Clear Channel gets day in court; Yahoo! continues tug-o-war; airlines get close again

By Aaron Hochman-Zimmerman

New York, April 11 - While the stock market was tumbling on Friday, the deal world was getting more tangled as Yahoo! Inc. continued to play one company off the other in the pursuit of what it sees as its shareholder interests and a better offer from Microsoft Corp.

Clear Channel Communications Corp. stock stayed ahead of the market, gaining as it will be allowed into court in order to press the financing banks to fund its leveraged buyout by Bain Capital Partners and Thomas H. Lee Capital Partners.

XM Satellite Radio Holdings Inc. and Sirius Satellite Radio Inc. slipped as they saw mixed reviews for their planned merger.

Delta Air Lines Inc. and Northwest Airlines Corp. shares improved as the two have come close to a deal again after drifting apart over pilot seniority issues.

National City Corp. slipped even as the Federal Reserve was seen as pushing for a deal.

Electronic Arts Inc. stock fell as it indicated that it would prefer to throw the net over Take-Two Interactive Software Inc. sooner than wait until after the release of Take-Two's hot property Grand Theft Auto 4.

The Dow Jones Industrial Average was beaten down by 256.56, or 2.04%, to end at 12,325.42 while the Nasdaq Composite Index dumped 61.46, or 2.61%, to finish at 2,290.24.

The S&P 500 was pushed back 27.72, or 2.04%, to close at 1,332.83.

Clear Channel to trial

Shares of Clear Channel (NYSE: CCU) managed to add $0.55, or 1.90%, to close at $29.45 as the banking team committed to the financing of the deal between Clear Channel and Bain Capital Partners and Thomas H. Lee Capital Partners filed to dismiss the breach of contract claim.

However, as expected the motion was denied and the court date is set for June 2, a market source said.

The date is interesting though, he said. "That could be a ploy to run out the clock" on the deal.

Clear Channel and its potential private equity buyers have accused the banks of trying to back out of the deal.

The banks claimed that the contract gives them until June 12 to provide financing.

If the trial lasts for more than 10 days, "they don't make it look like they were delaying it," the source said about the banks.

Satellite Radios see mixed signals

Also over the airwaves, shares of XM Satellite Radio (Nasdaq: XMSR) fell $0.29, or 2.61%, to close at $10.80 while shares of Sirius Satellite Radio (Nasdaq: SIRI) slipped $0.07, or 2.75%, to $2.48, as Clear Channels' counsel wrote to the Federal Communications Commission to discourage the agency from approving the deal, a market source said.

"Everybody's chiming in on it," a market source said, "I think it's kind of silly ... Clear Channel has no vested interest in this."

Still, Merrill Lynch labeled Sirius a sell at the fair value of $2.30 per share, but still sees approval by the FCC to be "very likely" in the coming weeks, a market source said.

A tangled world wide web is weaved

Shares of Yahoo! (Nasdaq: YHOO) slid $0.25, or 0.87%, to close at $28.34 as the board of directors was expected to meet Friday to discuss the company's strategic options, although no decisions are expected, a market source said.

Shares of Microsoft (Nasdaq: MSFT) were off by $0.83, or 2.85%, to finish at $28.28 as the speculation continued over which way Microsoft will take its next offer, if there is to be one.

Other players in the outer hall, such as Google Inc. (Nasdaq: GOOG), which lost $11.63, or 2.48%, from its share price to end at $457.45 after the two announced their two-week trial partnership on Wednesday. No serious marriage talk has been heard from the young couple.

Still, Microsoft showed a bit of jealousy as it is reportedly creating the beginnings of an anti-trust case against the web search engines which would, if combined, consume nearly 90% of the web search business, according to the New York Times.

Shares of other potential suitors for the hand of Yahoo!, News Corp. (NYSE: NWS) fell $0.44, or 2.26%, to end at $19.00 and Time Warner Inc. (NYSE: TWX) dropped $0.34, or 2.33%, to end the day at $14.27.

"That's been a mess so far," a market source said.

"I feel that Microsoft is going to win ... Yahoo! is just trying to get Microsoft to raise their bid," he said about Yahoo!'s involvement with other players in the sector.

"If [Microsoft] were to raise it to the original $31 per share, they would get shareholder approval," the source said, even management would likely agree to it, he added.

Yahoo! has not been willing to negotiate under the current set of circumstances, "which is kind of stupid," the source said as it negates much of their recent posturing for a better price.

Because of the back and forth "it's becoming like the Delta thing," he said.

Airlines fly a loose formation

Investors watching the airline deal were flying as shares of Delta (NYSE: DAL) stayed ahead of the average by gaining $0.26, or 2.67% to $10.01, while shares of Northwest (NYSE: NWA) tacked on $0.09 or 0.83%, to close at $10.96.

Delta's pilots and management have struck a deal to move forward with the merger and have offered it to their counterparts at Northwest, the Atlanta Journal-Constitution reported.

Northwest's pilots union will meet Sunday to consider the offer, according to the Minneapolis Star Tribune.

Take-Two before Grand Theft Auto 4

In technology, shares of Take-Two Interactive (Nasdaq: TTWO) slipped $0.17, or 0.67%, to close at $25.39 as Electronic Arts (Nasdaq: ERTS) indicated it would prefer to complete a deal before the April 29 release date of the newest installment of Take-Two's hit franchise, Grand Theft Auto.

Electronic Arts is hoping a deal before the release would avoid competition between the two brands, Business Week reported.

Shares of Electronic Arts fell $1.14, or 2.22%, to end the session at $50.21.

National City finds more interest

Meanwhile in finance, shares of National City (NYSE: NCC) gave up $0.46, or 5.16%, to finish the day at $8.45 as the Bank of Nova Scotia, which has been looking for an open door to the U.S. market, inched toward making a bid for a minority stake in the Cleveland-based bank, according to the Wall Street Journal.

Corsair Capital LLC may also be ready to throw its hat in the ring for a piece of National City as Key Corp. (NYSE: KEY) and Fifth Third Bancorp. (Nasdaq: FITB) were ready to bow out.

Shares of Key Corp. dropped $0.37, or 1.54% to $23.61 as shares of Fifth Third lost $0.50, or 2.34%, to end at $20.86.

"I am hearing PNC is also looking at [National City]," a market source said about PNC Financial Services Group Inc. (NYSE: PNC).

"Some deal will definitely happen," he said. "It has the Feds nudging it along."

PNC shares fell $0.46, or 0.71%, to $64.24.

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