By Jennifer Sloane, Esq.

What does the Coronavirus mean for the OOH Industry?

Having been in the OOH industry long enough to see many highs and lows, it is my opinion that we can predict the impact of the coronavirus on our industry by looking at what happened after 9/11.

I recall the morning of 9/11, boarding an airplane to fly to New York for the OAAA annual conference, only to be grounded as the events unwound over the next few hours.   Going back to the office, no one ever could have imagined what would happen next.  In the coming weeks, people were scared to go out.  Small mom and pop businesses had no income and couldn’t pay their rent, let alone their outdoor advertising invoice.   The snowball effect left many small independent operators struggling themselves since most of their advertisers were local businesses as opposed to large national advertisers.  Yes, the big players experienced a financial hit as well, but not to the extent of the smaller operators.  This resulted in many small operators having to sell their assets at low multiples to pay off their debt.  In the end, the large operators got some good deals on decent inventory.

I think that our industry will see these same impacts but on a much larger scale given the proposed duration of this quarantine.  First, I believe we will see many small businesses that will permanently close their doors as a result of the coronavirus.  These businesses might come back with certain stimulus packages offered by the government.  But in the meantime, the OOH industry will have less advertisers for their inventory, an impact that will be felt the hardest by small operators who rely upon local advertisers as their primary source of income.  Second, the spending habits of advertisers may shift as a result of how the world changes its way of doing business.  The experts predict that when it comes to advertising, OOH and radio will be the hardest hit as transit is replaced with telecommuting procedures for employees to work at home.  They anticipate advertisers reallocating their budgets to areas geared more towards the consumer at home.  Some employers are already saying this new normal of telecommuting is a positive cost-saving benefit to their business. If employers permanently adopt these work methods, our industry can expect a permanent reduction in OOH spending.

So what can we do to help minimize these potential impacts to our industry?  First, proactively approach your landowners NOW….not 30 days from now.  Because of the headline gripping, worldwide nature of this pandemic, it would not be unreasonable for operators to approach landowners and request a reduction in rent to try and save their business.  A request to convert standard rent to a percentage rent, offering to split revenues 50/50 until occupancy reaches a certain percentage, would probably be understood by most landowners.  But for some small operators, who are heavily debt financed, this will not solve their problem.   These operators will have to talk to their financing partners NOW to try and work out a temporary reduction or abatement of their debt payments.   And if that fails, these operators will have no choice but to sell.

Whatever immediate effects are felt, I strongly believe that the OOH industry is resilient.   People will be back out on the streets again, staring up at those big beautiful billboards on their way to work.  And while we will lose many small operators who could not survive the economic impact of the 2020 coronavirus outbreak, there will be young blood that will rise up to fill their void and continue to strengthen our beloved OOH industry.

Jennifer Sloane, Esq.

OOH Attorney

JSloane@Sloanelawoffice.com

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