Jacor Communications was a radio broadcaster with 16 stations in 6 cities. It had acquired too many non-earning stations, using borrowed money, and was destined to default. Jacor had also contracted to invest in the Colorado Rockies and to become its broadcaster when the team began to play, but the company could not fund that commitment.

The Zell/Chilmark Fund invested in Jacor Communications in an out-of-court deal in which senior lenders accepted repayment in cash at a discount. The initial investment of $75 million enabled the company to complete a restructuring, after which it had no debt and a clean structure with which to acquire more stations and grow.

In 1996, a change in regulations allowed Jacor to begin an aggressive program of acquisitions and industry consolidation. Through a series of radio group purchases, add-on acquisitions, station trades and joint marketing agreements, Jacor came to control more than 425 stations, making it the third or fourth largest radio broadcaster in the country.

In addition to providing capital from the Zell/Chilmark Fund, Chilmark provided significant management support, was closely involved in generating radio station deal flow, performed acquisition review, and provided strategic and financial advice. David Schulte served as Jacor’s non-executive chairman of the board during our investment.

In 1998, Jacor was acquired by Clear Channel Communications for a total purchase price of $4.4 billion. Proceeds to investors of the Zell/Chilmark Fund were more than $1 billion, generating a 53% IRR and 13.4x invested capital.

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