Clear Channel Outdoor emerges from Covid with a whole lot fewer employees, more digital signs and a footprint in 22 countries and a too-low cashflow margin.  Here are five things Insider noticed after reading the Clear Channel Outdoor 2020 10k.

1.  A whole lot fewer employees

Clear Channel finished 2020 with 19% fewer employees, compared to decreases of 15% at OUTFRONT and 8% at Lamar.   Clear Channel Outdoor had the lowest margin of the big three going into COVID (see table at end of this article) and had a 30% revenue drop so the cuts aren’t surprising.  Expect more cuts in Clear Channel Outdoor’s international division which had negative cashflow (ebidta) of $54 million in 2020.

2. European faces up, digital faces up, North American faces down.

Clear Channel Americas (i.e. North America and Caribbean) displays declined 4% in 2020.  Each of the Big 3 out of home companies pruned poor performing locations.  European displays increased.  Insider suspects this was due to Clear Channel Outdoors winning European transit bids.  And digital displays grew as well.  Not surprising because one of the company’s 5 strategic initiatives is the “continued digitization of our portfolio.”

3.  Twenty-two countries and counting…

Clear Channel is active in the US, 16 European countries, Singapore and 4 Latin American countries.  This is a bug not a feature.  How can a stock analyst understand what’s going on in 22 countries?  The lack of clarity means a lower stock multiple.  How can an executive  sit in an office in London or San Antonio or London or New York and keep track all these businesses?  A symptom of not knowing what’s going on was the $10 million employee fraud writeoff taken in 2017 by the company’s Clear Media venture (which was subsequently sold).   Fewer countries means more focus, higher margins and a higher stock price.

4.  The lowest margin going into covid and the lowest margin leaving covid.

Clear Channel Outdoor had the lowest margin of the big three US public out of home companies going into covid and has the lowest margin exiting covid.    Makes sense that Clear Channel Outdoor CFO Brian Coleman is talking about additional expense cuts in 2021.

5. Capexp declined but will start to recover

Capital spending declined  46% during 2020.  Insider expects capital spending to rebound slowly because of Clear Channel Outdoor’s weak international performance and high leverage.

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