This week’s Billboard Insider podcast features Paul Wright, the top out of home valuation expert in the United States. Paul’s firm SignValue.com appraises billboards, billboard leases and billboard easements. Paul talks about out of home values, a tax case that could hurt values, Landmark Infrastructure and what he thinks of Clear Channel, Outfront, Lamar and Link Media Outdoor.
Podcast: Play in new window | Download (Duration: 28:47 — 26.4MB)
Here are some excerpts from the 29 minute interview.
On the current M&A market
There’s a lot of optimism about the industry. We’re seeing a lot of interest from new groups that are in ancillary media. Newspaper, radio, television – that are thinking…out of home is the place we want to be. And so they’re moving dollars there. Making more investments.
On out of home values
The market is increasing in terms of values. We’re seeing values rise…There’s really strong revenue growth…We’re watching to see if the strong revenue growth is continuing and I think that’s likely because of the number two item which is a shift in ad spend. We’ve always kind of suspected that advertisers were moving dollars from other media. But I think this is the first sign that those dollars are coming from radio and television and newspaper…There are a couple of things that may slow down value growth. One of those things is taxation issues…There was a recent case in Pennsylvania that concluded that the value of billboard lease income to the landowner can be considered in assessing the value of that property owners land…The other think is a recession looming. I think that everyone knows that’s likely to happen in the next couple years.
Am I right that multiples are 10-12 times cashflow (EBIDTA)?
You are right…Our average is 10.5 or 11 and in term of revenue multiples I think we’re in the 5 to 5.5 times range…During the last recession we saw a spike in multiples. We were looking at lower revenues and lower cashflows and buyers were anticipating that to be a temporary thing.
Drivers of an out of home company’s value
One of the original staples of analysis when looking at valuation is lease costs. And that’s still one of the primary drivers that we look at…We want to know how much of that revenue is going to landowners…We’re also looking at market size and whether you’re in a major market…
Is a wood plant worth less than a steel monopole plant?
It is not the driving factor that a lot of people feel it is. Now if you’re comparing apples to apples – you’ve got a wood plant in the same market on the same streets with the same roads you might see a half to a quarter point discount on a revenue multiple. You might see a half point to three-quarters point discount on a cashflow multiple.
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