Clear Channel close to new TV deal: sources

By Megan Davies

NEW YORK (Reuters) - Radio operator Clear Channel Communications Inc (CCU.N: Quote, Profile, Research) and private equity firm Providence Equity Partners are close to striking a new deal over the radio operator's television assets, two sources familiar with the situation said on Friday.

Clear Channel cautioned in November that Providence was considering withdrawing from the $1.2 billion deal to buy 56 television stations and filed a lawsuit on February 15 in the Court of Chancery, Delaware, to force Providence to complete the acquisition. The lawsuit was filed against "Newport", Providence's vehicle for making the acquisition.

Providence has called the suit baseless.

The sources said the two sides were aiming to reach an agreement before Tuesday, when the court case is due to begin.

Clear Channel declined to comment. Providence could not be reached for comment.

A number of deals have hit the rocks as the economy has deteriorated and the financing markets dried up.

The lawsuit, filed a week ago, alleges Newport's "refusal to consummate the transaction is a failure to comply with the terms of the agreement," according to a copy of the suit, obtained by Reuters.

"Clear Channel is therefore entitled to an injunction restraining such failure and a decree of specific performance requiring Newport to comply with the agreement," the suit said.