8 Outdoor has suffered a major blow as it has lost the licence to manage about 70 digital advertising screens, with bigger rival Global picking up the contract.
Insite, the landlord that owns the out-of-home sites, said it decided to "terminate" the licence with its tenant, 8 Outdoor, because the company had fallen behind on payments.
Alan Brydon, chairman of 8 Outdoor, admitted the loss of the Insite contract was "a big setback".
He said 8 Outdoor has lost about 70 screens, or around two-thirds of its portfolio.
The company, which specialises in large-format, roadside digital out-of-home screens, is "looking at options" as it considers its future.
Brydon said 8 Outdoor was hunting for new investment to "fund growth and expansion" before Insite took back its sites and talks with investors are ongoing.
He added that 8 Outdoor is operating as normal. "We continue to trade on all of our sites," Brydon told Campaign.
However, it is thought that 8 Outdoor is taking precautions and exploring whether it needs to consider putting the company into administration.
8 Outdoor declined to comment on whether it has been in contact with administrators.
Global’s expanding portfolio
Global’s OOH division was already a tenant of Insite and will take over all of the screens that the landlord is planning to take back from 8 Outdoor. Most of the sites are believed to be located outside London.
Dan Maiden, founder and chief executive of Insite, which owns more than 1,500 advertising hoardings, said: "We’ve been licensing a number of digital sites across the entire UK to 8 Outdoor for several years, but they have not been paying our licence fees recently, so we reluctantly decided to terminate those licences.
"We have subsequently managed to agree a new licence with Global Outdoor for a portfolio of digital sites, including those formerly operated by 8 Outdoor."
It is understood that Global, Britain’s biggest commercial radio group and second-biggest OOH group, could be adding as many as 100 screens to its estate as part of its expanded deal with Insite.
Global has aggressively entered the OOH sector and consolidated the market, spending as much as £750m to buy Exterion Media, Primesight and Outdoor Plus last autumn.
The triple M&A deal took Global, which is controlled by the Tabor family, from zero to more than 30% market share in OOH, behind JCDecaux.
It was not immediately clear how the additional inventory from Insite might add to Global’s share.
A Global spokesman said: "Global has simply signed a new tenancy agreement with Insite, one of Global’s existing landlords for outdoor advertising sites.
"This is just a licence deal for a number of Insite’s outdoor advertising sites, some of which we understand Insite had previously licensed to 8 Outdoor."
8 Outdoor insists it can 'grow again'
SIS Digital Vision, a manufacturer of OOH screens and infrastructure, set up 8 Outdoor in 2015.
Simon Grice, chief executive of SIS Digital Vision, wanted to expand into ad sales and 8 Outdoor built up a portfolio of DOOH sites, which included Birmingham, Edinburgh, London, Leeds and Manchester.
Following Insite’s decision to terminate its contract, Brydon said 8 Outdoor’s portfolio is set to shrink to about 40 screens, which are owned by a number of landlords.
"It’s a big setback, but the fundamental principles haven’t changed one iota [in terms of the growth opportunity in DOOH]," Brydon said.
"Obviously, you’d prefer to do it with over 100 screens, not 40. We have been pushed back 18 months to two years – that’s when we last had about 40 screens. With a fair wind and if things go right, we can grow again."
SIS Digital Vision previously won investment from a Chinese firm, Sun Hung Kai & Co, which bought a minority stake for £11m in March 2018.
Analysts say DOOH is growing because advertisers value the medium’s ability to reach audiences at scale and to target by location and time of day – with the potential for fast-turnaround, digital creative executions.
Global, which owns radio stations including Capital, Classic, Heart and LBC, won the approval of the Competition & Markets Authority to buy Exterion Media in April.
The group has moved quickly to complete the integration of Exterion Media, Primesight and Outdoor Plus.
The three subsidiaries became one division and rebranded as Global on 8 July.
Leon Taviansky, former chief executive of Exterion Media, became chief executive, outdoor and Jonathan Lewis, founder of Outdoor Plus and a seasoned OOH operator, became executive director.
One industry observer suggested Global has been "clever" as it has added Insite’s screens to its OOH portfolio without having to make an acquisition.
Global has 235,000 sites – a mix of "classic" posters and more valuable DOOH screens – across the UK and Europe.