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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): MARCH 15, 1999
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CHANCELLOR MEDIA CORPORATION CHANCELLOR MEDIA CORPORATION OF LOS ANGELES
(Exact Name of Registrant as (Exact Name of Registrant as
Specified in Charter) Specified in Charter)
000-21570 333-32259
(Commission File No.) (Commission File No.)
75-2247099 75-2451687
(IRS Employer (IRS Employer
Identification No.) Identification No.)
DELAWARE DELAWARE
(State or Other Jurisdiction (State or Other Jurisdiction
of Incorporation) of Incorporation)
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300 CRESCENT COURT, SUITE 600
DALLAS, TEXAS 75201
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (214) 922-8700
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ITEM 5. OTHER EVENTS.
On March 15, 1999, Chancellor Media Corporation, a Delaware
corporation (the "Company"), issued a press release announcing the completion of
its review of strategic alternatives and a series of steps to better position
the Company strategically, operationally and financially, and thereby to build
value for all shareholders of the Company. The press release attached hereto as
Exhibit 99.1 is incorporated by reference and made a part hereof.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
Exhibits.
99.1 - Press Release, dated March 15, 1999.
2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
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CHANCELLOR MEDIA CORPORATION CHANCELLOR MEDIA CORPORATION OF LOS ANGELES
By: /s/ Thomas P. McMillin By: /s/ Thomas P. McMillin
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Thomas P. McMillin Thomas P. McMillin
Senior Vice President and Chief Financial Senior Vice President and Chief Financial
Officer Officer
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Date: March 15, 1999
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INDEX TO EXHIBITS
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EXHIBIT
NUMBER DESCRIPTION
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99.1 Press Release, dated March 15, 1999.
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EXHIBIT 99.1
CHANCELLOR
M E D I A C O R P O R A T I O N
FOR IMMEDIATE RELEASE News Announcement
CHANCELLOR MEDIA COMPLETES REVIEW OF STRATEGIC ALTERNATIVES,
ANNOUNCES STRATEGIC, OPERATIONAL AND FINANCIAL STEPS
TO BUILD SHAREHOLDER VALUE
- Chancellor and LIN Television Jointly Terminate Their Merger Agreement -
- Chancellor Chairman Thomas O. Hicks Named CEO Following Resignation of
Jeffrey A. Marcus, Who Will Continue to Serve on Chancellor's Board -
- James E. de Castro Named Vice Chairman of Chancellor Media and President/CEO
of Its Newly Formed Chancellor Radio and Outdoor Group -
- R. Steven Hicks Named Vice Chairman of Chancellor Media and President/CEO
of Its Newly Formed Chancellor Media Services Group -
- Chancellor to Form New Internet Business Unit -
- Hicks Muse Plans to Invest Up to $500 Million in Chancellor
Through Open-Market or Negotiated Purchases -
DALLAS, March 15, 1999 - Chancellor Media Corporation (Nasdaq: AMFM) today
announced a series of steps to better position the Company strategically,
operationally and financially, and thereby to build value for all Chancellor
shareholders. The steps follow completion of the review of strategic
alternatives announced by the Company on January 20.
Thomas O. Hicks, chairman of Chancellor Media, has been appointed the Company's
chief executive officer following the resignation of Jeffrey A. Marcus. Mr.
Hicks, who is also chairman and chief executive officer of Hicks, Muse, Tate &
Furst Incorporated, said: "Over the past two months, Chancellor, in consultation
with its outside financial advisors, has actively explored a broad range of
strategic alternatives, including but not limited to the sale, merger or
consolidation of one or more of the operating divisions of the Company or the
entire company.
"Having completed that process, and having held discussions with a number of
potential strategic partners, including some that have indicated they may want
to propose a strategic transaction in the future, we have concluded that given
the current business and regulatory environment, including various transactions
still awaiting regulatory and shareholder approval, we can best build
shareholder
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CHANCELLOR MEDIA CORPORATION, 3/15/99 PAGE 2
value at the present time by pursuing a number of strategic, operational and
financial initiatives that will streamline Chancellor's operations and focus its
resources on the fast-growing radio and outdoor-advertising business."
The steps being taken include:
o the termination of the merger agreement between Chancellor and LIN
Television Corporation. This action reflects the preference expressed
by a number of investors and Chancellor's determination to focus
primarily on its radio and outdoor-advertising businesses. Hicks Muse
will retain, and continue to build, LIN Television Corporation as an
independent enterprise within the Hicks Must investment portfolio,
under the continuing, highly successful leadership of LIN president and
chief executive officer Gary R. Chapman.
o the appointments of James E. de Castro, 46, currently president of the
Chancellor Radio Group and a Chancellor director, as president and
chief executive officer of the newly created Chancellor Radio and
Outdoor Group, and of R. Steven Hicks, 49, currently president and
chief executive officer of Capstar Broadcasting, as president and chief
executive officer of the newly created Chancellor Media Services Group,
whose activities will include a new Internet initiative as well as
developing and providing to the Chancellor Radio Group and other media
companies various programming, sales training, digital technology,
traffic, billing and yield management systems. In addition, Steve Hicks
will oversee Katz Media, the leading media representation company.
James A. McLaughlin, currently president of Chancellor Outdoor Group,
will continue in his present position and will report to Mr. de Castro,
as will Ken O'Keefe, who has been appointed chief operating officer of
Chancellor Radio. Stuart O. Olds, president of Katz Radio Group, a
wholly owned subsidiary of Chancellor's Katz Media unit, will report to
Steve Hicks. Mr. de Castro and Mr. Steve Hicks will also join
Chancellor chairman Tom Hicks as vice chairmen in a newly created
Office of the Chairman. In their new roles, Tom Hicks, Jimmy de Castro,
and Steve Hicks will share responsibilities previously held by
Chancellor president and chief executive officer Jeffrey A. Marcus, who
has resigned from his executive positions at the Company effective
immediately, but who will continue to serve on the Company's Board.
Both Jimmy de Castro and Steve Hicks will report directly to Tom Hicks.
Steve Hicks has also been named to Chancellor's Board, bringing the
number of Board members to eleven.
o the appointment of D. Geoffrey Armstrong as acting chief financial
officer, succeeding Thomas P. McMillin, who has resigned. Mr. Armstrong
joined Capstar Broadcasting in September 1998 as
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CHANCELLOR MEDIA CORPORATION, 3/15/99 PAGE 3
chief operating officer, having previously held a number of senior positions at
SFX Broadcasting, Inc. including chief financial officer, executive vice
president and chief operating officer. Under a management realignment that is
part of an initiative to reduce the Company's overhead by approximately $15
million, Eric C. Newman, senior vice president for corporate development, has
resigned and will return to Hicks Muse as a Principal. Chancellor emphasized
that it has no plans to reduce staffing at any of its operating units in
connection with the realignment.
o the appointment of William S. Banowsky, Jr., currently executive vice
president and general counsel at Capstar Broadcasting, as Chancellor's
general counsel, succeeding Richard A.B. Gleiner, who is leaving the
Company.
o Chancellor Board approval of an Internet initiative that will integrate
local web portals maintained for each of Chancellor's radio stations
with various e-commerce and marketing opportunities. Chancellor
believes this initiative, which has been structured to have minimal
impact on Chancellor's financial resources, has the potential to be a
major growth opportunity. Chancellor expects to formally announce this
strategic Internet initiative in the near future.
o the planned purchase by Hicks Muse of up to $500 million of Chancellor
stock through open-market or negotiated purchases beginning shortly.
The new Hicks Muse investment would bring the firm's total cash equity
investments since 1994 in Chancellor and in Capstar Broadcasting
Corporation (NYSE: CRB), whose merger with Chancellor is currently
pending, to $1.35 billion, and its ownership interest in Chancellor
after giving effect to all currently pending transactions to
approximately 29 percent on a fully diluted basis assuming the planned
purchase by Hicks Muse were to be made at Chancellor's closing market
price of $44.375 per share on Friday, March 12, 1999.
Chancellor expects to record a charge of approximately $20 million to $25
million in its first quarter ending March 31, 1999, in connection with severance
payments and other costs related to its operational realignment.
Tom Hicks said: "The actions announced today demonstrate the determination of
the Chancellor Board to strengthen Chancellor strategically, operationally and
financially, thereby building Chancellor's value for all shareholders. And the
additional investment of up to $500 million by Hicks Muse reflects our
continuing strong commitment to Chancellor and our confidence in its growth
prospects and earnings potential."
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CHANCELLOR MEDIA CORPORATION, 3/15/99 PAGE 4
Commenting on the termination of the Chancellor/LIN merger agreement, Tom Hicks
said: "My colleagues and I at Hicks Muse, Chancellor and LIN believe that there
would have been advantages in having major radio, television and outdoor
advertising assets under a single corporate umbrella.
"We also believe, however, in listening to the views of our fellow investors. In
this instances, a number of those investors have made it clear that they prefer
Chancellor Media to remain focused on the radio and outdoor advertising
businesses, and prefer LIN Television to continue as the strong, successful
standalone company it is today."
With regard to the management realignment at Chancellor, Mr. Hicks said: "The
leadership, energy and strategic vision that Jeff Marcus has demonstrated as
chief executive officer and a board member have been of great value in the
evolution of Chancellor. Jeff has been instrumental in transforming Chancellor
into the strong, diversified, highly competitive enterprise it is today. Now the
time has come to turn over senior management responsibilities to two seasoned
operating executives whose track record in building and running successful radio
broadcasting enterprises is universally recognized and admired. On behalf of the
Company, I want to thank Jeff for his contributions to Chancellor to date, and
express my gratitude that he will continue to serve Chancellor as a member of
the Company's Board. I am also pleased that Jeff has agreed to serve on the
Board of LIN Television."
Mr. Marcus said: "It has been a privilege to work with Tom Hicks, Jimmy de
Castro and Steve Hicks as together we have assembled one of America's premier
media platforms. I want to express my appreciation to the talented and dedicated
people throughout our organization who have helped to make Chancellor one of the
strongest, most profitable and fastest-growing companies in the media industry.
I am confident that the steps announced today will help Chancellor's Board and
management achieve the Company's long-term value enhancement objectives."
Commenting on Chancellor's new senior management team, Tom Hicks said: "At
Chancellor Media, Jimmy de Castro has demonstrated time and time again that he
is the industry's best radio station operating executive, bar none. As founder
and head of Capstar Broadcasting, Steve Hicks has built Capstar into the
nation's largest radio group in terms of station count, with 344 stations in 82
mid-sized markets nationwide. Capstar's 1998 consolidated net revenues were
$517.5 million, and its 1998 broadcast cash flow was $212.9 million.
"With Jimmy as head of its Radio and Outdoor Group, with Steve as head of
Chancellor's Media Services Group, and with both joining me as members of our
newly created Office of the Chairman,
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CHANCELLOR MEDIA CORPORATION, 3/15/99 PAGE 5
I believe we have a winning team that can take Chancellor to the next strategic,
operational and financial level."
Mr. Hicks noted that the combined Chancellor/Capstar enterprise will be the
leading major radio group in the United States based on station count, revenues,
broadcast cash flow and same-station broadcast cash flow growth. Based on
information contained in their respective public filings, the combined
Chancellor/Capstar achieved, on a pro forma, "same store" basis, 1998
consolidated net revenues up 14 percent, to $2.1 billion and 1998 broadcast cash
flow up 24 percent, to $939 million.
Mr. Hicks said: "Chancellor Media is taking the steps needed to become a great
company and great investment. I have been involved in the radio industry all my
life. Nothing means more to me, personally or professionally, than enabling
Chancellor to realize its tremendous potential and to build value for all of its
shareholders. That is my personal commitment - a commitment shared by all of my
colleagues on the Board and management of Chancellor as well as all of my
partners at Hicks Muse. I am confident that together we will accomplish our
strategic, operational and financial objectives and add a proud new chapter to
the Chancellor story."
With respect to assets that were to have been part of a combined Chancellor/LIN
entity, Chancellor will assign to LIN its agreements to acquire Televicentro de
Puerto Rico, the owner of WAPA-TV in San Juan, and Petry Media Corporation, a
television national sales representation firm.
Chancellor Media Corporation, with reported 1998 net revenues of $1.27 billion
and broadcast cash flow of $591.8 million, is a diversified media company
consisting of the Chancellor Radio and Outdoor Group, and the Chancellor Media
Services Group, including Katz Media, the leading media representation firm.
Reflecting announced transactions, Chancellor Radio Group will be the nation's
largest radio broadcasting entity with 469 stations in 106 markets reaching a
weekly listener base of 66 million people. Through the AMFM Radio Networks,
Chancellor offers syndicated programming nationwide. Chancellor Outdoor Group is
the nation's fifth-largest outdoor advertising company, operating over 41,000
display faces nationwide. Chancellor's Katz Media is the only full-service media
representation firm in the United States serving multiple types of electronic
media. Chancellor Marketing Group is a full service, sales promotion firm
developing and integrating marketing programs for Fortune 100 companies.
The news announcement contains certain forward-looking statements that are based
upon current expectations and involve certain risks and uncertainties within the
meaning of the U.S. Private Securities Litigation Reform Act of 1995. Key risks
are described in Chancellor's reports filed with
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CHANCELLOR MEDIA CORPORATION, 3/15/99 PAGE 6
the U.S. Securities and Exchange Commission. Readers should note that these
statements may be impacted by several factors, including economic changes and
changes in the broadcasting industry generally and, accordingly, the Company's
actual performance and results may vary from those stated herein and Chancellor
undertakes no obligation to update the information contained herein.
Contacts: Chancellor Media Corporation
Deborah R. Jacobson
Senior Vice President of Investor Relations
401/457-9403 or 214/922-8700
Joseph N. Jaffoni or David C. Collins
Jaffoni & Collins Incorporated
212/835-8500; [email protected]
Hicks, Muse, Tate & Furst
Roy Winnick or Mark Serner
Kekst and Company
212/521-4842 or 4802
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