iHeartMedia Prevails In Gamco Lawsuit

iHeartMedia Inc. has secured a dismissal of Gamco Asset Management‘s legal claims that the company shortchanged its investors by improperly diverting revenue from its Clear Channel Outdoor division. According to Bloomberg News (and as covered in the San Antonio Express-News), Gamco was unable to successfully make its case that iHeartMedia execs had violated their legal duties to shareholders by selling assets and moving funds from Clear Channel Outdoor Holdings to repay the parent company’s hefty debts. In its suit, Gamco had targeted an agreement that automatically routes some of Clear Channel’s business revenues over to iHeartMedia, claiming it hampers opportunities and operations. It also focused on Clear Channel asset sales that allegedly provided iHeartMedia with benefits denied to other investors.

In his ruling, which was handed down last Wednesday, Delaware Chancery Court Judge Joseph Slights found that Gamco, which was founded by billionaire investor Mario Gabelli and owns almost 10 percent of Clear Channel’s shares, failed to show that iHeart execs had “extracted a unique benefit” by paying down debt with the advertising unit’s funds that “came at the expense” of other Clear Channel investors.

Judge Slights also found that because Gamco had settled similar claims against iHeartMedia in 2013, the fund is barred from relitigating complaints about agreements concerning revenue handling and asset sales. The judge also ruled that iHeartMedia’s directors’ decisions to use Clear Channel funds to repay the parent company’s debts fell within the realm of their business judgment and weren’t a violation of legal duties they owed to investors. “We are disappointed with the court’s decision, and we are evaluating next steps,” Gamco attorney Andrew Entwistle said in an email. On the opposite side of the emotional spectrum, iHeartMedia was far from disappointed with the ruling, as spokesperson Angel Aristone told RAMP, “We are pleased with the Delaware Chancery Court’s decision to dismiss the lawsuit.”