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Rating Action:

Moody's Assigns Caa1 Rating to Clear Channel's Proposed Notes; Outlook Stable

11 Feb 2011

$750 million of Debt Affected.

New York, February 11, 2011 -- Moody's Investors Service assigned Clear Channel Communications, Inc.'s (Clear Channel) (Caa2 Corporate family Rating) proposed $750 million Senior Secured Priority Guarantee Notes due 2021 a Caa1 (LGD 2, 20%) rating. Proceeds of the financing will be used to fund approximately $250 million of the company's 6.25% (Pre-LBO) Senior Notes due this year and the remaining $500 million will be used to repay a small portion of the company's revolver and term loans maturing in 2014 and 2016. In addition to the note issuance, Clear Channel also amended its senior secured cash flow and ABL credit facilities to allow for future amend-and-extend transactions, incurrence of additional high yield bonds (used for the purpose of reducing the outstanding balances of the term loan and revolver), and greater timing flexibility under their bank debt accordion feature. All of the company's credit ratings remain unchanged and the company's rating outlook is stable.

A summary of today's rating actions are listed below:

Issuer: Clear Channel Communications, Inc.

.New $750 million Senior Secured Priority Guarantee Notes due 2021, Assigned Caa1 (LGD-2, 20%)

RATINGS RATIONALE

The company's Caa2 Corporate Family Rating reflects the unsustainable nature of Clear Channel's capital structure given its high debt-to-EBITDA leverage (approximately 13x gross leverage and 11.9x net leverage at December 30, 2010 excluding Moody's standard adjustments) and very large maturities in 2014 and 2016. Moody's anticipates that cash-on-hand and free cash flow generation will not be adequate to fund the approximate $5 billion of debt maturing through fiscal 2014. Also incorporated in the rating is Moody's expectation that Clear Channel's leverage metric will remain high relative to the underlying value of the company's radio broadcast and outdoor advertising assets over the coming 12 to 24 months.

Notwithstanding the company's weak balance sheet which greatly influences the company's credit ratings, Clear Channel possesses significant scale, geographic diversity and leading market positions in most of the 150 markets in which the company operates. Also, Clear Channel is presently benefiting from a healthy rebound in the economy as evidenced by improving operating performance, modest (but positive) free cash flow generation in 2010, and potential for enhanced liquidity and flexibility afforded to the company through the recently proposed credit facility amendments. Moody's notes, however, that the company faces higher interest costs from any refinancing or extensions of debt maturities which could materially cannibalize free cash flow.

The stable outlook reflects our expectation that Clear Channel will remain liquid over the next 18 to 24 months as significant cost reductions and revenue growth and refinancing and amendment activity (over the last 12 to 18 months) allow the company to remain well in compliance with its financial maintenance covenants, providing the company with additional liquidity and potential flexibility to help address intermediate-term maturities. Given the high leverage and limited free cash flow to reduce debt, Moody's would consider an upgrade of Clear Channel's ratings if the company were to sustain an improved level of operating performance resulting in meaningful revenue, EBITDA and free cash flow growth, resulting in material debt reduction and/or maturity extensions on a significant portion of outstanding debt (10% - 20%) well beyond the current note issue.

The rating could be lowered further if it appears that the economy will contract again or financial market liquidity materially tightens in the coming years, default or debt restructuring looks imminent due to inability to extend or refinance material amounts of the company's debt, or if revenue and EBITDA growth were to subside (or reverse), which would point to lower valuation of the company relative to our forecast at the expected time of restructuring.

The principal methodology used in this rating was Moody's Global Broadcast Industry published in June 2008.

Clear Channel Communications, Inc. ("Clear Channel") with its headquarters in San Antonio, Texas, is a global media and entertainment company specializing in mobile and on-demand entertainment and information services for local communities and for advertisers. The company's businesses include radio broadcasting and outdoor displays (via the company's 89% ownership of Clear Channel Outdoor Holdings Inc. ("CCO"). Clear Channel's consolidated revenue for YE 2010 was approximately $5.9 billion.

REGULATORY DISCLOSURES

Information sources used to prepare the credit rating are the following: parties involved in the ratings, public information, confidential and proprietary Moody's Investors Service information, and confidential and proprietary Moody's Analytics information.

Moody's Investors Service considers the quality of information available on the issuer or obligation satisfactory for the purposes of assigning a credit rating.

Moody's adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history.

The date on which some Credit Ratings were first released goes back to a time before Moody's Investors Service's Credit Ratings were fully digitized and accurate data may not be available. Consequently, Moody's Investors Service provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see the Credit Policy page on Moodys.com for the methodologies used in determining ratings, further information on the meaning of each rating category and the definition of default and recovery.

New York
Neil Begley
Senior Vice President
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Russell Solomon
Senior Vice President
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's Investors Service
250 Greenwich Street
New York, NY 10007
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JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's Assigns Caa1 Rating to Clear Channel's Proposed Notes; Outlook Stable
No Related Data.
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