Last week Pasco County, Florida approved a digital sign code requiring a billboard to take down 6 faces for every new digital face they install. The sign code restricts digital flips to 15 seconds.
Do you realize what a bad deal this is? For every 6 static faces which are removed from inventory an out of home company is only permitted 4 new digital flips. The out of home company must charge 50% more on each new flip to keep revenue constant.
Digital sign costs and useful life also need to be considered. A static steel structure costs $65,000 and lasts 40 years which works out to replacement costs of only $1,625/year or $135/month. A one sided digital billboard will cost $225,000 and have replacement costs of about $9,625/year or $802/month. This assumes 40 year depreciation on a $65,000 steel structure plus the replacement on the signs LED modules (50% of the $160,000 sign cost) at the end of 10 years.
Put it all together and you can see that under the Pasco code an out of home company has to charge 90% more on new digital flips just to earn the same return on capital. A bad code which does not give billboard companies much incentive to reduce the number of billboards and will raise the advertising costs of local businesses.
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Take down to build is a violation of antitrust laws. The sunset of old permits and then the issuance of new digital permits is a preferred vendor agreement and forecloses anyone from having a digital, unless they had previously been an incumbent. You can’t build unless you had already built. I’m going to court if this happens anywhere we operate!