Whispers that Clear Channel’s (NYSE: CCU) $19 billion sale to two private equity firms is on the rocks have been growing louder in recent weeks. Now the deal is on the verge of collapsing, says WSJ, citing people familiar with the matter. The sale is one of the last un-closed megadeals from the bygone era of cheap credit. Negotiations are said to have turned sour between the two PE firms, Thomas H. Lee and Bain Capital Partners, on one side and the financing banks, Citigroup, Morgan Stanley, Deutsche Bank, Credit Suisse, RBS and Wachovia, on the other. The banks know, of course, that they won’t be able to distribute this financing to third parties, meaning that once it goes on their books, they’ll be looking at instant massive writeoffs. As a source puts it: “The sponsors do not want to do this deal… No one wants to do this deal except for the seller.” At this point, the question is not whether the two sides can agree on something, but whether the financiers think they can legally walk away from the deal with a tolerable penalty.

The report is carrying some weight in the market, as the stock is off over 16 percent after hours.