If the deal is approved by SFX stockholders--and passes muster with federal regulators--Clear Channel would own and operate radio stations in the vast majority of the markets where SFX owns or operates live music venues, according Clear Channel's Tuesday morning (2/29) announcement.

SFX Entertainment has been the subject of buyout rumors in recent months, and the rampant speculation led CBS to issue a press release last week to deny that talks between CBS and SFX were underway.

According to trade magazine Pollstar, SFX-owned companies had a hand in more than 60% of the 200 top-grossing concert dates of 1999. SFX-promoted shows grossed $310 million in 1999, according to Amusement Business, well ahead of the $118 million take of the number two player, House Of Blues Concerts.

Since it began its acquisition spree in late 1996, SFX has spent $1.5 billion to buy out many of the top independent concert promoters in the U.S. and abroad. SFX now owns or operates 120 live entertainment venues in 31 of the top 50 U.S. markets, including 16 amphitheaters in the top 10 markets. Through acquisitions, the company also has grown into a leading sports management and marketing company.

Robert F.X. Sillerman brought SFX Entertainment public in 1997 after selling off SFX Broadcasting, a huge stable of radio stations he built through acquisitions in the early 1990s, for $2.1 billion. The former SFX Broadcasting stations were eventually merged into Capstar.

When a pending merger between Clear Channel Communications and fellow broadcasting behemoth AMFM is complete, Clear Channel will own or operate 867 radio stations and 19 television stations in the United States, and 240 radio stations outside the country. Clear Channel also operates more than 555,000 billboards, making the company a major player in the outdoor advertising business. The deal is expected to be finalized during the second half this year, according to a statement issued today by AMFM. (AMFM came into existence in March 1999 with the merger of Capstar Broadcasting and Chancellor Media.)

The Clear Channel-SFX merger could be the harbinger of more radio concert festivals, and will likely lead to more scrutiny of how radio festival appearances affect airplay. For instance, the Los Angeles Times reported in 1998 that broadcasting giant Chancellor Media billed A&M Records $237,000 to promote a new Bryan Adams single, in exchange for which Adams played four Chancellor-sponsored charity concerts for free.

Times reporters analyzed airplay charts from Broadcast Data Systems and discovered that, in the four markets where Adams performed, Chancellor stations kept playing the single after other stations around the country had dropped it. After the article appeared, Chancellor and A&M denied that theirs was an illegal pay-to-play deal. The Federal Communications Commission reviewed the matter but did not proceed with a formal investigation.

Under the merger agreement, SFX's Class A shareholders will receive 0.6 shares of Clear Channel Communications, Inc., common stock for each share of SFX stock held. Each of SFX Entertainment's Class B shares--about 90% of which are held by Sillerman with SFX CEO Michael Ferrel owning the balance--will be exchanged for one full share of Clear Channel.

Clear Channel President Mark Mays told analysts today that Sillerman has indicated a desire to move on to other ventures, but Ferrel has agreed to remain with the company through the transition. The companies expect to consummate the deal sometime during this year's third quarter.

SFX Entertainment shares closed at 38 1/2, up 1/2 today. Clear Channel shareholders didn't greet the merger news warmly, driving the stock's price down 8 9/16 points to 66 5/8 on the day.