At the September 9 Investor Day, Clear Channel Outdoor presented a detailed review of the current Clear Channel Outdoor business and operating plan for 2025-2028.    Here’s a review of the plan, sponsored and analyzed by SignValue.

Clear Goals

The plan was refreshingly clear about what Clear Channel wants to accomplish for the next three years:

• Compound revenue growth of 4-5%/year through 2028
• Compound cashflow growth of 6-8% year through 2028
• A reduction in debt/cashflow from 10 times today to 7-8 times in 2028.

In the past, Clear Channel either couldn’t or wouldn’t be that specific.  It’s hard to forecast when you have a farflung worldwide business.  Selling the overseas assets makes things easier.

Less is more

Less is sometimes more in the out of home business.  Look at this slide on Clear Channel Outdoor Aiports.  The number of airports served by Clear Channel Outdoor dropped in half over the past 5 years but revenues have increased 12% and adjusted EBITDA has increased 19%.  It pays to let bad contracts go.  We wish Clear Channel Outdoor had taken this approach to bidding for the MTA billboards contract.

Don’t expect acquisitions

Capital spending for the next three years will be focused on digital conversions so don’t expect many acquisitions from Clear Channel Outdoor.  This makes sense as you can achieve a 20-30% cash IRR on a digital conversion while the cash return on an acquisition (assuming a 10-12 times billboard cashflow purchase) is 8-12%.

SignValue’s Take:  Hurrah for a clear statement of Clear Channel Outdoor goals and objectives.  The plan is a good start.  Now the hard work begins.  The company projects Debt/Cashflow of 7-8 times in 2028.  That’s still about a third higher than the 5 times level that we think is appropriate for an out of home company.  Clear Channel Outdoor has made minimal progress in reducing leverage over the past five years.  Let’s hope this changes in the next five years.