2008-07-28 21:07:02 -

- In-line with prior guidance, Fitch Ratings has downgraded the Issuer Default Rating (IDR) and outstanding debt rating of Clear Channel Communications, Inc. (Clear Channel) as follows:

--IDR to 'B' from 'BB-';

--Senior unsecured non-guaranteed notes to 'CCC/RR6' from 'BB-'.

Fitch has also removed Clear Channel from Rating Watch Negative, where it was originally placed on Oct.

26, 2006. The Rating Outlook is Negative. Additionally, Fitch has withdrawn all existing ratings of Clear Channel.

Fitch's downgrade follows the recent announcement that shareholders have approved the acquisition of Clear Channel by certain investors in a highly leveraged transaction. The transaction will result in proforma leverage and coverage of approximately 9 times (x), and 1.5x, respectively. The IDR and Negative Outlook reflect the weak macroeconomic environment that continues to pressure local advertising sales of traditional media outlets like radio broadcasting as well as the longer-term pressures that secular changes have placed on traditional media.

In addition, the ratings and Outlook take into account the company's $1 billion of maturities in 2011, as well as significant principal amortization on the term loans that will begin late 2011. Fitch believes that Clear Channel has separable assets that could be sold if ever needed to de-lever and generally would not impact core operations. While management has never stated such, Fitch believes these assets include Clear Channel's International Outdoor segment that, in Fitch's opinion, does not provide significant synergies with the company's U.S. operations and its Katz Media national rep firm. Proceeds from any asset sales generally have to go towards repayment of the new term loans. Fitch estimates that Clear Channel should be able to generate annual free cash flow of at least $150 million assuming no pay-in-kind (PIK) election on the toggle notes. Fitch estimates a PIK election could result in an additional $150 million of annual pre-tax cash flows. Other sources of liquidity could come from Clear Channel's $2 billion committed revolver (Fitch notes the facility contains a Material Adverse Effect clause).

Fitch does not expect the secular challenges facing radio to be as significant as those facing print media, and believes that the medium will benefit from the continued roll-out of HD radio. Supply issues related to the number of ad spots could be present with HD radio, however Fitch believes the technology should help the industry attract more national advertising. While the outdoor segment is also susceptible to the slowing macro-economic environment, Fitch expects mid-single digit growth and continued margin expansion from the U.S. segment as it continues to roll-out digital billboards and takes market share from other traditional media outlets.

The new debt (totaling approximately $18 billion of new senior secured term loans and revolver, and senior unsecured notes, none of which were rated by Fitch) is expected to receive guarantees from Clear Channel's wholly-owned domestic restricted subsidiaries, which Fitch expects to include Clear Channel Holdings, Inc., the parent of Clear Channel Outdoor Holdings, Inc. The 'CCC/RR6' rating on the existing bonds and debentures of Clear Channel that remain outstanding reflect that they are structurally junior to the new debt since it will not receive subsidiary guarantees.

The rating withdrawal reflects Fitch's view that the level and timeliness of information available to Fitch going forward may not be sufficient to maintain timely and accurate ratings.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

Fitch Ratings, New York
Donna McMonagle, 212-908-0258
or
Media Relations:
Brian Bertsch, 212-908-0549