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Finance 450 at EMU with Dr. Moeller

Radio One Presentation
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Radio One

Substantive Issues

In the winter of 2000, Radio One, the largest radio group targeting African-Americans in the country, had the opportunity to acquire 12 urban stations in the top 50 markets from Clear Channel Communications. The stations were being sold by Clear Channel Communications to obtain FCC approval for its acquisition of AMFM Inc. Radio One was also negotiating the acquisition of nine stations in Charlotte, NC, Augusta, GA, and Indianapolis. The proposed acquisitions would double the size of Radio One. The case focuses on the strategic and financial evaluation of the proposed acquisitions.

Pedagogical Objectives

The case provides the opportunity to evaluate the strategic and financial aspects of the proposed acquisitions. The financial evaluation of the proposed acquisitions largely involves estimating their value.

 

Suggested Questions

1. Why does Radio One want to acquire the 12 urban stations from Clear Channel Communications along with the nine other stations?

2. What price should Radio One offer based on a discounted cash flow analysis?

3. What price should Radio One offer based on a trading multiples analysis?

4. What should Radio One offer for the new stations and why?