Will Justin Cochrane be Clear Channel’s last UK and Europe CEO?
The Media Leader Interview
Justin Cochrane tells Ella Sagar about Clear Channel Outdoor’s aim to become a US-only business, what would be the ‘right’ buyer for the UK operation, and how out-of-home needs to be more consistent with its message to advertisers.
Justin Cochrane, Clear Channel UK & Europe CEO, describes himself as “probably the least likely person to get into media”.
Despite being part of Clear Channel for more than two decades now, his background in engineering and finance is instructive to his character, which is a far cry from the stereotype of a brash, talkative media salesperson. Cochrane got an engineering degree and worked in that field for a time, then nearly joined the police before being turned off by a “boring” week on the beat in Battersea, before becoming a chartered accountant and working as a banker for a few years, which he admits to hating, too.
Cochrane finally joined Clear Channel, a company he “knew nothing about”, as part of their finance team in 2001. After having served as chief finance officer and chief operating officer for Europe, Cochrane became UK & Ireland CEO in 2015, replacing former Motorola marketing exec Andrew Morley.
“It’s 22 years later somehow and I’m still here running the European business,” he says humbly. However, it is these varied interests which initially attracted him to and then kept him in the world of outdoor advertising, which he sees as a “a really interesting dynamic” of infrastructure, engineering, advertising and media, and it’s the latter part in particular that he “stuck around for”.
And Cochrane is at the helm at a critical time for the business as the UK operation is up for sale alongside its other remaining European properties. Clear Channel needs to dramatically downscale its operations outside of the US if it wants to become a “Real Estate Investment Trust (REIT).
Clear Channel Europe currently has sites across 14 markets and is part of Clear Channel Outdoor, based in the USA, which announced the sales of its Europe South businesses including Switzerland, Italy, Spain and France, and that it would be conducting a “strategic review” of its remaining European businesses in its latest earnings call. Scott Wells, the global CEO, has gone even further by talking about Clear Channel’s path to becoming a “US-only business”.
Cochrane explains that “[being] a US-only business gives you lots of tax breaks. It positions the company better, our big competitors in the US are all REITs, because competitively it’s a better way to operate.”
Clear Channel’s Switzerland and Italy businesses are now sold, while Spain and France are still going through the process. So is it inevitable that Clear Channel UK’s days are numbered?
Cochrane says: “I can’t really talk about what happens next, but it’s clear that it’s highly likely to be a sale of the rest of the international bits of the business because that’s the only way you can become a US-only business.”
His mission now, therefore, is to “find the right owner for the rest of the European business in the right time.” Cochrane said the new owner would likely be “somebody that really buys into the media, wants to invest in it and buys into our plans.”
Does that mean selling to a rival outdoor company or another private equity company? The UK and European business was reportedly targeted by Germany private equity group Aurelius, the owner of Lloyds Pharmacy chain. However, talks broke down when Aurelius balked at the £1bn asking price, the Mail on Sunday reported last year.
For its European South businesses there have been a range of different buyers; outdoor rival JCDecaux acquired Clear Channel’s Italy business, and is in the process or doing the same for Spain subject to approval, whereas Clear Channel Switzerland sold to an affiliate of TX Group AG, a Swiss media company, and France is in exclusive conversations with equity investment company Equinox Industries about a sale next year.
Cochrane says that one thing he has learned from going through different processes is that it is “dangerous to predict anything, because it always ends up different to what you think it’s going to be” and that he “never wants to go into any process thinking there’s only one answer as you will probably be disappointed”.
“There’s different reasons when you get into it as to why somebody makes a better owner than somebody else, so the answer would be it’s an open playing field. There’s no one right answer, there can be lots of right answers. I’m sorry that sounds vague, but it’s the truth,” he says.
The Media Leader understands from a well-informed source that there have been previous further failed attempts to sell Clear Channel’s European business as a whole, rather than bit by bit. The recent offloading of four European South businesses has shown, the source explains, that Clear Channel has abandoned that strategy and is now trying to avoid lesser-performing markets being sold too cheaply if all its stronger businesses are sold separately. The source added the recent European South sales are likely to make the company’s debt-to-Ebitda ratio, a key measure of the company’s health, worse rather than better.
In addition, as the UK is seen as one of the highest-performing businesses remaining in Clear Channel’s European portfolio, it is more likely to be sold as a whole, rather than be split into separate parts (like six-sheets and billboards for example) and could be sold with other countries attached as well.
Neither Cochrane nor Clear Channel commented on these specific observations.
How OOH can grab a bigger share
A fire sale of Clear Channel assets across Europe could mean a concentration of assets, with potential buyers including its biggest UK rivals JCDecaux, Global, Ocean Outdoor, Alight Media and other specialists. The UK’s major outdoor companies have invested significantly in digital inventory, which is why Wells singled out Clear Channel UK for performing well despite a tough advertising market.
Such optimism would have encouraged Tom Goddard, president of the World Out of Home Organisation, who made the case for better standardisation of language with digital, more collaboration, and consolidation in his opening speech for the WOOH Global Congress in Lisbon in June. Goddard, who is stepping down as WOO president, called for the sector to “overcome its 5% syndrome” and grab greater shares of advertisers’ ad budgets.
Cochrane says that Goddard is “broadly right” that OOH and sees the benefit of outdoor media owners particularly collaborating more to be better heard by advertisers and agencies on the power of out-of-home, while still being “fiercely competitive with each other on winning tenders.” If there is really good collaboration, Cochrane adds, you “don’t necessarily need more consolidation”.
However, Cochrane is adamant that, for OOH to grow its adspend share, it must improve the consistency of its message to the market. In particular, the sector could “do better” on its arguments around return on investment.
“People have always spent about the same amount of money on out-of-home… if there’s not a reason to spend more or less, then it’s just going to stay the same. We’ve got a bit stuck in that and that goes back to the consistency of the message — having a strong industry message and then consistently saying it and saying it and saying it.”
Citing Cephas Williams from the Black British Network, he says “consistency is better than intensity every time”. This is especially true when it comes to changing advertisers’ attitudes and behaviours so they avoid “laziness” in their media choices. Cochrane also references Richard Bon, Clear Channel’s commercial lead for Europe, who uses a DJ analogy of needing to play a song 18 times before it is remembered.
He says changing this 5% attitude of seeing OOH “in the background” is a difficult long-term goal but it has been proved possible by growth of other channels like online.
Cochrane also points out that this consistent message to advertisers is even more important as other audiences continue to fragment.
“In a world where you’ve got fragmenting audiences, you’ve got more people spending time out of home, trying to get people’s attention is tough and you’ve got a medium out there that actually has more audience than it’s ever had and hasn’t fragmented. It doesn’t really matter who the media owner is; whether it’s Clear Channel, Decaux, Global, Ocean, still from the advertiser point of view, it’s got a bigger audience, and it works better because it’s digital and you can do all sorts of things better. It’s just getting that consistency of message out there.”
Systemic change does not come from instant ad bans
This long-term consistent message about OOH can be strengthened through Outsmart, the UK industry body for outdoor advertising, which nearly disappeared in 2017 because “a few big players wanted to pull out.”
Cochrane has been chair of the organisation since 2016, which he jokes “shouldn’t really be the case but I think nobody else really wants to do it”. Outsmart has since reduced its budget but has now hired a couple of permanent employees.
He highlights the work it does around lobbying, for instance, dissuading the Government from using instant bans on OOH to make political statements, one example being around High Fat Sugar Salt (HFSS) advertising.
Cochrane says OOH is “the easiest one [media channel] politically to attack”, and that limiting outdoor is “a very easy political move” which makes it difficult to compete with online.
“We do a lot of a lot of work around lobbying and saying look we’ve got a lot of self-regulation on outdoor in placement of ads but don’t just penalise us because it’s easy,” he emphasises.
On this topic, he says other news about banning advertising from fossil fuel companies is “a really interesting debate”, but that in his view in order to make big changes “a ban on day one without a plan is wrong.”
Cochrane explains: “In order to get really big systemic change, which is what you need for the environment, just banning certain things really quickly isn’t going to particularly help.”
Instead, more measured restrictions create the right forces for change, he insists before asking rhetorically: “when was the last time you saw an ad for a petrol-powered or diesel-powered car?”
“All the ads now are for electric vehicles, which [shows] the power of advertising. You start to shift it so you make the brands realise that they’ve got to change and I think that can then filter through.”
He adds that there are “so many people” wanting to understand the environmental impact of their media budget, and everyone has a role to play in it “in a way that is proportionate and uses the power of advertising.”