If you were angry yesterday when you learned what now-fired ClearChannel radio host Troi Torain has been saying on air you are really going to hit the roof when you realize who was, in effect, paying his salary: you.
(Before I get into that, can someone explain to me how it wasn't "news" when he said it or even when a City Council Member protested it, but only once ClearChannel did something about it? Headline: "Power 105 radio host Star gets fired". How about, headline: "ClearChannel = hate radio")
Now, about that money of yours going to ClearChannel… Through accounting magic, ClearChannel was able to claim an $891 million capital loss in the 4th quarter of 2005 from the spinoff of its live music division. As a result, they got a tax refund of $314.1 million.
Yes: the IRS is writing a check for $314,100,000 to ClearChannel Communications to pay for things like hate radio DJs. (Don't think it stops because Star is out; as I said, hate is a business model for Lowry Mays and co.)
Here's how ClearChannel describes it in their 10-K filing with the SEC (p35):
We completed the spin-off of our live entertainment and sports representation businesses on December 21, 2005. In accordance with Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, we reported the results of operations for these businesses through December 21, 2005 in discontinued operations. The spin-off generated a capital loss for tax purposes of approximately $2.4 billion. We utilized approximately $890.7 million of this capital loss in the current year to offset taxable capital gains realized in 2005 and previous years, which resulted in a $314.1 million tax benefit which is included in income from discontinued operations in the fourth quarter of 2005. The remaining $1.5 billion of the $2.4 billion capital loss was recorded as a deferred tax asset with an offsetting valuation allowance on our balance sheet at December 31, 2005.
Now, I don't know anything about the "Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets," but I sure wish someone had shown me that field in TurboTax when I was filing a return. I completed the spin-off my first generation iPod last year; I'd love $150 million from the government. How about those workers at Ford or GM that completed the spin-off of their jobs in 2005?
ClearChannel has $1.5 billion left in capital losses from the spin-off that they can claim against earnings in the future. At the rate of their first refund, that's another $529 million ClearChannel claims to have coming to them from the federal government for a grand total of $843 million.
And they still have those licenses we gave them to use our airwaves.