JCDecaux eying CBS Outdoor


Convinced that CBS Corporation CEO Les Moonves is interested in divesting CBS Outdoor, the top executives of Paris-based JCDecaux told analysts Wednesday that the company is looking to expand and that it would be a “natural buyer” for the CBS billboard unit. As it announced 2010 financial results, JCDecaux rescinded plans to pay a dividend to hold onto cash for potential acquisitions.

JCDecaux recently became the world’s largest outdoor advertising company, surpassing Clear Channel Outdoor. But the international giant is a relatively small player in the US market and its executives have for years indicated an interest in acquiring either Clear Channel Outdoor or CBS Outdoor (even when it was still called Viacom Outdoor) if either became available.

Family-controlled and headed by co-CEO brothers Jean-Charles and Jean-Francois Decaux, JCDecaux reported Wednesday (3/9) that revenues grew 22.5% in 2010 to $2.35 billion euros – the previously reported $3.12 billion. Earnings before interest and taxes (EBIT) shot up 127.2% to 173.3 million euros. Free cash flow doubled to 327.4 million euros.

That free cash flow meant that JCDecaux had plenty of cash to go through with previously announced plans to resume paying a dividend, which it had not done since 2008 (for the 2007 year). Instead, the company surprised investors by deciding to forego a dividend payment for the third straight year to keep its coffers full for M&A. With 70% ownership, the Decaux family is able to make that decision, regardless of what other shareholders might prefer.

CBS Outdoor is particularly attractive to JCDecaux because of its operations in the US, Canada and Mexico, including billboards, transit shelters, buses, rail systems (in-car, station platform and terminal), mall kiosks and stadium signage and in retail stores. In an SEC filing CBS said it has outdoor advertising operations in more than 100 markets in North America, including all 50 of the largest metropolitan markets in the US, 19 of the 20 largest metropolitan markets in Canada and all 45 of the largest metropolitan markets in Mexico. CBS Outdoor also has operations outside North America, including the exclusive rights to manage advertising space on approximately 90% of the total bus fleet in the UK and a variety of outdoor advertising displays in the Netherlands, France, Italy, Puerto Rico, the Republic of Ireland, Spain, Argentina, Brazil, Uruguay, Chile and China.

RBR-TVBR observation: If and when CBS Outdoor would be put up for sale, the bidders from within the industry would almost certainly be JCDecaux and Lamar, with Clear Channel Outdoor probably not being able to jump in because of antitrust hurdles. It would, however, be a big chunk for Lamar to bite off, since it had 2010 revenues of only $1.1 billion, compared to $3.1 billion for JCDecaux, $2.8 billion for Clear Channel Outdoor and $1.8 billion for CBS Outdoor. The other possibility would be private equity bidding for CBS Outdoor.