Steve McNeely has had a varied career in advertising, marketing, and media with roots in Exxon’s global retail marketing that reinvigorated the Tiger. Over the past 25 years, Steve has worked with a variety of private equity funds across a wide range of industry sectors but always with an affection for media, especially out of home. GE Capital recruited Steve as CEO in 1991 to restructure and lead the Patrick Media Group turnaround. Patrick was the product of Metromedia’s sale of Foster & Kleiser in a leveraged buyout. A successful turnaround accomplished, Patrick was sold in 1995. That sale precipitated the ensuing consolidation of the out of home industry.
Steve is currently the managing partner of Tantara Capital Partners. Tantara Capital, based in Pasadena, California, works with a variety of large equity funds with a focus on investment & deal origination, strategy, and execution. He was instrumental in putting together the GTCR/Fairway Outdoor/Adams Outdoor transaction and serves on the board. Insider interviewed Steve last week.
Steve, you’ve got investments in radio and small market TV. How are these sectors similar or different to out of home?
I find all three mediums have their roots in the local business community. Approximately 75% of our advertising base in OOH, radio, and TV is local advertisers. All three are strong reach mediums that complement more targeted digital campaigns. Being a part of each local community and supporting it through public service is important as well.
The biggest difference between broadcast and OOH is content. In OOH our content is impactful creative that drives purchase decisions. Broadcast media must deal with programming and Nielsen ratings to move the needle. OOH ratings with Geopath have surpassed the broadcast ratings scheme. At Adams + Fairway, we’re having significant success selling with Geopath ratings.
OOH excels in all things of paramount importance to brands: transparency, brand safety, measurement, and ROI. OOH can’t be fast forwarded or blocked, and there are no phantom bot clicks! OOH is well positioned to drive incremental search and tap into mobile campaign budgets.
What are the strengths of investing in the of home industry?
OOH has always intrigued me with its simplicity and the franchise that it is. From an investment perspective, OOH checks all the boxes important to investors: barriers to entry, strong margins, reasonable capital requirements, and diverse revenue streams. OOH has evolved and embraced actionable technology. No other medium (other than digital) has come close to the 29 consecutive quarters of growth that OOH has achieved through Q2 2017.
What are the risks?
The biggest exposures in OOH are executional risks. It is imperative to build a strong leadership team market by market. Encourage them to be innovative and revenue focused. And continue to invest and maintain your assets. Of course, you always have the visual blight people nipping at your ankles, but for the most part municipalities and regulatory bodies are seeing the proverbial light and the value OOH can provide. OAAA has done a good job protecting and advancing the industry in the regulatory world, and OOH has proven to be a strong community contributor whether it’s an Amber Alert, weather/disaster warning, public service, or even revenue.
We’re 8.2 years into the current recovery and the longest recovery in the US since WWII has been 10 years. Does this enter into your investment decisions?
If I had the answer to that I would be on a beach somewhere sipping an adult beverage! Economies will always experience cycles. Strong, well-managed companies with the proper capital structure will always survive whatever headwinds blow. It is being prepared and reacting accordingly. Every private equity investment is scrutinized and modeled to reflect a series of outcome scenarios. OOH is very resilient, perhaps more so than other traditional mediums.
Is Tantara looking for opportunities in out of home?
We are always looking for appropriate investment opportunities in OOH. Whether it’s grass roots expansion of the existing plant or market acquisitions, we are looking for anything that meets our investment hurdles. We like to be innovative in our investment approach. GTCR has been a strong partner in OOH…they get it! And Kevin Gleason has assembled an awesome Adams + Fairway team.
In case you haven’t figured it out yet, I’m passionate about OOH; it is a tremendous industry!
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