Clear Channel Outdoor Eyes CBS Billboard Unit, But for What Price?

Getting to $6 Billion May Be Tough, Analyst Agrees

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Clear Channel Outdoor said it will consider buying CBS Corp.'s billboard division.

The Cube, a CBS Outdoor display in New York
The Cube, a CBS Outdoor display in New York

"We'll look at it," William Eccleshare, CEO of the outdoor-advertising company, said in an interview at the Cannes Lions advertising festival in France. "Everyone is going to be looking at it and sizing it up, seeing if there's value to be had."

A deal would boost sales at Clear Channel Outdoor, which has almost 1 million ad displays in more than 40 countries, including huge signs in New York's Times Square, by almost two thirds. CBS, owner of the most-watched U.S. TV network, was approached by bankers interested in finding buyers for the billboard unit and agreed to listen to proposals, a person familiar with the matter said this month.

CBS Outdoor produced 13% of CBS Corp.'s total revenue last year. The unit is the third-biggest after entertainment, which includes the CBS broadcast network, and the Local Broadcasting division that operates the company's local TV and radio stations.

CBS is asking $6 billion for its outdoor advertising unit, The Wall Street Journal reported this month, citing unidentified people with knowledge of the operation.

Mr. Eccleshare, who became CEO of Clear Channel Outdoor this year, said he'd be surprised if anyone agreed to pay that much.

An analyst agreed. "Relative to where stocks are trading today, it's difficult to get to a $6 billion valuation," Paul Sweeney, a Bloomberg Industries analyst, said in an interview.

Lamar Advertising, the Baton Rouge, Louisiana-based owner of outdoor advertising displays, and Clear Channel Outdoor are trading at about nine times 2012 earnings before interest, depreciation, taxes and amortization, Sweeney said. Adding a 15% takeover premium, CBS could sell the billboard unit for $4 billion, he said.

Dana McClintock, a spokesman for CBS, declined to comment on Mr. Eccleshare's remarks.

CBS Chief Financial Officer Joe Ianniello said at a May 30 investor conference that there has been interest in the outdoor business. CEO Les Moonves has said he'd be willing to listen to proposals from interested buyers.

In March 2011, JCDecaux Chairman and co-CEO Jean-Francois Decaux said the French outdoor advertiser would be a natural buyer of CBS Outdoor. In 2009, he said the company would consider buying the division or Clear Channel Outdoor to become the biggest outdoor advertising company in the world.

"It's nice to have more than one strategic buyer interested," Mr. Sweeney said. "Having two strategic buyers can lead to a little bit of a price war."

JCDecaux officials didn't respond to calls or an e-mail sent outside normal business hours.

Clear Channel Outdoor, based in San Antonio, is controlled by Clear Channel Communications, the radio broadcaster owned by Bain Capital and Thomas H. Lee Partners. Clear Channel Outdoor had sales of $3 billion in 2011, while CBS Outdoor had $1.89 billion in revenue and JCDecaux had 2.46 billion euros ($3.1 billion) in sales.

-- Bloomberg News --

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