Two interesting new items from JCDecaux.

Jean-François Decaux, Chairman of the Executive Board and Co-CEO of JCDecaux, said:

“The world has changed dramatically since March 5th when we announced our 2019 full-year results with now more than 2.6 billion people, a third of the world population, in confinement due to the Covid-19. As a consequence, we are now facing a global recession which is likely to be worse than the downturn during the 2008 financial crisis with the advertising market being hit badly.

Given the more substantial confinement measures implemented in many large countries, the trading conditions are worsening with additional campaigns cancellations and postponements in March. For this reason, we are now withdrawing our Q1 2020 organic revenue growth guidance at around -10%. Q2 2020 revenue will be much more negatively impacted, due to the Covid-19 outbreak, almost everywhere, with countries such as Italy, Spain, France, some US states and now UK implementing a total or partial lockdown of residents. We will release our Q2 2020 guidance as planned on May 12th, 2020.

As a consequence, upon the proposal of the Executive Board, our Supervisory Board has decided to withdraw the 2019 dividend proposal from the resolutions to be adopted by the next shareholders’ meeting in order to both strengthen our liquidity and enhance our financial flexibility enabling us to take advantage of market opportunities as we did in 2009.

While the health and safety of our employees remain our top priority, we are implementing additional measures to mitigate the negative impact of this crisis including but not limited to cutting discretionary spend and capex, introducing temporary unemployment measures, reducing employee hours and introducing voluntary salary reduction. All stakeholders will need to show support during this unprecedented crisis, and we welcome the early decision from some airports, cities, transport authorities around the world to aid concessionaires. This includes for example, the suspension of the minimum annual guarantee payment obligation, the adjustment of the base rent calculation and / or the revenue share percentage.

It is impossible to predict the timing of the rebound but we are taking all necessary steps to be ready and strong to take advantage of market opportunities that may arise because we continue to strongly believe that OOH / DOOH will remain a very valuable media solution for international, national and local advertisers delivering high quality audiences. Our well diversified geographic portfolio will be beneficiary because some countries will rebound earlier than others.”

Then in this press release dated today:

JCDecaux announces to acquire a minority stake, through its wholly owned subsidiary JCDecaux Innovate incorporated in Hong Kong, in a consortium of investors which formed a special purpose vehicle to make a voluntary conditional cash offer to acquire all of the shares in the entire issued share capital of Clear Media Limited (“Clear Media”), a company listed on the Hong Kong Stock Exchange.

The offer price of HK$7.12 per share represents a total value of approximately HK$3,857 million (note: $114 million US) for all Clear Media’s outstanding shares, of which 23% or HK$887 million will be funded by JCDecaux.

Clear Channel KNR Neth Antilles NV, a subsidiary of Clear Channel Outdoor Holdings, Inc., who owns approximately 50.9% of the issued share capital of Clear Media, gave its irrevocable undertaking to tender its shares in favor of the offer.

Insider’s take:  So at first look, getting liquid and staying liquid is the #1 rule in a crisis.  Insider expects that the second quarter of 2020 will show a coronavirus worldwide recession.  We expect the drop to be sharp but brief as the situation stabilizes.  Exogenous shock recessions tend to be short and sharp (months, not years).

Then comes the US$114 million commitment to assist in buying Clear Media which has struggled mightily and adversely impacted Clear Channels profits and balance sheet.

Jean-Francois Decaux did say in his quote above, “…we are taking all necessary steps to be ready and strong to take advantage of market opportunities that may arise…”

In US market trading today, both CCO and Decaux were down for the day.

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