop” period, the Company’s financial advisor contacted a total of 22 potential strategic and private equity buyers, none of whom expressed interest in bidding for Clear Channel.

WE FIRMLY BELIEVE THERE IS NOT ANOTHER COMPETITIVE BIDDER FOR CLEAR CHANNEL, AND THAT $37.60 PER SHARE IN CASH MAXIMIZES VALUE AND CERTAINTY

The auction process was conducted by the disinterested members of the Board of Directors, and supported by a Special Advisory Committee composed of three disinterested directors. The Board and the Special Advisory Committee also received advice and assistance from separate financial and legal advisors, who were actively involved in the auction process. In order to ensure independence, these meetings – and all of the Board’s deliberations in relation to the competitive sale process – were conducted without the participation of Clear Channel management or the Mays family. Chairman and founder L. Lowry Mays has informed the Company that he will be selling a substantial majority of his holdings in the transaction.

THE PROPOSED MERGER IS THE RESULT OF A COMPREHENSIVE REVIEW OF STRATEGIC ALTERNATIVES
This merger proposal is the result of a comprehensive review of strategic alternatives designed to enhance shareholder value, taking into account the continued challenges in the radio sector and the Board’s views of the recent growth in the domestic outdoor sector, as well as Clear Channel’s future growth opportunities. During their review, the disinterested directors considered a full range of alternatives other than the sale of the Company, including a sale or spin-off of Clear Channel Outdoor, a recapitalization, share repurchase and special dividend, as well as remaining as an independent company. Particular consideration was given to the structural issues related to any potential separation of Clear Channel Outdoor, including significant tax implications, and the likely trading value of its shares in the absence of this transaction.

In light of these considerations, the unanimous conclusion of the disinterested directors was that the $37.60 per share in cash merger proposal results in the greatest value and delivers the greatest certainty to shareholders.
THE MERGER PROPOSAL DELIVERS A 28% PREMIUM OVER THE AVERAGE SHARE PRICE DURING THE 60 TRADING DAYS PRIOR TO THE COMPANY’S ANNOUNCEMENT THAT THE BOARD WAS CONSIDERING STRATEGIC ALTERNATIVES

The all-cash merger consideration of $37.60 per share represents a premium of approximately 28% over the average closing share price during the 60 trading days ended October 24, 2006, the day prior to the Company’s announcement of the Board’s decision to consider strategic alternatives, and a premium of approximately 26% over the average closing share price during the one-year period prior to the announcement of the merger.

The merger consideration is also a significant premium to research analysts’ stock price targets for Clear Channel, prior to the Company’s announcement that the Board was exploring strategic alternatives.

The merger agreement negotiated by the disinterested directors contains measures designed to ensure shareholders certainty of closing as well as to protect against business and market risks, including:
• Certainty of $37.60 in cash,
• Regular annual dividend of $0.75 per share to be paid quarterly through closing,
• Daily “ticking fee”— in order to ensure that the transaction is closed as soon as possible— of the lesser of 8% interest per year or the Company’s operating cash flow beginning January 1, 2008 through closing,
• Equity and debt commitments with no financing conditions,
• Requirement for the buyers to take all necessary steps to obtain regulatory approval, with reverse break-up fees owed in the event of a failure to close should regulatory approval not be received, and
• The ability to receive and consider competing proposals.
YOUR VOTE IS EXTREMELY IMPORTANT – NOT VOTING IS A VOTE AGAINST THE MERGER

Approval of the merger agreement requires the affirmative vote of two-thirds of Clear Channel’s outstanding shares. Not voting has the same effect as a vote against the merger. Please vote FOR the merger today by telephone or by Internet, as available per the instructions on the enclosed proxy card, or by signing and returning the enclosed proxy card in the postage-paid envelope provided.
If you have any questions or need assistance in voting your shares, please call our proxy solicitor, Innisfree M&A Incorporated, toll-free at (877) 456-3427.
Thank you for your support.

On behalf of the Board of Directors,
Alan D. Feld – Perry J. Lewis