NEW YORK, Jun 17, 2008 (BUSINESS WIRE) -- In-line with prior guidance, Fitch Ratings expects to downgrade
Clear Channel Communications, Inc.'s (Clear Channel) Issuer Default
Rating (IDR) to 'B' assuming shareholder approval of the latest
going-private offer that is set to vote July 24, 2008.

Fitch also expects to rate the secured bank facilities equal to or
one notch above the IDR; new unsecured would be one or two notches
below the IDR and existing senior unsecured could be two to three
notches below the IDR. As currently structured, it is likely that
Clear Channel's secured term loans and bank facilities would be rated
'B+/RR3' and the 10.75% senior notes due 2016 and 11% senior toggle
notes due 2016 would be rated 'CCC+/RR6'. Existing bonds and
debentures of Clear Channel that remain outstanding are likely to be
downgraded to 'CCC/RR6' from 'BB-' due to the structural subordination
in the capital structure as all other debt will receive subsidiary
guarantees.

The expected 'B' IDR is at the low end of the rating category and
takes into account the approximately $1 billion of 2011 maturities, as
well as significant principal amortization on the term loans that will
likely begin late 2011 or early 2012. 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
for the 2011 maturities could come from Clear Channel's $2 billion
committed revolver (Fitch notes the facility contains a Material
Adverse Effect clause).

Clear Channel also has separable assets that, while the company
has never stated such, Fitch believes could be sold if ever needed to
de-lever and generally would not impact core operations. 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. Fitch expects
Clear Channel to be able to de-lever to around the 7 times (x) range
by 2011. It is uncertain if access to the capital markets at that time
would be available for a sizeable debt re-financing.

Fitch expects cash interest coverage to be near or below 1.5x upon
closing on a pro forma basis and should remain near that level over
the intermediate term when taking into account future mandatory
principal amortization on the term loans. As such, there is unlikely
to be any upward momentum on these ratings over the next few years. A
'B' rating indicates that while financial commitments are expected to
be met, capacity for continued payment is contingent upon a sustained,
favorable business and economic environment. The 'B' IDR takes into
account the existing macro-economic environment that continues to
pressure local advertising sales of traditional media outlets like
radio broadcasting.

Fitch does not expect the secular challenges facing radio to be as
significant as those facing print media, and we believe that the
medium will benefit from the continued roll-out of HD radio (although
supply issues do remain) and, to a lesser extent, Internet streaming.
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.

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.

SOURCE: Fitch Ratings

Fitch Ratings
Jamie Rizzo, CFA, +1-212-908-0548, New York
Mike Simonton, CFA, +1-312-368-3138, Chicago
Media Relations:
Brian Bertsch, +1-212-908-0549, New York

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