Billboard buyout

Chancellor nabs Whiteco Outdoor for $930 mil

Chancellor Media Corp. extended its nonstop shopping spree Monday by agreeing to acquire Whiteco Outdoor Advertising, the ad medium’s largest privately held company, for $930 million in cash.

News of the acquisition is fresh off of Chancellor’s announcing agreements to buy fellow radio consolidator Capstar Broadcasting for $4.1 billion in stock (Daily Variety, Aug. 28) and LIN Television for $1.6 billion in stock (Daily Variety, July 8).

While both Capstar and LIN are controlled by Dallas buyout firm Hicks, Muse, Tate & Furst, as is surviving entity Chancellor, privately held Whiteco has been owned by the White family since its formation as White Advertising in 1935.

Whiteco’s contribution of 21,800 display faces in 34 states will bring the total owned by Chancellor to 35,000 faces in 37 states.

Makes nation’s top five

Dallas-based Chancellor, which entered outdoor advertising earlier this year by buying Martin Media, will rank among the country’s top five outdoor companies on taking over Merrillville, Ind.-based Whiteco.

In addition, Chancellor ranks as the No. 1 radio broadcaster and operates 12 network-affiliated television stations in eight markets.

The $930 million deal equals 12.4 times Whiteco’s projected 1999 billboard cash flow (or earnings before interest, taxes, depreciation, amortization and overhead) and, according to Chancellor, will be adding to after-tax cash flow by next year.

While explaining the acquisition during an analysts call, Chancellor president and CEO Jeffrey A. Marcus said “the foundation is in place” and called Whiteco’s acquisition “the third leg of the stool.”

One-stop shopping

Both references pertain to a strategy to pursue what Marcus called a “multimedia national platform” that offers advertisers one-stop shopping for their radio, television and billboard needs.

Although Clear Channel Communications has been pursuing the same strategy for years, Marcus nonetheless contended that Chancellor, through a rapid-fire series of seven major mergers, had created “a new paradigm.”

To pay for Whiteco, Chancellor noted it already has $700 million in credit facilities in place with banks and said it anticipated no problems in raising the rest. A good thing, too, considering that Chancellor’s stock tanked with the rest of the market Monday to close down 13.5% at $35.69 a share.

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