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... h of its markets with other radio stations and outdoor groups, as well as broadcast and cable television, newspapers, magazines, and direct mail. Chancellor's outdoor advertising, not unlike the radio group, competes with other outdoor groups, as well as with other forms of mass mediums. Chancellor's outdoor group competes on location, price, and availability of service. Ultimately, the success of a billboard is determined by the number of impressions it delivers.
An impression is measured by the number of people in a DMA that actually see the billboard. The number of impressions a billboard delivers is directly correlated to its advertising appeal. Media representation firms compete to gain client stations and sell airtime to advertisers. Chancellor competes with other independent and network media rep firms, direct national advertising, and competes on behalf of its clients with other media. Chancellor owns most of its competitors, such as Sell, Petry, and Blair Television. It's only significant competitor is Internet National Radio Sales.
The overall success of Chancellor Media Corporation is dependent upon ratings, impressions, and share of advertising dollars within the market. Increased ad dollars leads to increased revenues. Assuming all else equal, increased revenues generate increased profits. This can then be used to increase the overall business through acquisition opportunities, thereby creating a large cyclical effect. 'Chancellor Media is also subject to competition from new media technologies such as, the delivery of audio programming by cable television systems, direct broadcast satellite (DBS) systems, the Internet, personal communications services and other digital audio broadcasting formats. '; CONNECTIONS Hicks, Muse, Tate & Furst is a leveraged buyout firm building a media empire. 'Hicks, Muse assembles limited partnership investment pools and targets companies in specific niches that can form a nucleus for other investments. '; Thomas O. Hicks is the chairman and CEO of Hicks, Muse, Tate & Furst as well as the chairman and CEO of Chancellor Media Corporation. Hicks, Muse, et.
al. owns 17 percent of Chancellor Media, along with 69 percent of Capstar and 80 percent of LIN Television. In addition to its media holdings, Hicks, Muse, et. al. owns Berg Electronics, International Home Foods, Stratford Capital Partners, Olympus Real Estate, and Donaldson, Lufkin & Jenrette.
International Home Foods' nationally known products include Chef Boyardee pastas and Bumble Bee seafood, Libby's canned meat products, Player fruit spread, Gulden's mustard, and PAM cooking spray. The company also sells southwestern cuisine canned foods (Ro Tel tomatoes, Dennison's chili, and Ranch Style beans) and snack foods (Crunch 'n Munch and Jiffy Pop). Tom Hicks also owns the Dallas Stars NHL Team and the Texas Rangers MLB Team. 'Mr. Hicks serves as a director of Capstar, LIN Holdings Corp. , LIN Television Corporation, Sharon International Corporation, Inc. , Cooperative Computing Inc. , International Home Foods, Triton Energy, D. A. C.
Vision Inc. , and Olympus Real Estate Corporation. '; R. Steven Hicks, the brother of Tom Hicks, is the Vice Chairman of Chancellor Media Corporation, and the President and CEO of Chancellor Media Services Group, as well as the President, CEO, and director of Capstar Broadcasting. Steven Hicks founded Capstar in 1996. Between the Hicks' brothers, they own everything from consumer food products to multiple steps in the media chain. They own the creation of content or message (the Dallas Stars and Texas Rangers), the production of the message (LIN Holdings Corp. ), the delivery of the message (Katz), and the distribution and redistribution of delivery (LIN Television, Chancellor, and Capstar). Tom and Steven Hicks control the means of production and are a virtual monopoly.
CURRENT EVENTS On July 7, 1998, Chancellor announced that it would buy LIN Television for $ 902 million in stock. ''; The acquisition of LIN Television marks our entry into television broadcasting, a business complementary to our broad radio platform, 's aid Jeffery Marcus, [former] president of Chancellor. '; However, 'in July of 1998, a stockholder derivative action was commenced in the Delaware Court of Chancery by a stockholder purporting to act on behalf of Chancellor. '; The defendants in the case were Hicks, Muse, Tate & Furst Incorporated, LIN Television, and a few of Chancellor's directors. The plaintiff alleged that Hicks, Muse, Tate & Furst inflated the price Chancellor was to pay for the merger because they, themselves, had overpaid when acquiring LIN. Thus, the merger 'allegedly constituted a breach of fiduciary duty and a waste of corporate assets by Hicks, Muse, Tate & Furst, which allegedly controls Chancellor, and the directors of Chancellor named as defendants. '; The plaintiff, defendants, and Chancellor reached a settlement; on March 15, 1999; the Boards of Directors of both Chancellor and LIN decided to terminate the merger. From the announcement of the merger to the settlement of the suit, many interesting transformations shaped the executive branch of Chancellor. Beware the Ides of March. March 15 proved to be the fall for some executive members of Chancellor.
Jeffrey A. Marcus, former President and CEO, Thomas P. Mcmillan, former CFO, Eric C. Neuman, former Senior Vice President-Strategic Development, and Richard A. B. Gleiner, former General Counsel, all resigned from their executive positions with Chancellor effective March 15, 1999.
On that same fateful day, Thomas O. Hicks, the CEO of Hicks, Muse, Tate & Furst, was elected President and CEO of Chancellor Media Corporation; James E. de Castro was appointed as President and CEO of the newly created Chancellor Radio and Outdoor Group; and R. Steven Hicks, the current President and CEO of Capstar, was appointed as President and CEO of the newly created Chancellor Media Services Group. 'On August 26, 1998, Chancellor Media and Capstar Broadcasting entered into an agreement to merge in a stock-for-stock transaction that will create the nation's largest radio broadcasting entity. Chancellor will acquire Capstar in a merger of Capstar into a wholly owned subsidiary of Chancellor Media. '; 'The combined company will have 463 radio stations in 105 markets as well as interests in television, billboards and ad sales. '; This merger is subject to stockholder approval, and will be voted on July 13, 1999. Due to the FCC's Telecommunications Act of 1996, which relaxed cross ownership and duopoly restrictions, radio groups across the United States have either merged with or been bought out by larger corporations.
All of these mergers and acquisitions come with the hope of higher profits and larger returns. The thought being that larger station groups can not only cut costs by consolidating operations, but can increase revenues by creating a larger listener base that will attract higher shares of advertising dollars. The merger received approval by the Federal Trade Commission under the Hart-Scott-Radio Anti-Trust Act on June 9, 1999. However, not unlike the LIN agreement, this merger is also under scrutiny from stockholders. 'In September 1998, a stockholder class action complaint was filed in the Delaware Court of Chancery by a stockholder purporting to act individually and on behalf of all other persons, other than defendants, who own securities of Chancellor and are similarly situated. '; The defendants named in this case are Chancellor Media, Hicks, Muse, Tate & Furst, Thomas O. Hicks, Jeffrey A. Marcus, James E.
de Castro, Eric C. Neuman, Lawrence D. Stuart, Jr. , Steven Diet, Thomas J. Hodson, Perry Lewis, John H. Massey, and Vernon E. Jordan, Jr. 'The plaintiff alleges breach of fiduciary duties, gross mismanagement, gross negligence or recklessness, and other matters relating to the defendants' actions in connection with the proposed Capstar merger. '; This lawsuit is ongoing, and Chancellor intends to contest these allegations.
It will be interesting to see if this suit also ends with a settlement agreement to terminate the proposed merger. In 1998 Chancellor Media entered the outdoor advertising business with the acquisition of Martin Media L. P. and White Industries, Inc. for $ 610 million and $ 930 million respectively. These acquisitions launched Chancellor into the number five spot in the outdoor market, owning over...
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