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For Clear Channel, Something's Gotta Give

Stocks in this article: P SIRI

NEW YORK ( TheStreet) -- Clear Channel is set to redo Ryan Seacrest's contract, The New York Times reports, handing him a raise of $5 million annually from his current $20 million deal.

You probably know Seacrest from television,but he can credit his fortune to radio, particularly Clear Channel. Like many big celebrities, Seacrest got his start in radio. He still hosts syndicated programming for Clear Channel, does a morning show on cash cow KIIS-FM in Los Angeles and recently got a major investment in his production company from Clear Channel or, more precisely, the private equity firms that prop it up, Thomas H. Lee Partners and Bain Capital.

Ryan Seacrest just got a $5 million raise from Clear Channel, bumping him up to a $25 million salary from a company saddled with more than $20 billion in debt.

Even though I am not in the demo, I have no problem with Seacrest earning as much as does at Clear Channel and elsewhere. He deserves it. He's a modern-day Rick Dees or Dick Clark. It is curious, however, that a company saddled with more than $20 billion in debt has decided to make such an investment.

If you really want to freak yourself out, start on page 44 of Clear Channel's most recent annual report. It details the company's obligations.

Of course, you would be insane to go long Clear Channel stock, but if you follow the media space, an interesting situation could be developing.

Clear Channel recently named longtime media executive Bob Pittman as CEO. In addition to continuing with the tradition of cleaning house at radio stations across the country, Pittman changed the company's name. It's no longer Clear Channel Radio; it's Clear Channel Media and Entertainment, or CCME for short.

On the surface, this sounds like a solid idea. And that's because, on the surface, it is. Simply put, traditional radio is dead. And, unless you have disrupted the medium as Pandora (P) has, you would be foolish to keep such an outdated moniker on your letterhead. Several sources tell me that, while a nice branding move, it's most likely a strategic one designed to get the attention of prospective suitors.

At day's end, I am not sure how much longer Lee and Bain want to stick with Clear Channel. Seacrest is one thing, but, ultimately they do not need Clear Channel to ride that wave.

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