Anson Funds Calls for Sale of Clear Channel Outdoor
Anson Funds, an activist investment firm holding a 3.65% stake in Clear Channel Outdoor Holdings (CCO), publicly urged the company to pursue a sale on September 22, 2023. This move follows years of strategic engagement and analysis by Anson, which recently bolstered its activism capabilities by hiring Sagar Gupta, a former senior analyst at Legion Partners.
Clear Channel Outdoor: Business Overview and Market Position
Clear Channel Outdoor is one of the largest out-of-home (OOH) advertising companies in the United States, operating a diversified portfolio of billboards, street furniture, transit displays, and airport advertising. After recent divestitures, the company now operates exclusively within the U.S. market, focusing on both printed and digital billboards. The company’s stock market value stands at approximately $755 million, trading near $1.52 per share. Despite its size and market presence, Clear Channel Outdoor has underperformed relative to peers Lamar Advertising and Outfront Media, trading at a lower EBITDA multiple.
Strategic Shifts and Activist Influence
Historically, Clear Channel’s bifurcated business model—split between its Americas and European operations—posed valuation challenges. The European segment, operating under fixed-term municipal contracts, traded at a lower EBITDA multiple than the U.S. business, which owns most of its billboards outright. In May 2023, Legion Partners initiated an activist campaign targeting these inefficiencies, advocating for a strategic review that included divestitures or a full sale. Legion secured a board seat and helped guide the company through key asset sales, including its European and Latin American businesses, refocusing Clear Channel as a U.S.-centric company. Despite these changes, Clear Channel’s valuation has yet to fully realign with its peer group, trading at approximately 13–14x EBITDA compared to 16–18x for Lamar and Outfront. The stock has declined over 26% since Legion’s initial filing and remains substantially below its IPO price.
Clear Channel’s shift toward digital billboards represents a significant growth opportunity. Digital formats currently account for over one-third of the company’s revenue, despite comprising only 5% of its total billboard portfolio. However, expansion has been hampered by the need for municipal approvals, slowing rollout speed and complicating quarterly reporting for public investors. This slow adoption contrasts with the potential upside, as digital billboards generate roughly four times the revenue and substantially higher EBITDA margins compared to traditional displays.
Potential Acquirers and Market Context
The company’s transformation into a focused U.S. pureplay enhances its attractiveness to potential buyers, easing regulatory hurdles. Notable potential acquirers include Lamar Advertising, with a history of acquiring Clear Channel assets, and JCDecaux, which has shown interest despite regulatory challenges in Spain. Private equity interest is also intensifying, evidenced by Blackstone’s recent acquisition of New Tradition at an 18x EBITDA multiple and Berkshire Hathaway’s investment in Lamar. Ares Management’s 8% stake in Clear Channel further highlights institutional appetite for the out-of-home advertising sector.
Rationale for a Sale Over Standalone Operations
Anson Funds argues that pursuing a sale offers a more compelling, risk-adjusted path forward than continuing as a standalone public company. The company faces substantial long-term debt obligations nearing $5 billion, creating challenges for capital attraction and operational restructuring. A standalone turnaround would likely entail significant board and management changes, with uncertain outcomes. Meanwhile, the sale to a strategic buyer could unlock better valuations and accelerate the digital transformation that has been slow to materialize.
“After years of analysis and collaboration, Anson has concluded that a sale represents the best path to unlock value for shareholders.”
Background on Anson Funds and Its Activist Strategy
Founded in 2007 by Moez Kassam, Anson Funds manages over $2 billion and recently expanded into activism by hiring Sagar Gupta, who led the earlier Legion Partners campaign on Clear Channel. Anson’s position is the result of years of strategic engagement rather than opportunistic activism.
FinOracleAI — Market View
Clear Channel Outdoor’s transformation into a U.S.-focused pureplay enhances its strategic clarity but has yet to translate into a full valuation rerating. The slow pace of digital billboard expansion and heavy debt burden constrain standalone growth prospects.
- Opportunities: Accelerated digital billboard rollout could significantly boost revenue and margins.
- Risks: Regulatory approvals and municipal negotiations continue to slow digital expansion.
- Strategic: A sale to a well-capitalized buyer could unlock shareholder value and reduce debt risk.
- Market: Growing private equity interest in OOH advertising may drive competitive bids.
Impact: The call for a sale by Anson Funds signals a pivotal moment for Clear Channel Outdoor, reflecting a broader trend of activist-driven restructuring in the OOH sector. A successful transaction could reposition the company for growth under new ownership while resolving longstanding valuation and operational challenges.
