Clear Channel has hailed its UK operation for delivering higher margins and less volatility as it considers further changes in Europe and seeks to reduce more than $5bn in company debt.
Clear Channel Outdoor Holdings reported consolidated revenue of $637m today, an increase of 3.5% (excluding foreign exchange and sold businesses) in its latest quarterly financial results.
Scott Wells, Clear Channel CEO, told investors on its earnings call these results “continue to be led by our digital assets” which made up 41% of the total consolidated revenue figure, marking a 7.3% increase year-on-year.
Wells said: “At the heart of our strategy we’ve very committed to becoming a visual media powerhouse by understanding our customers’ needs, strengthening our digital capabilities and securely tapping into the right kinds of data to help our clients plan, measure and optimise their campaigns. We continue to believe this is elevating our role within the advertising ecosystem and increasing the range of advertisers we can pursue.”
Clear Channel has been selling most of its Europe South businesses. It sold its businesses in Switzerland and Italy on 31 March and 31 May respectively, with deals pending in Spain and France expected to finalise in 2024.
Wells explained these transactions would enable Clear Channel “to exit markets that have historically demonstrated a greater degree of volatility in our portfolio”, which would in turn improve its risk profile and help drive positive cash flow.
Wells also highlighted its Europe North segment, which includes Clear Channel UK, delivered higher margins, better financial metrics overall, a higher degree of digital penetration, and less volatility.
De-risking the portfolio and improving cash flow is an important priority for the company. Brian Coleman, Clear Channel’s CFO, revealed the company’s debt sat at $5.6bn, which was virtually flat on the last quarter. However, its cash paid for interest had increased quarter-on-quarter from $110m to $130m.
Wells hinted at more changes in future: “Our board is continuing to conduct its review of strategic alternatives for our remaining businesses in Europe, as well as evaluating a range of other strategic opportunities to enhance value.”
When asked more on what these “strategic opportunities” might be, for instance potential business in Latin America, Wells stressed they were “always looking at the market at where the opportunity is”.
Wells also said in the Q&A section of the earnings call: “We ultimately see this as a US-focused business, and we have assets in various parts of the world that are not the US, and strategically we’re considering the right time and the right opportunity for making those divestitures as it makes sense.”
When asked if these divestitures could be spun off as separate companies instead of being bought, he said “implicit” in a strategic review was to look for “the highest and best use of any asset” they were thinking of separating from, which was not “a structuring thing or an avenue” he was in a position to “speculate on right now”.
An uncertain ad market, particular in the US with a trend of agencies partners pausing or holding campaigns until Q3 or Q4, led Wells at the end of the call to say: “This is a time that there’s a little bit of a pause in the marketplace and it’s not entirely clear of where the market is going to go, but this business remains a very good business with with attractive economics, and it’s a business that we’re in the midst of de-risking and we’re making material progress on that which shouldn’t be something that pays real dividends over time.”
Looking ahead, Wells and Coleman “continue to be optimistic”, although the American national ad business “remains challenged”, with airports “experiencing strong growth” and Europe North “continues to deliver solid results”.
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