• Eccleshare says independence gives Clear Channel Outdoor greater ambition and a longer term view.

    Clear Channel Outdoor Worldwide CEO William Eccleshare

    Clear Channel Outdoor CEO William Eccleshare talked at last week’s JP Morgan Global Technology, Media and Communications Conference.  He expressed regret that Clear Channel Outdoor had to sell Australia and certain US assets.  Here are the highlights.

    On the virtues of independence.

    It changes us psychologically being an independent pure play out of home business rather than a subsidiary of a great big radio business…we now have a board or directors who are fully focused on out of home.  That gives us perhaps a greater sense of ambition…I hope it means we can take a slightly longer term view of the business….and I hope if means that we can look at tuck-in acquisitions that we might not have been able to look at over the past couple of years, and it might avoid us having to make some of the decisions regarding dispositions…as an operator I wish we still had a business in Australia and I wish we still had the markets in the US that we sold a couple years ago.

    On outdoor’s strength

    We are the last true mass reach medium.  Being able to reach a mass audience in the public apace has a real strength….all of the talk that we have around digital and technology is important but it builds on those core intrinsic values: more and more people spend more of their time out of home, more people spend their time in cities around the world and that is where we have a huge strength.

    On the ad agency side one of the things we always said about out of home is that it works in a different way to other media.  We are not an interrupted media.  Most other advertising works on the basis of interrupting the consumer when then would rather be doing something else, whether that is watching TV, reading a magazine, reading a newspaper.  They’re interrupting…we are actually reaching people when they are either stuck in traffic, waiting for a train, waiting for an airplane.  And all of the psychographics show that you are much more receptive to a message when you are not being interrupted…

    On Clear Channel’s US markets

    The split is 33/33/33 between the advertising that’s bought by the big agencies…then national advertisers…then genuinely local advertisers…We’ve had strength in local.  The area where we’ve seen the most growth in the last year is in the national category.

    On why US out of home gets only 4% of the total advertising buy

    Part of that is about supply, part of that is about the ability to erect signage, part of that is the strong inherent position of television advertising…I do think this sector has been under-researched.  If you don’t have the evidence for advertisers of the value you are getting you tend to be under-advertised…If the industry invests in better research and better attribution it will grow.

    On why margins are 20% worse internationally

    It’s a very different business model.  Unlike here were we have a permit on a permanent basis in the European markets and the Asian markets as well you’re talking a 5-7 year contract with a municipal landlord to run that inventory.  It’s much more like the airport model in the US which is a lower margin business.  You’re also working is much smaller individual geographies

    Insider’s take:  Eccleshare is spot-on about the benefits of focus.  The elephant in the room is Clear Channel Outdoor’s leverage.  Not sure how Debt/Cashflow can drop from the current 8:1 range to a sustainable range of 5:1 without asset sales.  Eccleshare commented that there is little operating synergy between the US and the company’s international segments.  Why not sell international to reduce leverage and increase focus?


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