Clear Channel Outdoor has sold its Rockford, Illinois plant to Key Outdoor.  The transaction was brokered by Max Drachman of Kalilco & Co.  Insider talked with Drachman about the sale.

How did this transaction come about?

Key Outdoor is one of the largest independent Outdoor operators in the Midwest. We are very close with the Dahl family and have worked on a number of deals with them over the years. They recently asked us if we could approach Clear Channel on Key’s behalf to acquire their assets in Rockford and surrounding communities. Fortunately, our firm sold approximately $500,000,000 worth of radio assets for Clear Channel prior to their going private a few years back, so we have a the right relationships and a great sense for “how they click.”

What was the rationale for the transaction by the two parties?

At the end of the day, the assets in question were simply worth more to Key Outdoor than CCO. Key’s CEO, Bob Dahl, started the company in 1977, and has grown it to approximately 2000 faces in Illinois, Iowa, and Missouri. His daughter Angela has joined him at the helm, and they have made continuing their growth trajectory a priority for many years to come. The CCO inventory in the Rockford area provided Key a valuable extension of their assets into northern Illinois. With the ability to focus on local sales in Rockford, we believe they will do very well with the assets.

On the other hand, CCO has strong positions in nearby Chicago and Milwaukee, so the Rockford inventory did not get the attention necessary to maximize profitability. They saw an opportunity to take some chips off the table in a market they consider “non-core” and can pay more attention to their larger markets which are more of their specialty.

Can we expect to see more Clear Channel outdoor spinoffs like this?

I don’t believe so. CCO markets like Rockford can be somewhat of a needle in a haystack. They certainly did not put any effort into finding a buyer and it took quite a bit of effort to tempt them to explore our deal. I would bet their next announcement is an acquisition as opposed to a divestiture. They have great assets in many of the larger markets in the U.S., and I believe we will see them make some acquisitions to protect/strengthen their position in said markets. While they have sold a few times recently, and earnings have not been great, they still have an incredible collection of assets which generate plenty of revenue. They are not going anywhere any time soon.

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