It was only five years ago that Clear Channel was on top of the world. The Mayses, led by their father, Lowry, had put together a dazzling series of acquisitions, making Clear Channel the company to watch — or get out of the way of — in media. Their control in radio was such that they were accused of being mini-Murdochs — too powerful and overreaching with their political views.

The company increasingly drew criticism, some of it harsh. Foes accused Clear Channel of blacklisting the antiwar Dixie Chicks (the company has repeatedly denied this) and of being too profit-hungry. Their cost-saving technique of voice-tracking (one disk jockey for many stations) was widely decried — and blamed for nearly causing a public health disaster. In 2002 police in North Dakota tried in vain for 90 minutes to reach a real person at six Clear Channel stations near the town of Minot to get the word out about a toxic chemical spill. The company has since retreated from voice-tracking: It now accounts for only 9% of all of its programming, down from 15% several years ago. Once supremely certain that its synergies would deliver shareholders to the promised land of fat returns, Clear Channel instead has spent years fighting critics, lawsuits, and bad press. It also faces two Justice Dept. investigations over allegations of being anticompetitive.

Meanwhile, technology was changing their world. Consumers became empowered as new entertainment choices, from Napster to iPods to cell phones, lured people away from their radios. The speed of technology advances, the rapid rise of satellite radio, the Internet customization of media — none of these were anticipated during Clear Channel’s early dealmaking days. On top of that, an ad recession and the emergence of new and promising outlets for advertisers, such as the Internet, helped put Clear Channel’s shares in the tank. In the past year alone, its stock is off 25%, to about $29, even after the company bought back about 10% of outstanding shares starting in April, 2004. That’s a steep drop from about $80 a share at its buying peak in 2000. The formerly cocksure Clear Channel is a humbled enterprise.

No wonder the Mayses and their executives are scrambling to clear all that static. And the results could affect the entire $20 billion U.S. radio industry, particularly since other radio execs closely watch dominant Clear Channel’s moves. On Apr. 29 the company announced plans to spin off its concert-promotion and live-venue business to shareholders and offer 10% of its billboard business in an initial public offering. The plan mirrored the current vogue among media conglomerates — splitting apart to try to unlock hidden value in their many assets. Some observers, though, viewed the Clear Channel breakup plan, first discussed by its board 18 months ago, as an acknowledgement that putting all the businesses under one roof was a failure. “They just couldn’t make it work,” says Merrill Lynch & Co. (MER ) radio analyst Laraine Mancini. “They ran the business too much for short-term gains and not enough for long-term health.” Mancini figures the spin-off, the IPO, and a one-time $3 dividend could boost total shareholder value by 20%.

Beyond the dismantling, the $9.4 billion-a-year Clear Channel is draping itself in new media offerings. It’s launching digital radio channels and podcasting and developing more exclusive content for radio station Web sites. The goal is to find ways to deliver what’s essentially a live, local medium to a borderless, timeless cyberworld. Mark says he has had talks with Apple Computer CEO Steven P. Jobs, Microsoft CEO Steven A. Ballmer, and Yahoo! CEO Terry S. Semel about ways their companies might use Clear Channel content. Clear Channel is also hellbent on winning back some of the status it has lost to satellite newcomers XM and Sirius by signing big names to host their own shows, including Donald Trump and Jesse Jackson. And Harry Thomason, a Hollywood director and longtime friend of Bill Clinton’s, confirmed to BusinessWeek that Clear Channel has had talks with the former President about his own show. “There’s definitely a place for the former President on radio at some point,” says Thomason.

In hopes of increasing traffic to its radio Web sites, a new feature called Stripped, which debuted on May 24, offers exclusive performance footage and interviews. The first segment features popular new singer John Legend on 125 sites, spiking Web traffic in cities such as Philadelphia, San Francisco, and Phoenix. Search engine Ask Jeeves Inc. signed on as a sponsor. To inject a bit of hip, the company in the past year brought in 35-year-old Internet guru Evan Harrison, former head of AOL Music, among other new young hires.

Clear Channel execs now refer to their “incubators” when discussing new projects, and Mark says the company is “less radiocentric and more listener-centric. What we do best is deliver an enormous amount of local content. We should be able to deliver that in alternative ways.” At a confab of more than 300 Clear Channel program directors in Atlanta on June 6, radio division CEO John Hogan’s message to his troops was: “Radio is more than tall towers in big fields. We can no longer be limited to a singular distribution method.”

But despite the new rallying cries, flashes of the old, bumbling Clear Channel shine through. In the too-clever-by-half category, it hoped to create buzz about an Akron station format change from sports to progressive talk last month by starting a critical Web site blasting the corporatization of radio. Problem was, listeners sensed the company’s fingerprints on the ersatz opposition, and a second wave of criticism hit — this one in the form of hate e-mails and a torrent of anti-Clear Channel blogging.

It’s a far cry from 1972, when Mark and Randall’s dad, L. Lowry Mays, now 69, bought his first radio station in San Antonio with friend and car dealer B.J. “Red” McCombs, who went on to own the Minnesota Vikings. Lowry was the epitome of the tall, tough, self-made Texas businessman. Over the next 30 years, he bought station after station — about 70 radio companies in all — many after 1996, when Congress lifted radio regulation. He also bought TV stations and moved into billboards and, eventually, live entertainment. Today, Clear Channel owns 1,200 U.S. radio stations (of the 10,600 commercial stations operating in the U.S.), 40 TV stations, 104 concert halls and amphitheaters, and 824,000 outdoor displays worldwide. The company’s concert-promotion business is the biggest in the U.S. Current tours of the Rolling Stones and U2 top their roster.

The elder Mays has played a less active role in running the company of late; last year he had brain surgery to relieve pressure from a blood clot. He was wheelchair-bound, but after months of rehab, the 6-foot-2-inch rancher is walking with a cane. He’s at the office several times a week, but it is Mark’s and Randall’s show. Both brothers have large families — Mark has six kids; Randall has four. They see each other mostly at the office and say they have a close working relationship. “What you see with us is what you get. There are no hidden agendas between us,” says Randall, a former investment banker at Goldman, Sachs & Co. (GS ) who came home from New York to work in the business in 1992. His old firm is handling the restructuring. Mark has a Texas folksiness, affable and back-slapping, while Randall is more reserved. Mark jokes that “he’s the smart one. I’m the good-looking one.” Deadpans Randall: “I’m not sure what’s better.”

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