Here’s what Clear Channel Outdoor executives said about expense cuts, selling Latin America or Europe and the future on yesterday’s first quarter 2020 earnings call.
Worldwide CEO William Eccleshare on Expense Cuts
We are targeting over a $100 million reduction in operating costs in Q2 and at least $25 million reduction in capital expenditures.
CFO Brian Coleman on expense cuts
In April we initiated temporary salary reductions for all levels of the organization including 30% salary reductions for both William our global CEO and Scott Wells, our Americas CEO. We have also furloughed employees based on market conditions and have initiated a hiring freeze. We are also aggressively cutting discretionary spending. Our goal is to achieve operating costs saving in excess of $100 million…during the second quarter of 2020….
Site lease expense is our largest cost category. Over 50% of our operating expense, the majority of which is fixed. In order to be impactful you have to focus on your leases. The company has done that. We started very early in Europe…The next largest operating expense is human capital – compensation expense…
Americas CEO Scott Wells on lease cuts.
We have thousands of landlords. The process of engaging is one you need to do landlord by landlord. We can send bulk letter out to initiate the process but these are all…individual negotiations…We are seeing good partnerships with our municipal lease portfolio pretty much across the board because this is a government inflicted challenge…the governments are working with us.
Coleman on selling Latin America or Europe
We have expressed an openness to selling non higher margin businesses…A lot of people have taken that comment to mean our European assets. But I would put Latin America in that bucket as well. There’s not a for sale sign up in Latin America. But we operate in four countries. They are successful businesses but I would not call them core…I would not put them in the higher margin category.
Wells on Clear Channel Outdoor’s US future.
We are a large DMA business…But we have a very strong business in Florida, a very strong business in Texas, a very strong business in the Southwest. All of those regions have been impacted less than the coasts. Then the Midwest is sort of in between…The car culture in the United States, it’s not like our audiences went to zero during this. Not even close…That’s something we’ve been able to keep an eye on with our Radar tool and we’ve been able to inform customers on how that has played out and how it’s starting to build back…
Eccleshare on the future.
As we start to see the lockdowns lifted there clearly is a sense that people are returning to the street and our signs and out boards are getting visibility…What is impossible to say at the moment is whether our audiences…are going to be there in the same strength as they were before the lockdown…Brian who lives in Texas will probably say things are returning to normal pretty quickly. I think if you lived in New York city you wouldn’t be saying that. Similarly Zurich is returning to a kind of normality, London definitely isn’t.
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