It’s a poorly kept secret that a couple months ago American Towers bought RSA Media, a Boston out of home company with 15 high profile Boston billboard structures. Kalil & Co. confirmed their assistance in negotiating and brokering the RSA Media sale transaction without mentioning the buyer, at the buyer’s request.

American Towers won’t confirm the transaction to Insider but we’ve heard from several Boston OOH sources that the transaction happened.   Here are Insider’s thoughts.

Who is American Towers?

• A publicly held operator of towers, distributed antenna systems and backup power systems in 17 countries and 5 continents.
• American Towers owns approximately 30% of the tower assets in the US Market.
• Revenues and cashflow totaled $1.8 billion and $1.0 billion for the third quarter of 2018.
• Debt/Cashflow is 4.6 times.  The company’s long term Debt/Cashflow target is 3-5 times.
• The company has a $73 billion market cap.

Who is RSA Media?

• A Boston outdoor advertising company operating  15 billboard structures with 25 faces in Massachusetts.
• The plant includes 4 digital billboard faces, 5 spectaculars and 3 trivisions.
• James Lack was RSA’s founder and President.  Susan Connor Eastman is the firm’s account manager.
• The company’s billboards are primarily along freeways in Boston.  See map below.

What’s the business case for the acquisition?

Proximity.  Both companies are headquartered in Boston.  It will be easy for American Tower to get up to speed on the plant and to monitor performance.

Similar skill sets.  Many of the skills needed to thrive in the tower business are transferable to out of home.  You need regulatory skills to negotiate the permitting process.  You need lease administration skills to manage a large portfolio of sites.  You need a knack for picking good locations.

Small cell revenues.  The out of home companies have been talking for years about generating revenues from leasing antenna space on their sites to wireless providers.  American Tower has customers who may want to boost coverage by renting antenna space on RSA’s billboards.

Similar financial models.  Tower companies look financially similar to out of home companies with high cashflow, low maintenance capital expenditures and cashflow valuations in excess of 10X.  Some of the similarities will be apparent when you compare the financial statements of American Tower and Lamar Advertising.   Tower companies sell at higher multiples than out of home companies because cashflow is higher.

Insider’s take: Surprised this hasn’t happened sooner.  American Tower has leasing and regulatory skills which are transferable to out of home and the transaction may generate additional wireless small cell revenues.  Insider wouldn’t be surprised to see more tower companies enter the billboard business.  What do you think?  Let Insider know using the form below.

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