SPOTLIGHT ON: OUTDOOR: Avenir sale could attract fresh entrants to the outdoor arena - Havas’s outdoor arm would offer a good entry into the market, Alasdair Reid says

By ALASDAIR REID, campaignlive.co.uk, Friday, 04 December 1998 12:00AM

Mergers and acquisitions in the outdoor business tend to be rather messy affairs. They usually involve protracted investigations by the Monopolies and Mergers Commission which result in awkward rulings. Deals are either delayed, destroyed or radically restructured, with new owners having to sell on lots of their inventory to meet competition rulings. This is odd, given that outdoor is such a small medium and one that can be easily bypassed by advertisers.

Mergers and acquisitions in the outdoor business tend to be rather

messy affairs. They usually involve protracted investigations by the

Monopolies and Mergers Commission which result in awkward rulings. Deals

are either delayed, destroyed or radically restructured, with new owners

having to sell on lots of their inventory to meet competition rulings.

This is odd, given that outdoor is such a small medium and one that can

be easily bypassed by advertisers.



But here we go again. Havas is selling its Avenir outdoor businesses,

including Mills & Allen in the UK, a clutch of transport advertising

businesses such as Sky Sites, AP Systemes and Pearl & Dean. Mills &

Allen, a player in nine European markets, is the plum asset. Last year,

its total European turnover was pounds 350 million and it accounted for

18 per cent of the UK outdoor market.



Which on its own must be tempting for some of the players already active

in the UK outdoor market. Clear Channel, which now owns More O’Ferrall,

for instance. Or TDI. Or Maiden. Any of these might generate MMC

interest.



This time, however, there is a feeling that things may be different.

There’s a lot of speculation - for instance, that we may see the

emergence of a newcomer. An outdoor media owner not yet active in the

UK. Or a UK media owner not yet active in outdoor.



Look at Carlton, say some observers. It has successfully diversified

into cinema - that proves it can make a profitable move into minor

media.



Or what about Granada? It knows a bit about the transport business,

given its ownership of service stations.



Would advertisers welcome an injection of new thinking? Would there be

drawbacks to TV involvement? Eric Newnham, the managing director of

Poster Publicity, points out that in the US, many outdoor contractors

have recently been bought by companies from other media sectors -

particularly radio.



He says: ’The essential factor is whether the buyer has enough money to

continue to invest in the product, but they must also have the depth of

experience to understand the medium. Big radio companies in the US have

found themselves on a particularly steep learning curve. There has to be

an understanding of the nitty gritty - issues like how councils work

when it comes to giving planning permissions for sites.’



Newnham is sceptical about the ability of TV companies to appreciate the

existence of that learning curve and he has concerns about possible

abuses - like conditional selling - that could come from cross-media

ownership.



But he suggests it wouldn’t be a complete disaster for a large outdoor

company to consolidate its position.



He says: ’For someone like Maiden or TDI to buy it would make some sense

because it would give them the European dimension they currently

lack.



But it would cause real concern if they became too strong in the UK

market. This has to be about balance.’



But Chris Morley, the chief executive of IPM, would certainly welcome

the arrival of a TV company. He comments: ’A television company would

bring an advanced level of management skills, and that would be

excellent news.



’I believe that the issue of inventory management will be crucial in the

future and TV, with its history of managing a complex trading system,

would bring a lot to that. It could keep the momentum going in the

medium - and it has been building quite nicely recently.’



But how about that learning curve? Outdoor, Morley says, is not a black

art any more. ’I don’t think the principles of selling are all that

different and we are working towards a transparent system for audience

measurement. People are still not sure about the system, but that will

change.’



This article was first published on campaignlive.co.uk

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