Long-Time Clear Channel Bull Drops Sell-Ax On Company, Calls For 40% Downside

• Shares of Clear Channel Outdoor Holdings, Inc. (NYSE: CCO) have plummeted 62.68 percent over the past year, almost down to the 52-week low on Tuesday at $3.53.
• Topeka Capital’s David W. Miller has downgraded the rating on the company from Buy to Sell, while lowering the price target from $11 to $2.
• The downgrade was based on capital structure issues at the company’s parent, iHeartMedia Inc (OTC: IHRT), Miller explained.

Analyst David Miller elaborated that the previous Buy rating on the company was based on expectations of the potential sale of 1,000 radio towers by iHeartMedia, of which only 400 were sold.

There also were expectations that Clear Channel’s European billboard business would be sold for net proceeds of $3 billion, which could then have been used “to pare off 2016 maturities at the IHRT level.”

Again, despite expressed interest of a leading Paris-based competitor, the two parties could not agree on valuation and the deal fell through.

Miller also stated that he had been “fairly certain as of last summer that CCO would resolve its digital display situation in Los Angeles, even getting good news on that front as of last July from the L.A. City Council. However, that is now stuck in limbo with the LA City Planning Commission, and no resolution appears to be within sight.”

The primary challenge faced by Clear Channel is leverage at iHeartMedia, in particular, the $197 million in maturities due in December 2016, as well as $8.3 billion in senior secured debt due in 2019.