Oct. 26 (Bloomberg) -- Shares of Clear Channel Communications Inc., the largest U.S. radio broadcaster, jumped 9.7 percent after the company put itself up for sale, increasing its market value to $17.6 billion.

Clear Channel is in talks with at least two competing buyout groups, people with knowledge of the discussions said. Blackstone Group LP has teamed up with Kohlberg Kravis Roberts & Co. and Providence Equity Partners Inc., said the people, who asked not to be identified because the discussions are private. Bain Capital LLC is working with Texas Pacific Group and Thomas H. Lee Partners LP.

Shares of the San Antonio-based company soared following its announcement yesterday that it was considering a sale and hired Goldman Sachs Group Inc. as an adviser. The stock rose $3.13 to $35.48 at 4 p.m. today in New York Stock Exchange composite trading, and has now gained 13 percent for the year.

``Given management's aggressive share repurchase and operational efforts, it's only natural they are frustrated in the performance of their stock and would consider a leveraged buyout,'' said Frederick Moran, a Boca Raton, Florida-based analyst at Stanford Group who has a ``hold'' rating on Clear Channel shares.

Mays Family

Clear Channel shares, which topped $91 in January 2000, have tumbled since then amid slow growth in the radio industry. The company had $6.8 billion of long-term debt at the end of the second quarter. The board, controlled by the Mays family, is evaluating ways to increase the share price and can't assure that a transaction will occur, the company said yesterday.

Lisa Dollinger, a spokeswoman for Clear Channel, declined to comment beyond yesterday's statement. Goldman spokesman Michael DuVally declined to comment. Officials at the buyout firms all declined comment. The Wall Street Journal and New York Times earlier today reported the talks with the buyout groups.

Standard & Poor's and Fitch credit agencies said today they may lower Clear Channel's debt rating to below-investment grade, or ``junk,'' status, citing the additional debt the company would take on in a buyout. Clear Channel bonds are rated ``BBB-,'' the lowest investment-grade rating, by both companies.

The company's 4.9 percent notes maturing in 2015 fell 4.7 cents on the dollar, or 5.5 percent, to 81 cents on the dollar, according to Trace. The yield rose 85 basis points to 8 percent. A basis point is 0.01 percentage point.

Spinoffs, Buyback

The perceived risk of owning Clear Channel debt rose 57 percent today and almost doubled this week, according to Bloomberg data, in response to reports that the Mays family may be considering a buyout.

Credit-default swaps, created to protect creditors against non-payment of debt, are used by traders to bet on changes in a company's debt risk. In a leveraged buyout, the risk increases because firms typically borrow about two-thirds of the purchase price, causing the value of the target's existing debt to depreciate.

Chief Executive Officer Mark Mays has spun off the company's live entertainment unit, Live Nation Inc., and sold shares of its outdoor advertising unit, Clear Channel Outdoor Holdings Inc., in an initial public offering. Shares of the unit rose 8.4 percent to $22.98.

Mays, 43, last month authorized a $1 billion share buyback. From March 2004 until September 2006, Clear Channel had repurchased about $4.3 billion of its shares, the company said at that time.

Mark Mays's father, Lowry, 71, is chairman of Clear Channel and his brother Randall is president and chief financial officer. Randall Mays, 41, is a former Goldman Sachs mergers and acquisitions banker.

Buyout Frenzy

A flood of money into private equity funds has fueled a record year for leveraged buyouts, with a number of media companies swept up in the frenzy, including Univision Communications Inc., another radio and television broadcaster, which in June agreed to sell itself to a group of buyout firms for $12.3 billion.

``Look at who wanted to buy Univision,'' said David Bank, an analyst with Toronto-based RBC Capital Markets. ``The same firms will probably take a look at Clear Channel.''

Providence, based in the Rhode Island city of the same name, Boston-based Thomas H. Lee Partners and Fort Worth, Texas- based Texas Pacific collaborated on the Univision deal. New York-based KKR was part of a group that acquired VNU NV, the Dutch owner of Billboard magazine, earlier this year for 7.58 billion euros.

A year ago Boston-based Bain, Thomas H. Lee, and New York- based Blackstone teamed up with Cumulus Media Inc. to buy Susquehanna Pfaltzgraff Co.'s radio unit for $1.2 billion, giving Cumulus control of 343 stations in 67 U.S. cities.

New York-based Cerberus Capital Management LP and Oak Hill Capital Partners of Menlo Park, California, may also be interested in Clear Channel, the New York Times reported.

To contact the reporters on this story: Brett Cole in New York at coleb@bloomberg.net; Andy Fixmer in Los Angeles at afixmer@bloomberg.net.

Last Updated: October 26, 2006 16:38 EDT