Here’s a selection of Scott Wells comments at last week’s Morgan Stanley Technology, Media and Telecom Conference, analyzed by SignValue.

Clear Channel needs to reduce debt in half to become a REIT

I think for us to convert to a REIT we’re going to need to be probably about half as levered as we are right now…somewhere between 4-6 times cashflow.

Don’t expect Clear Channel to sell US assets because the transaction won’t be deleveraging at today’s multiples.

As long as our leverage is at the level that it’s at and tax implications are what they are it’s hard to picture us…selling assets … you’re not actually delevering you’re just shrinking the size of the business..

Why Europe was sold

the reason that we sold Europe is that with our balance sheet, the risk involved because of the the fixed nature of the contracts relative to the upside because they’re so capital intensive – it it just didn’t make sense for a company as levered as we are…

A big prediction…

I would think five years from now half of digital revenue is going to be automated in some fashion.

ROI on Digital Billboard conversions

You get a 4-5 times uplift on the revenues of the sign the cost for building them varies a lot… but our track record on IRR’s have been high 20s to the mid 30s…

SignValue’s Take: Plenty of work necessary to cut Clear Channel’s leverage down to a range where a REIT becomes feasible, especially when you can’t get there selling low tax basis assets.  We’ve thought for a long while that owning Europe makes no sense.  Poor margins and it diverts cashflow away from 20-30% IRR digital conversions in the US.

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