Outdoor advertising is one of the oldest forms of media – and yet, it’s been very successful in the age of new media. Lamar Advertising (LAMR) is leading the charge, and after reporting better-than-expected revenues today, shares popped 4% even though the overall market was down dramatically.
Kevin Reilly, CEO of Lamar, joins the guys on the Fast Line to talk about how the outdoor advertising company continues to not only stay relevant; but stay pertinent in this digital age.
Reilly says the fragmentation of media - particularly newspapers, radio and television - is what’s driving Lamar’s strength. While other newspapers and broadcast outlets have been flat, Lamar is up single digits and it has been gaining share over the last three years or so, he says.
Lamar operates over 149,000 billboards. Less than 500 of them are digital, yet digital billboards contributed nearly half of the company’s revenue growth last quarter. Reilly says the yield for the digital billboards is 6 times the revenue base, and one of the major selling points is that the customer can insert their own ads and continuously change them for the time they’ve rented the space with no additional production charges.
As a company like Lamar stays successful while other names in the sector suffer, the obvious question becomes whether it is an acquisition target for another large media company that craves its consistency.
Reilly says he’s in a niche business. Lamar only makes up for 4% of the ad space in the U.S. so he’s not sure his company would “be that useful” as a takeover candidate.
Guy Adami has loved this name for a while. But last month Daktronics (DAKT) lowered its fourth quarter guidance by 48%, attributing it to low volume of sales. Why shouldn’t he be worried the same thing can’t happen with Lamar next quarter?
Daktronics isn’t a competitor to Lamar, Reilly says. As a vendor, Daktronics sells digital displays to Lamar. “We’re in the business of selling space,” Reilly says. “We’re not a manufacturer.”
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