Clear Channel Outdoor stock finished at $1.66 Friday, down from $10.59 ten years ago. Over the past decade almost everything that could go wrong did. Bad ownership. Bad overseas assets. No one watching expenses. Covid.
iHeart’s looting
One of the first things that you’ll notice is that revenues and cashflow have declined while debt hasn’t. From 2014 to 2017 iHeart Media leveraged up Clear Channel Outdoor and pulled $1.5 billion in dividends and distributions out. In January 2016, for instance all the money from Clear Channel Outdoor’s $458 asset sale to Lamar went to a special distribution to iHeart. This left the Clear Channel Outdoor public shareholders stuck with an overleveraged company with declining revenue. The looting stopped when Clear Channel Outdoor was spun off from iHeart in 2019 but the damage is long-lasting.
Bad overseas assets
Clear Channel was forced into a sale of Clear Media China operation for a song in 2020 following collapsing revenues and an internal fraud. Clear Channel Outdoor’s European operations have generated subpar returns while requiring about half of the company’s capexp commitments.
No one watching expenses
Expenses grew faster than revenue for 6 of the past 8 years. Corporate overhead was $131 million in 2014. By 2022 it had grown to $158 million even though Clear Channel Outdoor revenue shrank 15% between 2014 and 2022. Why should corporate overhead rise when a company is shrinking? Things seem to be improving on this front since William Eccleshare stepped down at CEO in July 2021. Clear Channel Outdoor CFO Brian Coleman and and CEO Scott Wells are talking about reducing expenses by $30-40 milllion following the sale of European assets. This is a no-brainer. Lamar’s corporate overhead is 5% of revenue. Apply that metric to Clear Channel Outdoor and corporate overhead should be $125 million instead of $158 million.
Here’s the data:
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This article could not have said it any better.
Clear Channel Outdoor started a slow death ever since Bain Capital took over and turned it
from an Outdoor company into something I
can’t quite define. Companies like Lamar remained a solid outdoor company. Never lost
it’s identity.
This reminds me of what happened to TWA Airlines decades ago after Carl Icahn bought them… took $2.5B out of the company over 10 years and declared backruptcy. What’s worse is that the pensions for all the retired workers went with Icahn. (He eventually agreed to put back $170M after the government got involved, but still, what a deal …for Icahn). Same thing here… iHeart and Bain should be investigated.
Good article. Clear Channel, when it was still Foster & Kleiser and owned by Metromedia, was my first OOH client. They were still painting bulletins by hand. Who’d of thunk it about such a great company with such a long history going back to the early 1900’s? (No. I did not represent them in the early 1900’s.)