Mario Gabelli’s mutual fund Gabelli & Co. has lodged an objection with Clear Channel Outdoor (NYSE:CCO) after a decision by that company to move up to $1 billion in payments to its parent company Clear Channel Communications. 89% of  the Outdoor business is owned by Clear Channel Communications while the remaining share is owned by a Hedge fund, JHL Holdings, and several private equity members.

Gabelli is among these and maintains a 6% holding of the company’s publicly traded shares. The first of these shares was acquired in 2005 when Clear Channel Outdoor was initially offered as separate entity for public investment.

Gabelli’s ire comes as the board was involved in a deal that would see what Clear Channel admits will be over $1 billion in cash flow to the parent company. Clear Channel Communications is highly leveraged at the present time and the cash movement is seen as a measure to off put the debt burden.

JHL holdings lodged, in an official communication with the Clear Channel Outdoor board accusing the company of improper money movement. That letter claimed the number involved was $656 million. Clear Channel outdoor has performed solidly and JHL called improper the movement of money to its less than thriving parent company. The voting rights at Clear Channel Outdoor are almost entirely retained by the Communication group with 99% voting weight.

The implications for the investors are clear. Clear Channel Outdoor will under perform based on this deal. It can’t do as well with large money swaps at a less than market rates. Because of their impossible to surmount voting ability Clear Channel Communications will see no benefit in cancelling or limiting the transaction. Clear Channel has had the rights to swap money between the companies under a “corporate services agreement” and sees no liability in continuing the transactions.

Gabelli, along with the other private investors, has very little power to influence the situation from inside the company. It is unclear what is possible under these circumstances and what direction the mutual fund will take. What is clear however is the lack of support for the move and the desire to do something about it. Gabelli insiders have privately spoken about the matter in derogatory terms and have described their entire investment as less than satisfactory. Much of their ire stems from Clear Channel Communications dealings with the Outdoor company.