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Billboard Valuation & Advisory Services

Clear Channel Outdoor Holdings, Inc. Restructures Global Operations to Enhance Shareholders Value

Clear Channel Outdoor Holdings, Inc. Restructures Global Operations to Enhance Shareholders Value

In recent news Clear Channel Outdoor Holdings, Inc. announced that they have sold Clear Channel France to Equinox Industries and are now looking to sell their Europe-North segment, which includes the UK and Northern Europe. They’re also conducting strategic review of their Latin American businesses in countries like Mexico, Brazil, Chile, and Peru. These moves are part of Clear Channel’s efforts to optimize its portfolio, strengthen its financial position, and enhance shareholder value.

Clear Channel has already sold its businesses in Switzerland, Italy, and France and plans to sell its Spanish business. The company is getting help from financial advisors, Moelis & Company LLC and Deutsche Bank Securities Inc., for these changes. However, there is no set timeline for completing these processes. According to Generally Accepted Accounting Principles, this transition will lead to separate presentation of assets and liabilities in the Company’s Consolidated Balance Sheets, impacting the reporting of results for discontinued operations in the Consolidated Statements of Loss.

Additionally, they’ve moved their Europe-South segment to discontinued operations. Clear Channel Outdoor Holdings, Inc. is a leader in the outdoor advertising industry, using digital billboards and data analytics to connect advertisers with consumers in 19 countries.

Despite these positive steps, there are risks involved in these changes, including delays and economic uncertainties. The company remains committed to enhancing shareholder value and optimizing its global presence.

Read full press release from Clear Channel Outdoor here: https://investor.clearchannel.com/news/news-details/2023/Clear-Channel-Outdoor-Holdings-Inc.-Completes-Sale-of-Clear-Channel-France-to-Equinox-Industries-Initiates-Process-to-Sell-its-Europe-North-Segment-Businesses-and-Strategic-Review-of-its-Latin-American-Businesses/default.aspx

Out-of-Home Advertising: Second Quarter 2023 Marks Historic Growth

 Out-of-Home Advertising: Second Quarter 2023 Marks Historic Growth

In the second quarter of 2023, the Out of Home (OOH) advertising industry had a 2.2% boost in revenue, reaching $2.68 billion, as reported by the Out of Home Advertising Association of America (OAAA). This is the second-highest quarterly revenue in OOH history. Digital OOH advertising, which makes up more than a third of the sales, grew by a significant 12.9% compared to the previous year. The Transit category saw the most substantial growth, increasing by 7.7% from the same period in 2022.

The OOH advertising industry is thriving, particularly in the “experience economy,” with travel experiencing significant growth. While other traditional media are declining, the OOH industry is expected to grow by 4.2% this year, according to MAGNA.

Notably, six of the top 10 OOH product categories performed better than the overall 2.2% quarterly growth. Legal Services (46.4%), Domestic Hotels & Resorts (29.0%), Colleges & Universities (20.2%), Local Government (14.7%), Hospitals, Clinics & Medical Centers (10.7%), and Consumer Banking (9.3%) all had substantial increases in OOH advertising.

The top 10 advertisers in the second quarter were Apple, McDonald’s, Coors, Verizon, Disney, Amazon, T-Mobile, Max, Coca-Cola, and Dunkin’.

Among the top 100 OOH advertisers, a significant majority (77%) increased their OOH spending compared to the second quarter of 2022. More than a third of these advertisers (37%) more than doubled their OOH spending. Thirteen advertisers increased their OOH spending by more than ten times.

Additionally, nearly a quarter (24%) of the top 100 OOH spenders were technology or direct-to-consumer brands, including Apple, Verizon, Amazon, T-Mobile, Max, Google, Uber, VRBO, Hotels.com, Nintendo, and Expedia, which ranked among the top 25 spenders. The OAAA’s revenue estimates cover various OOH advertising formats, including digital and static billboards, street furniture, transit, place-based, and cinema advertising.

OUTFRONT’S Strategic Roadmap: Navigating Challenges and Growth in 2023

OUTFRONT'S Strategic Roadmap: Navigating Challenges and Growth in 2023

In a recent article from Billboard Insider OUTFRONT’s CEO, Jeremy Male, outlined the company’s plan for the rest of the year at the Citi 2023 Global Tech Conference.

The key points of their strategy are:

Growing Transit Business: aims to revitalize its transit business, which has faced challenges. They plan to achieve this by connecting their digital transit assets to programmatic platforms. The company is focused on amending their transit agreements, especially with significant partners like the NYC Subway (MTA – Metropolitan Transportation Authority).

Cost Reduction: expenses are being closely monitored, particularly their SG&A (Sales, General, and Administrative) costs, with the goal of reducing these costs as a percentage of revenue in preparation for 2024.

Challenging Ad Market: The advertising market is not performing exceptionally well. Growth projections are modest, with some sectors, like TV and tech, experiencing declines, while others, like legal and health, are doing better.

Digital Conversion Targets: OUTFRONT insists on a minimum 20% Internal Rate of Return (IRR) for digital conversion projects.

Fewer Acquisitions: OUTFRONT has reduced its focus on acquisitions due to changing market conditions, as public multiples have decreased, and private expectations haven’t adjusted accordingly. They plan to concentrate on optimizing existing assets, but remain open to promising opportunities.

Debt Reduction: to decrease its Debt/Cashflow ratio to 4:1. Their leverage is between 5.0 and 5.5, and their primary objective is to bring it below 5:1 and eventually move towards 4:1.

The Effect of Easements on Sign Multiples

The Effect of Easements on Sign Multiples

In a recent Billboard Insider article, a reader posed the following question: “When you are ready to sell your property, is it more advantageous to sell your land along with your structure and include a perpetual easement, or to keep the land and sell it as a whole?”

 

 

Paul Wright, the CEO of SignValue, responded that this decision is far from a one-size-fits-all scenario. Instead, it depends on a complex set of factors. These factors encompass urgency to sell, lease duration, market size, competition, growth potential, prospects of digital conversion, escalation rates, and revenue-sharing agreements embedded in the lease.

 

 

The following calculations offer some revealing insights into the impact of easements on sale prices. For example, a sign that commands a cash flow multiple of 10x might realize a sale price that falls short of the market value of the sign if an easement is included. However, a sign with a cash flow multiple of 12x would incorporate the easement’s value into the sale price.

Q2 Reports From Lamar, Outfront, Clear Channel, JCDecaux

Q2 Reports From Lamar, Outfront, Clear Channel and JCDecaux

Lamar Advertising announced its operating results for the second quarter ended June 30, 2023. The company reported a 4.5% increase in net revenues, from $517.9 million in Q2 2022 to $541.1 million in Q2 2023. Operating income also increased by $10.3 million, from $166.5 million in Q2 2022 to $176.8 million in Q2 2023. The company attributed its strong performance to the recovery of the advertising market and the demand for its digital and transit products.

Outfront Media announced its financial results for the second quarter of 2023. The company reported a 4.1% increase in revenues, from $450.2 million in Q2 2022 to $468.8 million in Q2 2023, driven by higher billboard yields and growth from both its local and national businesses. Transit revenues increased 1%. The company also declared a quarterly dividend of $0.30 per share, payable on September 29, 2023.

Clear Channel Outdoor announced its financial results for the second quarter of 2023 on August 7, 2023. The company reported a slight decrease in overall revenues, from $641.5 million in Q2 2022 to $637.2 million in Q2 2023, mainly due to the impact of foreign exchange rates and the sale of its business in Italy and Spain. The company’s America’s division grew a modest 1%. However, the company also reported a significant reduction in net loss, from $65.8 million in Q2 2022 to $36.6 million in Q2 2023. The company also announced that it is in exclusive discussions to sell its business in France and that it continues to review strategic alternatives for its other European businesses.

JCDecaux announced its operating results for the second quarter ended June 30, 2023. The company reported a 7.5% increase in adjusted revenue, from €1,475.6 million in Q2 2022 to €1,585.0 million in Q2 2023. The company attributed its strong performance to the recovery of the advertising market and the growth of its digital and transit products. JCDecaux announced on May 30, 2023, that it has entered into agreements with Clear Channel Outdoor Holdings, Inc. to acquire its businesses in Italy and Spain.