Clear Channel Outdoor stock rose 8% yesterday after the company announced it will consider selling their European business.  Clear Channel Outdoor also increased fourth quarter 2021 revenue guidance.  It raised fourth quarter revenue growth by 2%.   Fourth quarter consolidated revenues are projected to grow 39-42% and return to pre-covid levels.   See table below.

Billboard Insider thinks a European sale will be a good thing.

• The parts will be worth more than the sum of the whole because the market will apply a higher valuation to a smaller easier to understand business.
• The company’s North American managers will have tighter focus without international distractions
• A European sale will reduce debt.  Clear Channel Outdoor’s international business was generating $202 million in annual cashflow prior to covid.  A sale at 12 times cashflow would generate $2.4 billion and reduce Clear Channel Outdoor’s debt from $5.7 billion to $3.3 billion.  The European sale may not reduce the company’s leverage (currently above 10 times cashflow) to the 5-6 times cashflow sustainable level, but it will be a step in the right direction especially if the company prunes corporate overhead after shedding more than half of its revenues.

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