SBHD: The MMC often scuppers poster deals; in the case of Portland, the reasons are more personal.
The collapse of poster specialist Portland’s acquisition of Poster Publicity (PPL) last week raises the question: what is it with outdoor and acquisitions? It is rarely the industry’s fault, but it seems that any attempt by an outdoor company to grow through acquisition is destined to fail.
Usually it is the Monopolies & Mergers Commission (MMC) that scuppers deals, such as Portland’s attempted acquisition of Concord in 1989 and countless moves by poster contractors to buy one another.
This time it’s personal. Martin Sorrell, chief executive of WPP, which owns about a third of Portland, vetoed the deal on the grounds that PPL was asking too much. The timing of this was dramatic and unhelpful.
The negotiations were public knowledge from October last year and the two specialists had expected to complete the deal, after expensive due diligence, by January 20 – barring intervention by the MMC.
They had already pitched together successfully for BBC Network Radio’s business and integrated their buying departments, and preparations were under way to hive off Portland International as a separate company at PPL’s old offices.
The effect of all this on Sorrell’s relationship with Portland chairman Dennis Sullivan we can only guess at, but the failure of the acquisition leaves both companies in limbo.
For PPL, the problem is short-term. When the acquisition was announced, PPL made no secret that it felt it was having problems growing without a link to an agency or international network.
The volume-dependant way outdoor is bought means the size of a poster buyer’s billings are everything, and no one can achieve competitive rates if they fall below a certain threshold. PPL, for all that its personnel and management allow it to punch above its weight, must have decided before embarking on the negotiations that it was in danger of falling below that threshold.
However, PPL has other suitors. Carat’s Posterscope (formerly Harrison Salinson) and the Media Business Group only fell by the wayside when the Portland deal was announced in the trade press. The company’s chairman still wants to sell his shareholding before retirement, so the firm should easily find a new home – and a way to grow.
But for Portland it is the long term that is the problem. “Portland has a management problem in the UK,” says Mills & Allen sales director Michael Higgins. “Dennis Sullivan had found a solution to that problem by bringing in PPL.”
Until 1994, Portland had been the undisputed market leader since the late Seventies. However, it had started to be threatened by the growth of Concord and lost some big accounts.
PPL chief executive Gerry McSharry and managing director Eric Newnham were to take over the day-to-day running of Portland to shake up the company. Sullivan was to be chairman and managing director Terry Alexander deputy chairman. Such a public admission of Portland’s management weakness – that it had to buy in outside talent – cannot easily be ignored. “Standing still is no longer a solution. Portland can’t just say this hasn’t happened,” says Higgens.