Valuing the billboards at Entravision

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Wall Street applauded last week when Entravision said it was looking into selling its outdoor advertising division (11/16/07 RBR #225). So, just what are those 10,400 billboard and poster faces, mostly in the New York and Los Angeles metros, worth? At Bank of America, analyst Jonathan Jacoby says the outdoor division, which operates as Vista Media, could fetch 115-125 million bucks. He also figures that Entravision would pay little or no tax on the sale, since it has a pretty high basis and some available NOLs.


"The reason for the sale is simple; 1) EVC has underperformed the outdoor industry’s revenue growth over the last few years, and 2) EVC’s outdoor segment margins at ~10-12% (2008E) are significantly below the ~40% industry average.  We believe that prospective buyers will look at essentially the stick value for these assets (as opposed to a cash flow multiple).  We would not expect EVC to have a problem selling these assets, and while there has always been speculation that some of the EVC boards may have some zoning issues, we do not believe that EVC is alone in this regard (it is something that we hear about many operators in large urban markets)," Jacoby told clients.

Analyst Victor Miller at Bear Stearns is a little more conservative in his estimate, saying he expects Entravision to get about 100 million for the outdoor division, and also that there will be little or no tax bill due. Who are the potential buyers? "Entravision competes with CBS Outdoor, Clear Channel Outdoor, Van Wagner and Regency Outdoor.  Each of these operators could be a prospective buyer, as an acquisition would be considered a ‘tuck-in’ acquisition.  With roughly 70% of Entravision’s outdoor revenues coming from New York, we believe CBS, CCO and Van Wagner are the more likely buyers," Miller said.


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