Clear Channel

(CCU) - Get Report

lit a fire under its long-stagnant stock Friday, setting a plan to spin off one unit, sell shares in another and return cash to shareholders through dividends.

The San Antonio, Texas, radio broadcaster said it would sell 10% of its Clear Channel Outdoor unit in an IPO and spin off its entire Clear Channel Entertainment unit to shareholders. The company also plans to pay a $3 special dividend and boost its regular quarterly payout by 50%.

The company also posted first-quarter earnings that missed analyst estimates. Investors weren't fazed, though, and Clear Channel shares jumped 9% in early action Friday.

"We're seeking to unlock the considerable value in our Company, and create a strong foundation for future growth, by improving the strategic, operational and financial flexibility in each of our leading business units," said CEO Mark Mays. "We expect these transactions to highlight the fundamental value of each of our leading businesses in a tax-efficient manner, so that current and future investors can more clearly evaluate the Company's overall inherent value. These initiatives are designed to optimally capitalize each business in a manner that generates enhanced equity returns while maintaining strong balance sheets and preserving financial flexibility. Each business will have sharpened management focus and an improved ability to attract, retain and reward employees in a way that's aligned with shareholders."

Clear Channel Outdoor will consist of Clear Channel's domestic and international outdoor operations. It's the world's largest outdoor media company with annual 2004 sales of $2.5 billion.

Clear Channel Entertainment will consist of entertainment operations throughout North America, Europe, South America, Asia and Australia, with annual 2004 sales of $2.75 billion.

For its first quarter ended March 31, Clear Channel earned $48 million, or 9 cents a share, down from the year-ago $116 million, or 19 cents a share. Revenue fell 4% from a year ago to $1.9 billion. Analysts had forecast a 13-cent profit on sales of $1.96 billion.

"In what was a challenging first quarter, we maintained our focus on leading change, driving innovation and delivering value to our customers across our leading out-of-home media assets," Mays said. "Clear Channel Radio's results reflect our first full quarter of performance in a 'Less is More' listening environment. While still early, we are already seeing proof that we are providing a better listening experience and more effective environment for advertisers."

Early Friday, Clear Channel rose $3 to $35.