Clear Channel fire sale continues…..

Kevin Shute —Addressing the Elephant in the Room

By OOH TODAY believes all voices, not just the loudest, must be heard Last updated Jul 24, 2023

Clear Channel Outdoor Holdings today announced it has entered into “exclusive discussions” to sell its business in France to Equinox Industries a Paris-based industrial holding company, founded in 1999 who describe themselves as “an industrial holding company that invests private equity money in a non-hostile and consensual way in businesses faced with turnaround, restructuring or shareholding issues”. The press release goes on to state that the parties are aiming to complete the proposed transaction in Q4 2023 subject to the completion of more stringent staff consultation processes prevailing in France.

The release also states” This transaction is not subject to regulatory approval”. Which I interpret as any bid from JCDecaux WOULD have faced regulatory barriers and that has probably ruled them out of the running as prospective suitors in their home market. Even if this transaction falls through.

If executed, this sale would represent the final country business in what Clear Channel Outdoor termed its Europe-South segment which formerly comprised of four country businesses, three of which have already been sold;

–Spain and Italy-sold to JCDecaux for combined US$81.1m announced May 30th, 2023

–Switzerland-sold #GoldbachGroup for US$94.2m announced 31st March 2023.

The Europe-South segment generated revenues of US$467.1m, equivalent to 19% of total CCO group revenues in Full Year 2022.

Remaining are the businesses in countries that make up the Europe-North segment comprised of 12 businesses including, Belgium, Finland, Netherlands, Ireland, Poland, Denmark, Estonia, Latvia, Lithuania and the biggest, most profitable country market, the UK. This segment generated US$566.1m or 23% of CCO group revenues in Full Year 2022.

Geopolitical considerations will have a severe impact on sale prospects

Geopolitical considerations will have a severe impact on sale prospects for the Europe-North segment given nearly half (five) of the businesses are countries that border either Russia, Belarus or Ukraine. I don’t anticipate a long queue of suitors until Putin’s invasion of Ukraine, and threats to NATO allies, are quelled and tensions with Russia subdued. But fortune favours the brave as they say. And these businesses would be a steal if Clear Channel Outdoor are intent on exiting Europe, more so if the Ukraine invasion is swiftly brought to a favourable conclusion.

The western country businesses, comprising the remainder of the Europe-North segment, are more desirable and more saleable, notwithstanding record high bank interest rates and inflation afflicting the UK in particular, and the negative economic impact and uncertainty caused by Putin’s invasion of Ukraine which is blighting every European country and will continue to do so for the medium term. Nevertheless, I anticipate many of these businesses will attract the interest of market rivals, the online digital ‘Big Tech’ monopolies or the embryonic OOH ‘infrastructure’ companies -to whom #ClearChannelUK are already beholden, as prospective suitors will discover if they conduct robust Due Diligence and look in the right places – more on this transformational dynamic in a future post.

There couldn’t be a worse time to be in the market selling European OOH assets

There couldn’t be a worse time to be in the market selling European OOH assets. This could and should have been initiated and concluded before #Covid and Russian aggression against Ukraine. Sometime during the “fantastic run” enjoyed by its former CEO, from 2009 to be precise. See here; https://oohtoday.com/clear-channel-outdoor-chairman-ceo-calling-it-quits-after-12-years/

As these fire sales will not address the elephant in the room of group debt which remains at near US$5.7bn. And having nearly sold an entire European division that delivered 19% of group revenue in 2022, that challenge has become even greater as the ‘extend and pretend’ routine to addressing senior debt becomes more like ‘delay and pray’ in a time of rising interest rates.