The Billboard Insider Podcast
00:19:10 · Dave Westburg, Jim Johnsen
[00:19:10] S0: Right. Right. [00:19:11] S1: So, you know, name... You know, you know, give give me the list of names that that would equate to a 4 to $500,000,000 transaction [00:19:20] S0: You're right. [00:19:20] S1: In a in a single in a single spin. It's just... Man, it's it's damn near impossible. [00:19:26] S0: Outfront Media. [00:19:27] S1: Love them. I I, you know, I I... From a forward thinking, progressive sales and marketing organization, I think they get it like like they've never gotten it before. They're not selling space anymore. They're selling a product with lots of sex appeal, and they're and they're putting lots of sex appeal on their sales and marketing. And I think, ultimately, that's gonna pay dividends for them. [00:19:50] S0: What's your take about how the MTA contract's rolling out? They seem to be getting close to finishing their build, and they also seem to be in a place where after needing being a net cash require, that MTA contract's gonna shortly be generating free cash flow for them. [00:20:07] S1: I'll tell you what. The product looks phenomenal. I'm in New York City often, and I'm riding the subways often. And the... I forget the name. The way they present the product with a three in one or the Mhmm. You know, sort of the the Burma Shave effect on the the screens looks dynamite. One thing they do right is station domination. [00:20:28] S0: Mhmm.
00:20:28 · Dave Westburg, Jim Johnsen
[00:20:28] S0: Mhmm. [00:20:28] S1: So, generally, they're trying to sell the entire environment to one advertiser at a time and making a gigantic splash inside instead of, you know, trying to sell 20 flips, so to speak. So I think they're doing that right. I think, ultimately, it's gonna pay off for him. But... Wow. I mean, talk about kicking off, you know, relatively shortly before COVID and then having a sale through COVID and having ridership down 90%. And ridership, from what I understand, is still, you know, down more than 50%. Mhmm. It's it's been a challenge. [00:21:01] S0: But revenues are coming back seems like before riders. It's been an interesting phenomenon. [00:21:05] S1: That is interesting. Yeah. No. That that that is very interesting, and maybe that's a testament to how good the product is. You know, just, you know, the c... CPM or or whatever is going up, but the advertising is there. [00:21:17] S0: Clear Channel Outdoor.
00:21:17 · Dave Westburg, Jim Johnsen
[00:21:17] S0: Clear Channel Outdoor. [00:21:18] S1: You know, as they used to say about the... About CBS, they're the Tiffany the Tiffany collection of assets. My god. When you when you look at the sort of the the legacy of the assets there all all the way back to Foster and Kleiser Mhmm. And, you know, the fact that in some cases, those imprints have changed four or five times, but the ass... They... But the asset is still just as good. It's just... It fascinates me. It fascinates me. They've they've had so many challenges for so long. I mean, they've, you know, they've sort of... It's the street vendor who who only has a couple things to sell every day. Right? Because it's... Their their capital constraints have been so deleterious to them that it's it's amazing that they've been able to sell through that. But, again, the assets are so darn good. I mean, the guys that... You know, when they spun off certain markets there and... When was it? 2018? [00:22:10] S0: Yes. [00:22:11] S1: '17? I mean, you know, whether whether you talk to Jim from Ashby Street or you talk to some of the Lamar guys or some of the other guys that bought some of the assets, they are... They were just in shock with how good the assets were and how much lift there was on the assets by applying some more capital and some more hard work to them. Mhmm. So [00:22:32] S0: What what would you do about Clear Channel Europe?
00:22:32 · Dave Westburg, Jim Johnsen
[00:22:32] S0: What what would you do about Clear Channel Europe? [00:22:35] S1: Oh, that's a great question. I mean, you know, my knee jerk is I'd sell it at at whatever the clearing price was. But I'm sure the lenders have something to say about that. [00:22:44] S0: They gotta clear at least 300,000,000 because they got... Don't they have a $300,000,000 European bond issue? So they gotta clear at least that much. [00:22:51] S1: Right. Right. [00:22:53] S0: But, Jim, I... I'll come at you with this and see what you think. My read is opportunity costs of Europe are immense. It's got very poor margins. It's been demanding 35, 40% of Clear Channel's total capital expenditures. So my... This is my take. It's the slacker kid that wants a big allowance. And, and and that's money they can't... They have great projects they could do here in The US. Acquisitions, tuck ins, switching to digital, taking advantage of radar, and they can't do because they're having to feed a low margin European operation.
00:23:27 · Jim Johnsen, Dave Westburg
[00:23:27] S1: So, Dave, I have not spent much time in the professional world outside The United States, so I'm probably too little knowledgeable to even say this. But my sense is, whether it's South America or it's Europe or it's Asia or whatever, my sense is that out of home advertising in other parts of the world is just different. It's just Mhmm. It's... It plays out differently. It's more agency than it is asset ownership. It's more, you know, more willingness to to work at lower margins. It's more municipally driven. It's just... But... And and the flip side of that is it's more nationally advertising driven as well. So you've got all of those dynamics. And so if... My guess is if you're trying to run a out of home company in Europe like you're trying to run an out of home company in The US, it's it's a bit of a a mistake right out of the gate. And I I think they probably have some of that dynamic going on even Mhmm. Though they... You know, had been running it for for a long period of time and and really had European roots. So Mhmm. You know, you would... One would think he would understand that. But, I mean, I I remember... Oh gosh. Now I'm trying to remember how this happened. It was either Eller Media or was it Clear Channel that bought Maiden Outdoor. Mhmm. And I remember sort of being brought in to do some of the diligence on Maiden, and the way they ran that business was just so impressive. I mean, it [00:24:48] S0: just Is that right? [00:24:49] S1: It was a well oiled machine that... They had a whole department dedicated to, to to responding to RFPs
00:24:49 · Jim Johnsen, Dave Westburg
[00:24:49] S1: It was a well oiled machine that... They had a whole department dedicated to, to to responding to RFPs [00:24:56] S0: Wow. [00:24:56] S1: Day in day in day out. And that's just that's just different than the way we do business here in The US. [00:25:01] S0: Wanna touch on Link Media. They seem to... They... Two years ago, they did a lot of acquisitions, then they spent a year sort of digesting. They seem to be back in the market. [00:25:11] S1: Very selectively. Yeah. They're they're they're being selective in terms of what they go after, in terms of what they rationalize. Scott's done a dynamite job running the... You know, taking over from Jim Mhmm. And has really, you know, positioned the company well. But I think they've been selective in terms of what they bought. I think, you know, I think they've also maybe implicitly thought that during this sort of fervish period of acquisitions where Lamar and OUTFRONT and others are swinging pretty hard at things that they might not have the ability to compete at the same level. And so they've sort of, you know, taken sort of taken sidelines or taken weaker positions on possible acquisitions. That, you know, that may change over the next couple of years. [00:25:55] S0: They're they're running it for the long term, and so they they can afford to sit out what they perceive as a hot market. And maybe they get involved if we hit a recession. They get back in in a big way. [00:26:06] S1: I think that's exactly right. It's, you know, slow and steady wins the race kind of philosophy, if you will.