At yesterday’s Morgan Stanley Technology, Media and Telecom Conference Lamar CEO Sean Reilly referenced two pending purchases: a midwest out of home advertising company and a sizable transaction in Los Angeles which is tied up in litigation. Insider surmises that the LA transaction is Regency Outdoor Advertising. Regency owns billboards in Los Angeles and Regency’s owners Drake and Brian Kennedy are in litigation.
Here’s a summary of Reilly’s comments:
On Programmatic
Everybody’s been talking about it but there’s not been a whole lot of doing going on. This is the year…it will make an incremental contribution…$8-10 million…dollars we otherwise wouldn’t have seen…We went open architecture. Plug and play…The trick in this whole programmatic world is #1 don’t let your space be auctioned, don’t lose control of your CPM. So we designed the platform with protocol’s where the CPM is protected…The other thing we’ve done is…walled off all the other traditional channels that buy from us. You’re not allowed in if you’re otherwise buying out of home…Cost is the reason…The cost of this sale is higher than the cost of sales for the overall platform…We have these four DSP partners that are part platform and plumbing..and they’re part pitch. They’re part digital agency. They go represent our platform to the folks that buy this..They get a commission on the sale…I’m really happy with the progress our partners have made. One partner in particular is trying to make this whole architecture work for traditional static billboards. That of course would be a game changer.
On pending acquisitions
Any day now we’re going to close on a nice little company… in Illinois and in and around St Louis. We’ve got another rather sizeable transaction that we’ve got under letter agreement out in Los Angeles that’s tied up in some litigation but we’ll fall off that bridge when the brothers declare peace.
On acquisition multiples
Fairway. We announced the trailing multiple and forward multiple as 12 their EBIDTA, a little under 11 our forward…On the fill-ins we can to a little better on the forward multiple… We’re not buying people. We’re just buying billboard leases, advertising contracts, permits…There’s a couple of other folks shopping in the same patch. A company called Boston Omaha outbid us last year on a couple deals. We were also outbid on one of the Fairway assets.
On Outfront and Clear Channel
I’m happy about the numbers that Outfront put up. That’s really really good for the industry. When he fills up his space it’s good for everybody…Their mix of businesses is a little difficult for me to make the case that I can do that any better than them – particularly large market transit. So to the extent there’s a marriage made out there I think that would probably be a discussion with our friends from France… It could provide an opportunity if that business combination feels like any market below the the top 20 is a market where they don’t want to be, and Outfront has some of that…
Clear Channel is going to emerge as an independent business which is great…They’ve announced a new CEO…they’ve announced a new CFO, they’ve announced a new General Counsel. They are doing all the things you’d do if you are going to stay an independent enterprise. I don’t think they are coming out of the gate looking to shop themselves.
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