Companies by Letter

 

# A B C D E F G H I J K L M N O P Q R S T U V W X Y Z


Outdoor Systems, Inc.

 


Address:
2502 N. Black Canyon Highway
Phoenix, Arizona 85009
U.S.A.

Telephone: (602) 246-9569
Fax: (602) 433-2482


Statistics:
Public Company
Incorporated: 1980
Employees: 1,490
Sales: $471 million (1997)
Stock Exchanges: New York
Ticker Symbol: OSI
SICs: 7312 Outdoor Advertising Services


Company History:

The largest outdoor advertiser in North America, Outdoor Systems, Inc. owns roughly 250,000 display properties in the United States, Canada, and Mexico. The display properties are of various types, including billboards, transit shelter displays, subway displays, and mall displays. The company was founded in 1980, but did not begin to grow robustly until it converted to public ownership in April 1996. A flurry of acquisitions followed in the next several years, including the $690 million purchase of Gannett Inc.'s outdoor advertising business and the $1 billion purchase of Minnesota Mining & Manufacturing Co.'s outdoor advertising business. In the process, Outdoor Systems leaped from ranking as the sixth-largest billboard operator in the country to the champion of the North American industry. In 1998 the company owned advertising displays in 96 of the top 100 U.S. advertising markets and in seven of the top ten markets in Canada. As the company prepared for the 21st century, it was beginning a concerted push into Mexico, where a July 1998 acquisition made it the largest outdoor advertiser in the country.

Moreno's Arrival in 1984

Outdoor Systems entered the billboard business in 1980, starting out in Phoenix, Arizona. By 1984, three years of operation had produced a respectably-sized, local outdoor advertiser, a company with 80 billboards to its name in the Phoenix area. From this juncture forward, however, the small Phoenix advertiser began to expand. Although Outdoor Systems' portfolio of outdoor displays did not dramatically increase immediately after 1984, the year did mark the arrival of the company's greatest promoter, Arturo "Arte" Moreno, a fourth-generation Arizonan who would lift Outdoor Systems to eye-catching heights.

Moreno was born and raised in Tucson, Arizona, where his parents ran a print shop and published a Spanish newspaper. During his teenage years, Moreno helped with the family business, often working late into the night on the newspaper. The long hours reportedly led him to pursue a different career path, and in 1973, he was graduated from the University of Arizona with a degree in marketing. Moreno then began accumulating experience in the billboard business, allying himself to the profession that eventually would make him a multi-millionaire. He worked for Gannett Outdoor, the outdoor advertising subsidiary belonging to Gannett Inc., for a number of years, representing the company's interests in Arizona, Missouri, and New Jersey. It was while Moreno was working for Gannett that he first came in direct contact with Outdoor Systems. Moreno, at the time, was employed by an established veteran in the billboard business, and in Outdoor Systems he saw a small, young billboard operator that offered a wealth of opportunities to a shrewd operator. Moreno was intrigued.

In 1984, Moreno and a friend, Wally Kelly, approached the owner and founder of Outdoor Systems, William S. Levine, and inquired about purchasing the company. When he made his proposal, Moreno was in charge of Gannett's billboard operation in New Jersey; Kelly was employed as the vice-president of national sales for WhitecoMetrocom Inc., an outdoor advertising company. Levine, a Phoenix businessman involved in real estate and other business endeavors, was unwilling to sell his billboard assets. He was, however, impressed with the presentation pitched by Moreno and Kelly, enough to offer the pair the opportunity to come work for him in a partnership. Moreno and Kelly agreed, and a union was formed.

"We tried to position ourselves," Moreno later recalled, "saying, 'Obviously we can't be the largest. There's just no chance--but we can position ourselves to be the Cadillac of billboard companies'." Standing out as a cut above the rest meant an emphasis on service. Moreno and Kelly brought a commitment to service when they joined Outdoor Systems and immediately began setting up an organization to support an intensified sales effort. Their emphasis on service was simple in its nature, but the basic changes worked. Under the direction of the ambitious pair, telephone calls were returned as quickly as possible. Potential clients received information immediately. When a client's billboard advertisement appeared for the first time, a confirmation telephone call was quick to follow, along with a photograph showing the billboard in question. Because of the attention to these fundamental services, Outdoor Systems' business blossomed, energized by the new spirit instilled by the new arrivals.

Moreno worked to fashion Outdoor Systems into the premier billboard operator in the Phoenix area, and then set his sights beyond the city, acquiring display properties that gradually broadened the company's geographic presence and turned Outdoor Systems into a regional operator rather than a local operator. Progress during the 1980s was slow, checked by the limited financial resources available to expand through acquisition, but the decade did bring the company forward. Within a decade, Moreno lifted Outdoor Systems' revenue volume past the $50 million mark. Moreno did not begin to demonstrate his most striking talent until he took Outdoor Systems public in 1996, 12 years after Levine named him a director of the company. From 1996 forward, progress occurred at a lightening pace, enabling Moreno to by far exceed the expectations he held a decade earlier.

1996 IPO Ignites Growth

At the time of Outdoor Systems' initial public offering (IPO) of stock, the outdoor advertising industry was undergoing dynamic changes. There was a movement toward consolidation, sparked, in part, by the potential ban on outdoor advertising by tobacco companies. In the general trend toward consolidation, no company would stand out more than Outdoor Systems, which embarked on an exhaustive acquisition campaign that quickly vaulted the company toward the number one position in its industry. Within a year, all of Outdoor Systems' competitors would be dwarfed by the acquisition spree directed by Moreno.

The last annual sales total recorded by Outdoor Systems as a private company stood at $64.8 million. The IPO was completed in April 1996, raising $37 million to use to acquire other billboard companies throughout the country. At the time, Outdoor Systems ranked as the sixth-largest outdoor advertiser in the country, but within four months after the IPO the company leapt past all competitors to rank as the number one company of its kind in North America. The acquisition that pushed Outdoor Systems to the industry's top spot was the August 1996 purchase of Gannett's billboard business, the same company Moreno had worked for prior to joining Outdoor Systems. It was a transaction that could rightly be defined as a megadeal, a $690 million purchase that was the largest of the 11 acquisitions completed within a year after the IPO. With the 160,000 display faces gained in the Gannett deal, Outdoor Systems stood as the industry leader, its display properties clustered in major markets. Except for the purchase of Dallas-based Reynold Media, all of the display properties acquired between the spring of 1996 and the spring of 1997 were located in markets where Outdoor Systems already owned billboards.

Gannett and the other acquisitions of 1996 proved to be just a foretaste of Moreno's acquisitive bent. In 1997, the company acquired 20 outdoor advertising companies, widening the gap separating it and those companies struggling to keep pace. "We have a big appetite," Moreno noted, understating the extent of his company's activity on the acquisition front. Among the acquisitions completed during the year, none was bigger than the company's purchase of the outdoor advertising business belonging to Minnesota Mining & Manufacturing Co. (3M), which outstripped the magnitude of the Gannett acquisition. In May 1997, one month after paying $170 million for roughly 45 "Spectacular" signs in New York City's Times Square, Outdoor Systems shelled out $1 billion to acquire 3M's outdoor advertising subsidiary, 3M Media, which ranked as the third-largest billboard company in the United States. Based in Bedford Park, Illinois, 3M Media collected approximately $220 million in sales from its billboards, poster panels, and advertising displays. "This acquisition," Moreno remarked at the time of the 3M deal, "gives us the opportunity to offer broader national, regional, and local advertising coverage, as well as maintain our leadership of the outdoor advertising industry." Specifically, the acquisition strengthened Outdoor Systems' presence in several lucrative states, including California and Texas, and provided an entry into numerous Florida markets.

When the 3M deal was concluded, Outdoor Systems gained nearly 100,000 billboards in 40 states, including display properties in 20 of the top 25 U.S. markets and seven of the top ten Canadian markets. The addition of these display properties lifted the company's total number of display faces above 200,000, but Moreno did not stop there. He pressed forward, completing a dozen more acquisitions before the end of the year, including the December purchase of Outdoor Media Group Inc. which provided the company with its first foray into the greater Las Vegas area, one of the fastest-growing markets in the United States. "He's a billboard genius," one industry analyst said of Moreno at the end of 1997, adding "He saw value where a lot of others didn't. In so doing, he's created a very substantial return for shareholders." The company's shareholders, who watched the price of their stock soar 322 percent during Outdoor Systems' first year as a public company, expectantly awaited Moreno's moves in 1998, confident that further acquisitions were imminent. The billboard genius did not disappoint.

Late 1990s Acquisitions in Mexico

Entering 1998, Outdoor Systems was poised atop a broad and firmly-built geographic foundation. The company held sway as the largest outdoor advertiser in the United States, and its wholly-owned Canadian subsidiary, Mediacom Inc., ranked as the largest outdoor advertiser in Canada. The next logical region to establish a third leg of operations was in Mexico, where Moreno turned his sights in 1998. In July, Moreno acquired Vendor, S.A. de C.V. for $215 million, gaining the largest outdoor advertising company in Mexico. Concurrently, Outdoor Systems purchased the outdoor advertising assets of Multimedios Estrellas de Oro, S.A. de C.V. for $22.5 million. Together, the two acquisitions included more than 6,600 advertising displays in more than 20 of Mexico's largest markets, including Mexico City, Monterrey, and Guadalajara.

Ranking as the largest billboard operator in the United States, Canada, and in Mexico, Outdoor Systems occupied an enviable position as it prepared for the 21st century. Its formidable grip on the major markets in each of the three countries where it operated, provided more than a foundation for future growth: it positioned the company as the industry giant and the target for every other billboard operator to shoot for. Whether Outdoor Systems would be able to withstand challenges to its position remained to be seen, but with Moreno guiding the company its future pointed to further acquisitions and a deeper market presence throughout North America.

Principal Subsidiaries: Mediacom Inc. (Canada).





Further Reading:


Brodesser, Claude, "A Billion for Billboards: Giant Outdoor Systems Gets Even Bigger with Deal for 3M Unit," MEDIAWEEK, May 5, 1997, p. 5.
Davis, Riccardo A., "3M Expected to Sell Billboard Subsidiary," Knight-Ridder/Tribune Business News, April 30, 1997, p. 43.
"Ford Motor Company and Outdoor Systems, Inc. Announce Historic Advertising Package," PR Newswire, June 29, 1998, p. 6.
Halliday, Jean, "Ford Secures $50 Mil-Plus in Outdoor Space: Huge Pact with Outdoor Systems Solves Short-Term Buying Dilemma," Advertising Age, June 29, 1998, p. 3.
Hudis, Mark, "Way Beyond a Great Gorge: Despite Antitrust Concerns, Outdoor Systems Continues to Feast," MEDIAWEEK, May 19, 1997, p. 12.
Mull, Angela, "Outdoor Aims to Be One-Stop Shop," The Business Journal-Serving Phoenix & the Valley of the Sun, June 12, 1998, p. 10.
"Outdoor Systems Completes Purchase of Largest Outdoor Advertising Company in Mexico," Business Wire, July 6, 1998, p. 1.
"Phoenix-Based Outdoor Systems Inc. Buys 3M's Billboard Ad Division," Knight-Ridder/Tribune Business News, May 2, 1997, p. 5.
Western, Ken, "Phoenix-Based Outdoor Systems Goes on a Buying Binge," Knight-Ridder/Tribune Business News, December 8, 1997, p. 12.
Wilke, Michael, "Outdoor Woes: Gannett Could Suffer Layoffs," Advertising Age, August 19, 1996, p. 3.

Source: International Directory of Company Histories, Vol. 25. St. James Press, 1999.




Quick search

 

Loading