In the last three years, the UK outdoor advertising industry has
been the subject of no less than 20 separate acquisitions. The biggest
of them came last year with the pounds 475 million purchase of More
Group by the US radio broadcasting giant, Clear Channel.
However, the imminent pounds 300 million sale of the Havas Group’s
international outdoor empire, which includes its UK subsidiary, Mills &
Allen, has ensured that the outdoor brigade remains a priority for
would-be media investors.
One of the most significant aspects of the current wave of activity in
outdoor is the interest shown by broadcasters. Aside from the Clear
Channel deal, Scottish Media Group has just forked out pounds 35 million
for the poster specialist, Primesight.
More recent still is Scottish Radio’s pounds 27 million acquisition of
Trainer - one of the premier outdoor contractors north of the border.
Among the names touted as potential buyers of the Havas business are
Carlton Communications and Granada Media Group.
Keep on digging and you discover that broadcasters had made their mark
even before the latest round of purchases. TDI, one of the most dynamic
arrivals in the UK, is owned by Westinghouse - making it part of the
same corporate family as the US network, CBS. Go back far enough and you
discover that Clive Hollick’s MAI was a former owner of the Havas poster
Mills & Allen’s marketing director, David Pugh, cites a number of
reasons for the renewed interest in the sector. ’As other media
fragment, outdoor is playing an increasingly important role as the
broadcast glue that can hold a mixed media campaign together,’ he says.
’Not only that, but better research, bigger audiences and increased
professionalism are driving growth.’
According to Pugh, investors are not only attracted by the industry’s
growth so far. ’This is still an underperforming medium,’ he claims. ’It
currently takes 5 per cent of national ad revenue and we believe it can
go as high as 8 per cent.’
Eric Newnham, chief executive of the outdoor specialist, Poster
Publicity, believes that the financial markets are also driving demand.
’There has been massive consolidation in the US outdoor business which
explains why some big North American players are looking for
opportunities internationally,’ he says. ’There is also pressure on
public companies here to find ways to grow. It is no surprise that media
companies are turning to the last untapped broadcast medium.’
This sentiment is echoed by the prices at which outdoor is trading. The
price paid by Scottish Radio for Trainer is, by some estimates, eight
times the established market rate. Meanwhile, Maiden, one of the last
major independent groups, has seen its share price double recently -
despite issuing a profit warning last year.
Observers believe there are good reasons why Carlton or Granada might
see Mills & Allen as a good fit with their existing business. Nigel
Mansell, managing director of the outdoor specialist, Concord, says:
’Granada is already employing agencies to put up poster sites in its
motorway service stations and Little Chefs - so there is a natural fit
there. Meanwhile, Carlton is a heavy user of outdoor to promote its TV
programmes. That means potential savings of millions for them in such a
Not all companies have the same corporate agenda, however. Scottish
Media Group’s acquisition of Primesight gives a useful insight into the
way British television broadcasters view outdoor.
SMG’s corporate affairs director, Callum Spreng, says: ’We’ve got a
robust media business as a result of ITV and our newspapers - but it is
not growing as fast as outdoor. So we see good growth potential to tap
into. Primesight has gone through significant growth in the six-sheet
market and we will accelerate that trend during 1999.’
Spreng also underlines the point that ’outdoor is seen as a good support
medium by TV advertisers’. This observation raises the spectre of
cross-selling between the two media - though Spreng is adamant this is
not SMG’s intention. ’The plan is for Primesight to be a stand-alone
business,’ he says.
The story of Clear Channel’s arrival in the UK is a quite different
affair. After acquiring More Group, it has now returned to its roots by
snapping up Golden Rose Communications, the radio group which owns Jazz
Clear Channel International’s chief operating officer, Coline
McConville, identifies a number of strategic strands within the
company’s UK expansion.
While the More Group is a robust and growing business in its own right,
McConville says the acquisition is also a way for CCI to strengthen its
position in the US outdoor market. ’We’ve been part of the consolidation
in the US, but the outdoor market there is still only 2 per cent of
total ad revenue. The European experience shows that getting up to 5 to
6 per cent requires a growth in the use of street furniture. That is
what gets advertisers’ message into the heart of cities.’
At the moment, street furniture is virtually non-existent in the US.
But McConville believes that ’by investing in and innovating around the
More business, we can build up the medium’s credibility and demonstrate
the benefits of street furniture to the US market’.
Although CCI’s core business in the US is radio, the Golden Rose
acquisition is opportunistic rather than a strategic attack on UK radio.
By fusing the two businesses, CCI can reduce Golden Rose’s costs,
Already sales, marketing and PR have been brought together under one
As in the Carlton/Havas scenario, there is also a potential saving of
millions for Jazz FM in terms of outdoor promotions.
With all eyes now on Havas, the most likely scenario is that CCI or TDI
will acquire the lot - then sell the M&A business in order to head off a
confrontation with the UK competition authorities. Most agree that
Carlton and Granada would be unwise and unwilling to take on all of
Havas’s European portfolio.
As for the prospective benefits of new owners in outdoor, the views of
insiders are mixed. Pugh says: ’It is attractive to see new shareholders
bringing money and expertise into the market.’
Newnham agrees - though he has some reservations. ’There is potential
for growth in outdoor but it will take a lot of investment and hard work
bringing in new advertisers.’
Mature media owners such as Carlton or Granada ’may bring more
credibility to the medium,’ Newnham continues, ’but they will also be on
a steep learning curve. They will need to work with experienced
professionals if they are to get the best out of the medium.’
Concord’s Mansell agrees with this assessment - and expects it to be a
key form of protection for poster buying specialists. ’We have a lot of
experience in advising clients on strategy and then implementing it. I
see no fundamental threat to that role.’