After Tube result, the next stop may be consolidation
A view from Gideon Spanier

After Tube result, the next stop may be consolidation

When change happens in media, it often feels slow, but then there is a sudden shift.

Look at the newspaper industry, which faces a year of reckoning as The Independent prints its final edition on Saturday, The Guardian prepares to axe 250 roles and Trinity Mirror struggles to make The New Day work.

But change can be good, if it makes a sector stronger and encourages innovation and investment. That certainly looks the case with outdoor media.

Exterion Media’s triumph over JCDecaux last week for Transport for London’s £1.1 billion out-of-home ad sales contract, the most valuable in the world, is just the start.

Now we get to see if the speculation before TfL’s decision was right about this being a pivotal moment, triggering a wave of consolidation.

The rumour mill is buzzing. Just 24 hours after the result, Campaign reported that Exterion and its owner, Platinum Equity, were planning a takeover of Clear Channel International. None of the players would comment and some observers think that the takeover claims are overblown and premature.

Merging Exterion and Clear Channel would create a powerful number two across Europe and beyond to challenge JCDecaux, the number one.

But it is far from clear if iHeartMedia, Clear Channel’s owner, is interested. There are claims that it might have brushed off informal contact from the Exterion camp in the past and might not be in a position to do a deal for some time because of legal complications with its debt.

However, Platinum is in a powerful position as it has solid income for years to come from TfL. Exterion, which was bought for $225 million in 2013, is already thought to have paid off virtually all its debt. Contrast that with iHeartMedia, with $20 billion of loans.

Platinum could look at other takeover opportunities, sell Exterion or float it on the stock market.

But there is an argument that Platinum should feel emboldened by the TfL win because Exterion proved it could beat the world’s biggest outdoor company. One source said Exterion beat its rival "by a country mile" on practically every criterion on TfL’s scoring system.

Whatever happens, the rumours about Exterion and Clear Channel should flush out further interest. There is no other sector in media where so many of the leading players are owned by private equity.

They invested because they saw an opportunity to consolidate a legacy sector that is being transformed by technology. But it might need a new player with deeper pockets to lead the next wave of global consolidation.

Fewer, stronger outdoor media owners would benefit the medium.