Not for the first time in recent months, there is a strong
suspicion that the Maiden Group has been consulting its edition of the
Bumper Book of British Excuses. This substantial volume is popular with
great sporting and industrial institutions, particularly in the field of
transport - leaves on the line, the wrong sort of snow, etc - but
there’s surely a well-thumbed copy on all the desks that matter at
Maiden.
That at least was the view from some quarters of the industry last week
when they read Maiden’s interim results for the six months to 30
June.
The period had, according to a company statement, provided a ’difficult
trading environment’ resulting in an 8 per cent year-on-year decrease in
turnover - and although it still managed to scrape a slim operating
profit, the damage manifested itself in an overall pre-tax loss of
almost pounds 1 million when other balance sheet factors were taken into
account. But, and here’s big excuse number one, there was nothing it
could do about it because the whole outdoor advertising sector had been
depressed.
How so? The outdoor industry likes to think of itself as relatively
recession proof - along with all media sectors it does well in periods
of growth, but when times are tough, outdoor is often the last budget to
get cut because the medium is regarded as being of good line of last
defence value. And, of course, we haven’t exactly had a recession.
Maiden’s line was that the industry at large had been hit by a far more
subtle phenomenon - indecision.
Advertisers couldn’t make their minds up as to whether we were heading
for boom or bust, so they cut their outdoor budgets.
But no other medium has suffered noticeably and the outdoor industry’s
own figures, from the Outdoor Advertising Association, indicate that
revenue for the first six months was more or less flat year on year. The
obvious conclusion is that the 48-sheet sector - Maiden’s core market -
faced a particularly difficult time.
Perhaps - but even Ron Zeghibe, the chief executive of the Maiden Group,
is ambiguous on this point, preferring to focus attention on price per
panel figures. He states: ’If you look at all the publicly available
figures, from independent sources, the price per panel in 48-sheets
decreased by exactly the same amount in 6-sheets - 15 per cent. That
would point to a broad-based drop in demand across the medium. It is a
cyclical issue economically and nothing to do with one product line
versus another one.
There has been a whole lot of uncertainty out there which has led to
advertisers holding on to discretionary budgets. The good news though is
that the second half looks a lot better.’
The City appeared to find Zeghibe’s statement eminently plausible and
took a somewhat lenient view of Maiden’s performance, knocking only 4
per cent off the share price last Thursday, the day the results were
released.
But some in the industry are irritated that Maiden appears to be
shifting some of the blame for a poor set of figures. Roger Parry, the
chief executive of Clear Channel International, which operates in 26
countries, says that the UK was one of the network’s better-performing
markets. He asserts: ’Our UK business for the first six months of this
year was up 11 per cent and we remained very profitable. Admittedly,
growth rates were slightly lower than they have been but the plain fact
of the matter is that Maiden lost share. What I think we are seeing is a
movement of money from 48-sheets to 6- and 96-sheets, from
non-illuminated formats to illuminated, from poor quality to greater
quality.’
He adds: ’There are some of us in the industry who are a little fed up
with the fact that when Maiden has a poor performance it blames the
market as a whole.’
Maiden sources counter some of Parry’s assertions by pointing out that
Clear Channel’s UK operation doesn’t file publicly available accounts
any more. The implication is that Clear Channel (and other contractors
in the 6-sheet market, for that matter) is being disingenuous. But
buyers say that Parry’s figures bear out their experience of the
marketplace - which also indicate that the transport advertising
company, TDI, had a superb first quarter, up by more than 15 per
cent.
What’s the true state of affairs? Does the 48-sheet market in general,
and Maiden in particular, face a long-term decline in share? And should
we give any credence whatsoever to Zeghibe’s ’uncertainty’ factor? Steve
Wilson, the managing director of Blade, says he has some sympathy with
the Maiden point of view. He comments: ’Maiden did very well in the
times of plenty so they are coming from a high base of profitability and
outdoor has been struggling to grow revenue when other media haven’t. I
don’t know why - one of the theories is that advertisers are taking
money from the outdoor budget to experiment on the internet. All the
same, I don’t think there’s any doubt there has been a continuing shift
in market share towards 6-sheets.’
Wilson, in common with other observers, points out that rates may well
have been as soft in the 6-sheet market as they’ve been in 48s but
that’s largely due to the fact that, because of new-build programmes by
Clear Channel and JCDecaux, there has been a huge increase in
supply.
Some analysts believe that Maiden’s 48-sheet rival, Mills & Allen, came
within a whisker of outperforming Maiden in 48-sheets over the first
half - which, if true, could be astounding given that M&A was a company
adrift for two years until JCDecaux bought it earlier this year.
Annie Rickard, the chief executive of Posterscope, agrees there’s little
doubt that some sectors of the outdoor market are performing a lot
better than others. She states: ’You could argue, I suppose, that the
uncertainty over the future of M&A adversely affected the whole 48-sheet
market. But if you look at the consistently strong performers like TDI,
you have to say that its performance is down to sales and marketing. The
48-sheet sector is still a big chunk of the market, but they are not
selling as well as they could be. If Maiden had performed better in that
area I suspect it would have led to a better result.’
