Clear Channel Outdoor CFO David Sailer provided an update on assets sales at this week’s Deutsche Bank Media, Internet and Telecom Conference. Here’s a selection of Sailer’s comments, analyzed by SignValue.
France was a bad business for Clear Channel Outdoor
France, that was a tough business tough business in the sense of the structure of the business, how it ran from a risk profile. That was a tough business…when COVID happened and and ad sales went down…France was a business that was burning cash…
What’s left to sell
We sold Chile Peru and Mexico and what’s left is Brazil. That process right now is ongoing…we’re looking to execute that this year and then what’s left in Europe is Spain…that business has performed really well. The management team has done a great job…they they put their heads down. They won a lot of contracts…I’m looking forward to that sales process…There’ll be a lot of interest in that business.
International asset sales will cut corporate overhead by $35 million
Our corporate expenses were roughly $135 million… I’d say right now that number is around $35 million of savings off of corporate. That brings you down to roughly $100 million…
Don’t expect many acquisitions from Clear Channel Outdoor because it’s trying to reduce leverage
When you think about the multiple that we have from a leverage standpoint and you look at what assets of scale sell for in the of home space, that math is pretty tough..
Digital Billboard Expansion in US
We’re going to continue doing what we’ve been doing over the last… decade… organically building or converting you know 70-100 signs a year…It returns…roughly 30%/year..
Airports have been extending terms of existing contracts instead of going to RFP which is helping margins.
Over the last couple of years the airports really haven’t gone out to RFP… most airport deals are 7-12 years. After they’re up they go out to an RFP… Over the last several years, airports have been extending…three years, five years and usually when you extend your terms stay the same..If your terms stay the same and your revenue increases that actually has been an increase on margins…
Don’t expect US assets sales because US assets have a low tax basis
We’ve we’ve sold some small stuff but anything of a large scale like an entire market, we have really low tax basis. It’s as simple as that. We’re very low tax basis…If you sell a business at 12 times and the tax hit on that is four turns the math doesn’t work.
SignValue’s Take: The international sales are a good thing. They eliminate a cash drain and a claim on a very tight capital budget. It will take many years for Clear Channel to reduce leverage to the 4-6 times range which we consider sustainable. Until then the stock will be volatile due to financial risks. If you have questions, contact one of our consultants for a confidential consultation at info@signvalue.com or (480) 657-8400
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