William Eccleshare seems a bit more open to selling Clear Channel Outdoor’s international operations.  Here are the highlights from his talk at the Goldman Sachs Communicopia conference wednesday.

On why Clear Channel Outdoor is growing.

The rush to online was effective but it might have been just a little bit overdone… That’s part of what’s driving this.  Digital has certainly helped.  We continue to build our digital presence.  70-80 new boards a year…I think the final piece of the jigsaw…has been the ability to demonstrate to advertiser the real impact that the medium can have.  Having the robust use of data with our Radar product to really show what consumers do as a result of seeing an ad on a billboard has been a kind of a holy grail for the industry…We are absolutely seeing advertisers come into the medium who wouldn’t have come in before because of that data.  We’re seeing advertisers come into Clear Channel and give us 100% of their budget in a way that they would never have done before…

Are there synergies between the US and international business?

We’re the only out of home player that operates global coverage.  I think that brings some real benefits.  I think that also brings scale.  Increasingly if you look at new media platforms they are looking at building global business relationship…In terms of procurement the digital screens that we buy we’re buying on a global basis and that has a benefit…And finally from an investor point of view the diversity of our platform is a real benefit for us.  We were talking earlier about the potential recession.  But one thing I’m reasonably certain of is that it’s not going to be a global crash.  In which case the kind of diversity that we can offer might be really attractive.

On China

It’s a tough situation…We’ve been in this joint venture for 18 years…China GDP growth has slowed.  The US China trade war isn’t helping.  The Chinese consumer is going through a little bit of a reset…We have a phenomenal business in the tier 1 and tier 2 cities in bus shelters.  That’s great except that those bus shelter contracts are with municipalities and have a longer period of time than our European contract and there isn’t this culture of renegotiation that we have in Europe and the US when there’s a downturn.  The tough thing at the moment is that our cost base is uncomfortably fixed.

The share price is down since separation from iHeart.  Why?

The equity raise that we did was the right thing to do but it clearly diluted the equity base.  The real issue that people aren’t getting is the China business.  If you back out the China business and you apply the kind of multiples that JCDecaux has…you would see that we should be trading 20-25% higher than we are…I’d encourage people to do the math.

On a spinoff of the international operation.

We were absolutely clear at the point of separation that we didn’t want to stick a great big for sale sign over our business or over our…international business and become distressed sellers.  That would have been the wrong thing for our shareholders and the wrong thing for our business.  We’ve now gone through addressing some of those issues surrounding the balance sheet…I don’t want to put a big for sale sign up but nor do I want to say that we’re not in the business of selling assets because we might be.  There might be better owners of some of those international assets…there might be people who value those assets higher than we do…But I really don’t want the business or the market to get distracted from the fact that we have great assets and we’re operating those assets and we believe that the upside is significant.

Insider’s take:  Eccleshare is softening his tone one a sale of the international business.  A good thing.  US/international synergies are overrated.  Investors won’t reward Clear Channel Outdoor for diversifying internationally when they can do that on their own by buying international stocks.  Clear Channel Outdoor will be more focused and valuable if it splits international from the US.  Yesterday Seeking Alpha reported that JCDecaux is interested in buying part or all of Clear Channel.

[wpforms id=”9787″]

Paid Advertisement