Billboard Operators, Already Hurt by Recession, Face Ad Bans All Over the U.S.

(MoneyWatch) 

Pity poor Lamar Advertising, one of the country's largest providers of outdoor billboards and signs. In February, the company will report its full-year results for 2008 and BNET is guessing thery're going to be bad.

This isn't a controversial guess. Lamar's Q3 results were shaky: revenue flat, net income down, cashflow up, dividends suspended, and questions about whether the company was going to meet its debt requirements.

One reason Lamar could be heading for a headache-inducing earnings call is the current environment for outdoor ads is kinda awful. The industry has so far led a charmed life -- it's the one part of advertising that isn't really affected by the internet. Even better, the rise of digitally programmed billboards (like you often see in Las Vegas or Times Square) gave companies like Lamar a new story to tell.

But all across America, local cities and towns are clamping down, trying to get rid of as many billboards as possible. Here's a selection of fires Lamar and its competitors have had to fight recently:

• California is currently considering a two-year moratorium on new billboards.
• Digital boards in Los Angeles are regarded by some as a safety issue because they distract drivers.
• Los Angeles County adopted a new-billboard moratorium to crackdown on 800 digital signs. LA residents were annoyed because the boards can be seen at night. (Which extends their revenue potential).
• Houston is midway through an effort to remove 800 billboards from the city.
• Ridgeland, Miss., has an ordinance to reduce its billboards over time.
• Durham, N.C., is considering new billboard restrictions.
• Wyoming, Mich., wants to restrict digital billboards along US 131.
• Memphis, Tenn., is following suit.
• The Memphis ban has caused Scenic Outdoor to put its billboards there up for auction.

(Background: electronic signs, which as a rule of thumb cost around $500,000, display a new image about every eight seconds. Many can be changed online from a central location, so over time they become cheaper.)

In this environment, coupled with the economic downturn, the chances of Lamar showing revenue growth are slim indeed.