Winners and losers in outdoor war

SBHD: Poster contractors can’t rely on the OFT to back off – power is now in the advertisers’ hands

Since the Sorrento outdoor conference last year, poster contractors have been pressuring advertisers, poster specialists and agencies to come up with a unified definition of the poster market.

The idea is to present the Office of Fair Trading (OFT) with a unified view that would force it to change the terms on which it bases its investigations. A liberal definition of the market would then allow the cash-rich market leaders to embark on the round of takeovers they so badly desire.

The Incorporated Society of British Advertisers (ISBA) was the final body last week to agree to a definition of the market that aims to split the medium into two main sectors: mobile and static. The static market is composed in turn of three size markets: six sheets, 48 sheets and 96 sheets.

The Institute of Practitioners in Advertising (IPA) and the Council of Outdoor Specialists (COS) would allow contractors up to 30 per cent of each sheetage size and 25 per cent of the whole medium. However, the contractors are not happy.

“Outdoor is one market,” says Ron Zeghibe, chief executive of Maiden Outdoor. “We should be allowed to own 25 per cent of the gross revenue of the total medium.”

So what is an acceptable level of growth for the poster contractors and advertisers? According to figures prepared by the COS, the largest winner under the new definition would be Maiden, which could theoretically expand its ownership of 48-sheet posters by 28 per cent and its 96-sheet stock by 50 per cent.

In real terms, this means that Maiden could buy most of either British Transport Advertising or NSS, the fourth and fifth largest contractors respectively. Conversely, if BTA has the money it could probably swallow many companies to quadruple in size.

According to COS calculations, Mills & Allen, the largest 48-sheet contractor, could grow its 48-sheet stock by 16.8 per cent, taking it from 8,600 panels to 10,044. In the 96-sheet market M&A could grow by 19 per cent.

More O’Ferrall’s creation of the six-sheet market means it already dominates, which, as part of the new market definition, ISBA is happy to accept. In the 96-sheet market it could grow by 17.6 per cent, up from 721 panels to 848.

“It doesn’t change anything,” adds Zeghibe. “We can already acquire one company.”

But what are the OFT’s feelings on these events, as it hasn’t even seen the agreed market definition yet? “We would look to relevant Monopolies & Mergers Commission reports,” says an OFT spokesman, “but also take into account the views of competitors and customers.”

Crucial to OFT acceptance are the customers, in short, ISBA. Peter Marr, ISBA director of media and research, believes it should have the whole say as outdoor is a pure advertising medium. “Outdoor has no editorial so the only public interest is the advertisers’ interest. They will take more notice of us as it’s entirely our money,” says Marr.

It may be that if the outdoor medium is to grow it will simply have to accept that the power to hold the OFT back is in the hands of the advertisers.