5551 Corporate Boulevard
Telephone: (225) 926-1000
Fax: (225) 923-0658
Web site: http://www.lamar.com
Sales: $810.1 million (2003)
Stock Exchanges: NASDAQ
Ticker Symbol: LAMR
NAIC: 541850 Display Advertising
Lamar Advertising Company is the third-largest outdoor advertising company in the United States, ranking behind Outdoor Systems, Inc. and Clear Channel Communications, Inc., both of which have more assets and larger networks than Lamar. Lamar has closed the gap with its recent acquisitions, however, and now operates the most outdoor displays in the United States and ranks third in outdoor advertising companies. Through two of its subsidiaries, Lamar Outdoor Advertising and Lamar Transit Advertising, it manages approximately 149,000 billboards in 43 states. The company operates 34 transit advertising franchises in 12 states with displays posted on buses, bus shelters, and benches. Through a third subsidiary, Interstate Logos, Inc., it provides 97,500 logo displays for limited access highways, including federal Interstates. These are green highway exit signs that post logo information about nearby restaurants, gas stations, and motels. Lamar has also secured contracts in Ontario, Canada, and in 20 of the 25 states that allow private contractors to fabricate the signs. It is the primary provider of such services in the United States. In addition, the company offers graphic design and production services for its customers. In total, Lamar operates 152 outdoor advertising companies through its subsidiary network. Although its central management offices are housed in its 53,500-square-foot headquarters in downtown Baton Rouge, Louisiana, much local autonomy is allowed the managers of each of these companies, and they remain in charge of day-to-day company operations. Even though it is a public company, Lamar remains a family business under the control of third and fourth generation members of the Lamar and Reilly families. Robert Switzer, the great-grandson of Charles Lamar, Sr., serves as vice-president of operations. CEO and president Kevin Reilly, Jr. owns approximately 40 percent of the business, and Charles Lamar III and his sister, Mary Lee Lamar Dixon, great-grandchildren of the company's founder, own about 27 percent.
Lamar's history goes back to 1902, when J.M. Coe created the Pensacola Advertising Co., a small poster company involved in promoting the coming attractions of the Opera House in Pensacola, Florida. In 1905, Charles W. Lamar, Sr., president of the American National Bank of Pensacola, became Coe's partner in the business. The two men owned the opera house as well as the poster business. When the partners decided to break up in 1908, they used a coin toss to decide who would get what part of their mutual business. Coe won the more lucrative opera house and Lamar, who lost the coin toss, got the poster business. He named the new firm Lamar Advertising.
The poster business was a relatively new industry. Just a decade earlier, in 1891, poster makers had created the Associated Bill Posters' Association, generally credited with being the nation's first association of advertisers. At the time, posters were used to advertise on what were called billboards but were nothing like the large, steel-frame structures used today. Then they were nothing more than town and city wall spaces used to advertise businesses or, just as often, upcoming public events. Posters could be stripped away or covered up when it was necessary to replace them with new ones.
It proved to be a timely venture, however, for although Lamar's business was the design and fabricating of wall displays, it placed him in a position to finance expansion into a new realm of advertising just as modern technology created a need for it. Before the company's first decade of business ended, it became clear that the auto would soon replace the horse and buggy and that roads would be needed to accommodate it. By 1912, when Henry Ford introduced the Model-T, the nation had begun its love affair with the car, and Ford's assembly-line method of manufacturing enabled it to be priced within the reach of middle-class Americans. Lamar's response was to move into the new area of outdoor, roadside advertising. In 1926, Lamar and his two sons, Charles Lamar, Jr. and L.V. Lamar, purchased the Baton Rouge Poster Advertising Co., renaming it Lamar Advertising Co. of Baton Rouge.
Despite the Great Depression and the fact that Lamar's markets were in states with few paved roads, the company soon turned roadside advertising into its primary business. Like others in the industry, Lamar was aided by Outdoor Advertising Inc., an organization formed in 1931 to promote billboard sales nationwide. During the 1930s Lamar slowly expanded the business, purchasing five outdoor advertising companies in Louisiana and Florida, areas where a paved road infrastructure was, like the company, rather slow to develop. Lamar died in 1944, leaving the business to his son Charles, Jr. and his two daughters. The three siblings took over the management of the Louisiana and Florida operations of the now prosperous and growing family business.
Although it was a growth industry, the billboard advertising business was a tough one. In the industry's early years, many billboards had to be hand-painted on the actual display surfaces, a tedious process. Eventually that method gave way to printing the billboard displays on sheets and assembling them at the "plant" (the site of the billboard). Today, most billboard advertisements are prefabricated as computer-designed and precision cut vinyl pieces and can be assembled with an efficiency far beyond what the technology of Charles Lamar's day allowed.
Obstacles to the growth of billboard advertising companies arose in the form of state and local zoning regulations that did everything from imposing permit requirements to specifying the allowed locations and size and shape of the displays. Nevertheless, the industry steadily prospered, especially after World War II, when the average American family could again afford to buy an automobile. Between 1940 and 1960, industry-wide yearly revenues increased from $44.7 million to more than $200 million.
A new period of expansion for Lamar began in 1958 under the leadership of president and CEO Kevin Reilly, Sr. Reilly represented a third generation of family management of Lamar Advertising through his marriage to Charles Lamar, Sr.'s granddaughter, Ann Switzer Reilly. Under Reilly's leadership over the next 15 years, Lamar purchased an additional eight companies in Florida, Alabama, and Louisiana. Growth was abetted by the fact that Florida had become a tourist and retirement mecca, and its roads were improving quickly.
However, Reilly also faced serious problems, some of which were industry-wide, including growing public resistance to billboard advertising. Critics felt that the industry was cluttering American highways with eyesores, blocking out the natural beauty of the landscape. They also offered proof that billboards were dangerous distractions for drivers and caused unnecessary accidents. By the late 1950s, the federal government began paying attention to critics of billboard advertising, thus threatening the strong possibility of additional regulation. The rumbling prompted some important efforts by the industry to govern itself, particularly through the agency of the Outdoor Advertising Association of America and the Institute of Outdoor Advertising. Nevertheless, the critics prevailed. Enlisting the aid of Lady Bird Johnson, the industry's opponents prompted a milestone piece of legislation. The Highway Beautification Act of 1965, a law designed to limit and govern outdoor advertising along 300,000 plus miles of federal highways. The act, strongly opposed in southern oil-producing states, ended the indiscriminate erection of billboards on the right-of-ways along all federally funded roads. It was a heavy blow to the outdoor advertising industry.
However, while this development initially had an adverse effect on Lamar's business, in the long run the company may have benefitted from the setback. Although the Highway Beautification Act brought unit growth of billboard displays to a virtual standstill, it forced Lamar to develop adequate contingency planning and to diversify.
In 1973, the original company and its acquired companies, totaling 13, were organized into the Lamar Corporation, a network of affiliates created to provide a central and more efficient system of accounting and management. Ten years later, Lamar gained total ownership of all of its 15 affiliated partnerships. It also acquired Creative Displays, Inc., which added another ten billboard markets to the company's total.
In February 1989, Kevin Reilly, Jr. became Lamar's president and CEO. He had first joined the company in 1978, the year after he earned a B.A. from Harvard University. Until assuming the presidency, he had served as president of Lamar's Outdoor Division, starting in 1984. Under his leadership, Lamar greatly expanded its operations. Kevin Reilly's brother Wendell Reilly served as chief financial officer from 1985 to 1989, while brother Sean became the vice-president of mergers and acquisitions. Charles Lamar III was the company's first general counsel, acting in this capacity from 1982 until 1998.
Lamar's strategy is to be the leading provider of outdoor advertising in each of the markets it serves, with an emphasis on markets with a media industry ranking based on population between 50 and 250. Important elements of this strategy are Lamar's decentralized management structure and its focus on providing high quality local sales and service.
In 1988, just before Reilly took over the company's reins, Lamar entered the business of fabricating interstate logo signs, winning a contract from the State of Nebraska in Reilly's initial year and eventually expanding to become the principal provider of logo signs in the United States. Thanks to the burgeoning super-highway infrastructure, the need for signs on public rights-of-way for approved franchises continued to grow, and Lamar's logo sign business, through competitive bids, won contracts from 18 states.
Through the 1990s, Lamar expanded its operations into other important areas, including transit advertising and wireless communications. It started creating and maintaining advertising displays on buses, bus shelters, and commuter benches in 14 of its primary markets as well as three other states: South Carolina, Utah, and Georgia. It also began contractual negotiations with electronic communications providers to allow them to attach receiving and transmitting devices to billboards on properties they owned. To date, it has made agreements with four of the principal providers of such services in the United States.
The company also went public, making an initial stock offering in August 1996. Although Lamar became a public company, to a large extent it was still a family-owned and operated business that prided itself on its friendliness and the experience and loyalty of its managerial personnel. On average, its regional managers had been with the company for 25 years.
Lamar undertook a vigorous acquisitions program in the 1990s, despite the fact that it faced some problems. A major, industry-wide setback was the steady decline in the billboard advertising of tobacco products, which had begun in 1992. Leading tobacco companies, yielding to both governmental mandates and societal pressures, began a drastic reduction in their outdoor advertising, a policy that continued over the next several years. This development cut fairly deep into the billboard advertising business and left many billboards blank. Recovery was slow. Not until 1996 did the industry, with 396,000 operating displays, come close to the 400,000 of its peak year, 1985. In 1992, tobacco advertising accounted for 12 percent of Lamar's net revenue, and although it had dropped only by 3 percent by 1997, Lamar was faced with the prospect that settlements in suits against the tobacco industry would lead to a total ban of outdoor advertising of tobacco products. The company responded by planning the total elimination of tobacco advertising by April 1999.
Lamar easily weathered the end of its tobacco accounts, however. Many non-tobacco advertisers had been waiting for billboard locations to free up. In any case, most of Lamar's real growth in outdoor advertising now derived from its transit and logo displays, areas in which Lamar had put major efforts. This proved to be a fruitful strategy. In 1996, Lamar purchased FKM Advertising. In the next year, its revenue increased by 61 percent over the previous year and its earnings rose by 74 percent, reaching $92.3 million.
During 1997, Lamar continued to expand through important acquisitions. In fact, it was a year of tremendous growth, accounting for 24 of the 106 acquisitions the company made between 1983 and 1997. Lamar also increased its total number of outdoor displays by a hefty 47 percent. In April, it purchased Penn Advertising, gaining close to 7,000 displays in New York and Pennsylvania, and in June it bought Headrick Outdoor, adding close to 3,200 bulletin displays and providing entry into four new states: Arkansas, Illinois, Kansas, and Missouri. It also bought McWhorter Advertising and some markets from National Advertising Company (3M), owned by Outdoor Systems, Inc., and made several smaller acquisitions. These resulted in expanded markets plus a significant increase in the total number of outdoor bulletin displays operated by Lamar.
Acquisitions continued in 1998. By July, Lamar had completed the purchase of an additional 24 concerns, and by October it had five more. Early in the year, after purchasing Ragan Outdoor in Iowa and Illinois, Derby Outdoor in South Dakota, and Pioneer Outdoor in Missouri and Arkansas, Lamar also signed an agreement to buy Northwest Outdoor, which, in addition to adding about 4,000 displays, allowed the company to enter markets in Washington, Montana, Oregon, Idaho, Wyoming, Nebraska, Nevada, and Utah. In May, Lamar acquired two more companies: Sun Media and Odegard Outdoor Advertising, L.L.C. A major acquisition followed in October, when, for $385 million and a debt assumption of about $105 million, Lamar purchased Outdoor Communications, Inc., adding 14,700 displays in 12 southeastern states.
In a major acquisition in June 1999, Lamar purchased the outdoor advertising division of Chancellor Media Corp., ranked number five in the billboard advertising business, for $1.6 billion. The deal involved Lamar paying $700 million in cash and the remainder in stock. With this purchase, Lamar became number one in total number of display signs operated in the United States.
In the early 2000s, Lamar continued to expand through acquisition. Much of the expansion was in the western and southern United States. In October 2000, the company bought Bowlin Outdoor Advertising & Travel Centers Inc. in a $27.2 million stock trade. Bowlin operated displays throughout New Mexico, Arizona, and Texas. In December, it acquired PNE Media L.L.C. and Victory Outdoor Advertising L.L.C., both based in Georgia. In August 2001, Lamar announced a trade with its competitor, the Viacom Outdoor Group, in which the two firms would swap outdoor displays. Viacom traded 144 displays in Birmingham, Alabama, for Lamar signs in California, Florida, and Missouri. In 2002, Lamar purchased American Outdoor Advertising from Landmark Communications of Virginia. The firm operated 960 displays in 11 southeastern states. In July 2004, Lamar purchased 611 displays in 19 states from Olympus Advertising. Later in that same year, it purchased Oregon-based Obie Media Corp., which sold advertising space on 38 transit systems and operated more than 1,100 billboards. Under the terms of the agreement, Lamar bought Obie's stock for $43 million and assumed some $23 million in outstanding debt. Writing in AdWeek Southwest, Richard Williamson quoted Lamar's chief financial officer Keith Istre as stating that, between 1996, when the company went public, and 2004, Lamar had spent about $5 billion in acquiring other companies.
Due to Lamar's aggressive campaign of acquisitions, it experienced losses in the early 2000s. However, throughout this period it also showed continued growth, with sales revenue rising from $687.3 million in 2000 to $810.1 million in 2003. Company finances turned around in 2004, with the first reported profit in several years.
Lamar's future continued to look bright. Among it strategies for growth, the company planned to firm up its position as the largest logo sign operator by adding new state franchises and, possibly, new acquisitions. In an industry that is highly fragmented at best, Lamar continued to work toward consolidation of its various operations without sacrificing its local identity in the various communities served by its individual companies. It remained a major player among the 600 companies in the outdoor advertising business, successfully competing with both rival display concerns as well as media advertisers vying for the same market share.
Lamar Outdoor Advertising; Interstate Logos, Inc.; Lamar Graphics; Lamar Advertising of Penn Inc.; Lamar Advertising of Oklahoma Inc.; Lamar Advertising of Youngstown Inc.; Lamar Advertising of Michigan Inc.
Infinity Broadcasting, Inc.; Clear Channel Communications, Inc.; Omnicom Group Inc.; Viacom Outdoor Group.
Atlas, Riva, "Billboard Mania," Forbes , November 4, 1996, p. 371.
Beatty, Sally Goll, "Billboard Firms Ease into Smokeless Era," Wall Street Journal , October 30, 1997, p. B6.
Brownlee, Lisa, "Sign of the Times: Billboards IPOs Catch Eye with Oversize Gains," Wall Street Journal , September 12, 1996, p. B6.
Dinsmore, Christopher, "Lamar Advertising Acquires Billboard Firm American Outdoor Advertising," Virginian-Pilot (Norfolk, Virginia), June 5, 2002.
Harrison, Joan, "A Face Lift for a Drab Industry," Mergers and Acquisitions , May–June 1997, pp. 46–47.
"Lamar Advertising Company Announces Third Quarter 2004 Operating Results," Business Wire , November 15, 2004.
"Lamar Advertising to Buy Obie Media," UPI NewsTrack , September 20, 2004.
"Lamar Spends $1.6 Bil for Chancellor Outdoor Biz," Advertising Age , June 7, 1999, p. 44.
Lovel, Jim, "Lamar Profits Fall Short of Projections," AdWeek Southeast , August 5, 2004.
Nicholson, Gilbert, "Lamar Boosts Its Dominance Over Billboards," Birmingham Business Journal , August 31, 2001, p. 1.
Sparks, Debra, "Musical Billboards Are the Hottest Advertising Medium. Then Why Is the Smart Money Bailing Out?," Financial World , February 18, 1997, pp. 48–51.
Williamson, Eric, "Louisiana-Based Advertising Company Expands with Augusta, Ga.-Area Purchase," Augusta Chronicle , December 9, 2000.
Williamson, Richard, "Lamar to Buy Outdoor Firm in $43 Mil. Deal," AdWeek Southwest , September 24, 2004.
—John W. Fiero —update: Thomas Wiloch