No media corporation is immune to today's advertising downturn, and Clear Channel Communications, an immense and fearsome force in radio, is no exception. A radio conglomerate in business since 1972, Clear Channel, based in San Antonio, Texas, seemed invincible back in 1996, when new regulations allowed it to snap up multiple stations in many markets. Today, however, company fortunes have fallen so fast that it's said to be weighing a prepackaged bankruptcy.

Though it spent its first two decades as a sleepy owner of stations mostly in the Southwest, Clear Channel exploded across the nation after the Telecommunications Act of 1996 relaxed station-ownership restrictions. A glance at Clear Channel's current roster reveals a still mighty empire that encompassed some 900 stations, controlling much of the dial in markets great (11 stations in Los Angeles) and small (eight stations in Huntington, West Virginia). No question Clear Channel seemed invincible when private-equity firms Bain Capital and Thomas H. Lee Partners acquired it less than a year ago, in a leveraged buyout, for $27 billion.

If Clear Channel Communications goes down, it may not be particularly lamented. Its powerful grip on American radio, TV stations, outdoor advertising, and live events -- until 2005, when Clear Channel Communications spun off Clear Chanel Outdoor (CCO) and Live Nation -- has long invited criticism and controversy that its artistic self-policing and political double standards compromised its stations' quality. In one well-publicized incident after the September 11, 2001, terrorist attacks, Clear Channel compelled its stations to ban hundreds of songs that appeared, however obliquely, to refer to the event ("Knockin' on Heaven's Door," "Stairway to Heaven," "New York, New York").

But setbacks were minor, and given its media hegemony, Clear Channel must have seemed like a sure bet for Bain and THL in 2007. However, 2008 turned out to be a terrible time to buy media conglomerates (or any large corporate investments) from public shareholders. Now saddled by debt and tapped out on its lines of credit, Clear Channel faces the stark reality of first-quarter 2009 losses of $418 million (in contrast to an $800 million profit a year earlier), and a 23 percent decline in revenue. The company has begun discussing a restructuring with its creditors, The New York Post reported in May. Even if it avoids declaring bankruptcy, a cash squeeze seems imminent.

If it gets through unscathed, Clear Channel faces a tough road ahead; like other media, its chosen category of radio is becoming impossibly fragmented. Sirius XM Radio (SIRI), in the also-troubled satellite category, offers hundreds of niche options to suit every taste. (Sirius XM, too, is struggling.) And streaming channels (Pandora, Rhapsody) can be personally tailored. And Amazon (AMZN) and Apple's (AAPL) iTunes have made public consumption of individual tracks increasingly simple and impulsive. Video didn't kill the radio star, it turns out, but Clear Channel is stumbling, and the collective weight of its smaller competitors is becoming impossible to ignore.

Todd Pruzan is an editor for DailyFinance. You may follow him on Twitter at toddpruzan.

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