Reader Comments on the Call for Clear Channel Outdoor to Sell

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Here’s a selection of Billboard Insider reader comments on Legion Partners call for Clear Channel Outdoor to sell.

A finance exec says a sale is doable but faces some regulatory barriers.

It would be very doable to sell the whole enchilada.  Market cap is currently around $516MM.  Put a 20% take over premium on that and you are at about $620MM….for some select private equity shops that deal size may be too small.   I have not read their debt docs but my guess is the lenders have to approve a change of control, and I would also guess they would not approve a change of control without material paydown of the debt.  What’s material?  Anyone’s guess, but mine would be $1B or more.  So now you need a check writer for $1.6 to 1.7B.   Still very doable for many private equity shops.   The question is, could a PE/BDC get comfortable with a mid teens EBITDA multiple.  Good question.

I do think the DOJ would have something to say about it if OUTFRONT or Lamar struck a deal to purchase.  The DOJ could outright deny OUTRONT but I think Lamar with some fancy footwork could possibly get through the gauntlet if it agrees to spin certain markets where it and Clear Channel Outdoor combined would have a dominant share.  JCDecaux obviously would have the easiest time on this front (in US…but in Europe a different story).   This also begs the question of whether OUTFRONT or Lamar would want Europe.   Again as a total guess….both of them spit the bit on this front.
Let’s also remember that Moelis took Clear Channel Outdoor Europe through an exhaustive process in the recent past and came up empty handed.   So for an activist to now say “hey you should explore selling the entire thing” is a bit naive.
An out of home exec says Clear Channel needs to be run by someone with an out of home operating background.
I’ve been contacted lately by people who wonder why everyone continues to tolerate Clear Channel Outdoor’s constant poor performance.  And, as those discussions unfold, the principal reason that most attribute to the abysmal operating performance is leadership over the last 15 years.  All comment on how the company owners never seem to want to hire an operating CEO (and other good operating personal in their various departments at the company.  The only exception may be the real estate department.  But even then, I’m not sure they are staffed, or directed, to attacking the costs there.  It is absolutely possible to reduce lease rents by 1% each year and that would be huge for EBITDA, especially when considering the compounding effects of those costs reductions over a few years.)  But they continue to hire financial engineers to run the company that have no outdoor background.  Makes no sense to me or my friends.  In the meantime, competitors get larger and stronger and Clear Channel Outdoor falls further behind.   Frustrating to watch, for sure.

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