MEDIA FORUM: MMC could clarify outdoor ownership - at a cost - The prospect of yet another wide-ranging Monopolies and Mergers Commission inquiry into the outdoor medium loomed ever larger last week. Can any good come of it? It could clarify the ownership

The More Group saga continues. The battle of the bus shelter - sorry, street furniture - looks as if it could have many more twists and turns before it concludes. Last week, Decaux upped the ante by offering More Group shareholders pounds 12.20 in cash per share - clearly trumping the pounds 11.10 offer from the US company, Clear Channel (Campaign, 29 May).

The More Group saga continues. The battle of the bus shelter -

sorry, street furniture - looks as if it could have many more twists and

turns before it concludes. Last week, Decaux upped the ante by offering

More Group shareholders pounds 12.20 in cash per share - clearly

trumping the pounds 11.10 offer from the US company, Clear Channel

(Campaign, 29 May).

That should put Decaux in the driving seat. Only one snag - a Monopolies

and Mergers Commission investigation that will take months to


If we assume that the bid receives the MMC’s blessing, More Group

shareholders would still have to wait until the autumn for their money.

Should it be blocked, however, it’s back to square one.

It looks as if we’re set for another MMC inquiry into the outdoor

business - the fifth in recent memory. And that is not a happy prospect

for the industry.

Both Decaux and More are big in the bus-shelter six-sheet poster


A merged entity would have a virtual monopoly. Does that matter? It

would certainly have nothing like a monopoly of outdoor revenue - less

than 25 per cent in fact. And, to take the bigger picture, it would have

less than 1 per cent of the total UK display advertising market. Some


In the past, however, the MMC has given confused and contradictory

signals as to whether each sector of the outdoor business should be

regarded as a separate market. Many years ago, Mills & Allen was blocked

from acquiring Dolphin in the larger format market but, recently, Maiden

was allowed to snap up BTA (again in larger formats) and TDI now has a

monopoly of bus-sides following deals with Maiden and Buspak.

But there’s another wrinkle where the bus-shelter market is concerned -

and it’s ostensibly what the MMC inquiry will examine. The award of

street furniture contacts is a useful source of income for local


It’s obviously in the interests of councils to have two big groups

bidding against each other.

Decaux is confident that this will not prove a major sticking point.

Last week, Jean-Francois Decaux, its chairman and chief executive,

stated: ’We were surprised by the decision to refer Decaux’s offer to

the MMC because of competition concerns in the market for providing

street furniture to local authorities, since this contradicts decisions

taken by the Office of Fair Trading in 1994 and 1995 not to regard the

bus-shelter business as a separate market. We are, however, encouraged

by the news that the Local Government Association did not formally

complain to the OFT because a survey of its members on the issue

produced only a 10 per cent response.’

Local authorities may not be complaining. Unfortunately, advertisers

are. The Incorporated Society of British Advertisers is believed to have

argued that bus shelters must continue to be regarded as a separate

market - and has voiced strong concerns that a merged Decaux-More group

would be likely to abuse its position.

It did this despite specific reassurances from Decaux that there would

be no rate rises above the retail price index for the next three years

and that it would invest pounds 50 million in new plant. ISBA is

unimpressed - and its intervention could lead to the MMC opening up the

scope of its inquiry to include every aspect of the outdoor market.

Is that a prospect to be feared? Just what would the implications


Alan Simmons, the chief executive of the poster specialist, Concord,

can’t see much good coming from it. But he can see why advertisers have

voiced their concerns. He comments: ’If you look at the six-sheet

market, the vast majority of advertisers are in fmcg, financial services

or cars.

The fmcg people especially are targeting housewives and have come to see

six-sheets as a good reproduction medium that can be used as an

alternative to magazines.

’We’re relaxed about the offers on the table - neither would give us a

problem. But advertisers have been fighting a long drawn-out battle on

the subject of media ownership across the board and have every right to

express their reservations. Having had the MMC crawl all over the

industry several times in the past, this is the last thing we need.’

Phil Georgiadis, a founding partner of Walker Media and spokesman on

outdoor media issues for the Institute of Practitioners in Advertising,

says that market share should clearly be calculated against the whole

outdoor medium. ’We are comfortable with individual players having up to

25 per cent of all outdoor revenue,’ he says.

Georgiadis believes that the emergence of fewer and stronger media

owners could improve the outdoor medium: ’We could see more

accountability, better research, higher quality of sites. Strong players

invest at a global level. There is more chance of them surviving - it is

a global business. The transfer of best practice from other markets has

got to be a good thing for the industry.

’And we believe that there is a safety valve. If companies try to

exploit their dominance, the market is capable of either pulling out of

that medium as a whole or switching from one format to another.’

Chris Morley, the chief executive of the poster buying specialist, IPM,

is similarly relaxed about the Decaux bid. He points out that there are

several layers of irony here. He states: ’More Group developed the

bus-shelter market from nothing - and they did it by going to France and

taking their cue from what Decaux was doing there. For many years there

was a monopoly in street furniture because the whole business had been

created by More. Even now, with Decaux in the market, More is still the

only player in all but a handful of London boroughs and a few other


Morley points out that it could be a nightmare if the MMC decides to

revisit previous takeovers. He adds: ’It is a lengthy and arduous

process - and unnecessary for a 4 per cent medium. We could have done

without all of this. But it certainly shouldn’t lead to people shying

away from from the medium. It may even benefit from all the publicity.’


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