The UK poster industry is in a state of frenzy. A series of events over the past month has started a flurry of secret negotiations as big players look to form sales alliances, or acquire, regional poster contractors.
More O’Ferrall is involved in negotiations that could see it separate its billboard posters – 96 sheet and 64 sheet – from its bus shelter business. The billboards would then be sold and marketed in alliance with the sites of other regional poster companies in a new sales operation.
MO’F is understood to be working on the plan with Michael Higgins, former sales director of Mills & Allen (M&A), and a man with strong contacts among regional poster contractors.
Maiden Outdoor is also involved in negotiations with regional contractors.
Indeed, sources suggest that some regional contractors – notably those with particularly valuable areas of the country within their grip (such as London) – are negotiating with M&A and Maiden at the same time.
The driving force behind the rush for alliances is the Office of Fair Trading’s decision to allow Maiden to acquire British Transport Advertising. It is the first OFT ruling to allow a poster contractor to take more than 25 per cent of any sheetage size. The move is seen as giving the green light for other contractors to increase their share of the poster market.
It has uncorked 15 years of bottled up acquisition activity. Consolidation is now the name of the game.
In the same week that the Maiden deal was approved, Atlas – the consortium of large regional poster contractors – announced it was disbanding.
Atlas has been in operation (under various names) for more than two years – but it has never had an easy ride. Its aim was to pool the sheetage of ten big regional contractors and sell them as a national product through a London-based sales operation. While it seemed like a good idea, it failed partly because of what one contractor describes as “the difficulty of managing ten very individual entrepreneurs that all knew the best way to operate their businesses without the help of Atlas”.
The problem for Atlas was that individual contractors allowed their own sales deals to take priority over what Atlas could negotiate across the consortium. In the end, this made it less than the sum of its parts.
With Atlas out of the way, some regional contractors are looking to set up joint selling arrangements with MO’F or Maiden that will plug their posters into national campaigns.
Maiden is in the market because of M&A’s deal two weeks ago to handle the sales of the fifth largest poster contractor National Solus Sites. NSS previously had a joint sales deal with BTA, and Maiden thought it had bought that arrangement when it purchased BTA. However, M&A was able to offer NSS a better percentage and stole the contractors’ sites from under Maiden’s nose.
So Maiden is still looking for alliances with regional poster contractors to up-weight profitable regions where its coverage is weak.
Maiden has what the other two majors don’t. It has OFT approval to control 36 per cent of the 48-sheet market – what the BTA and NSS acquisition would have given it.
So while the others are frantically chasing alliances based on an understanding that the ground rules have changed, the OFT has not actually made any statement on what market share is acceptable.
It approved the Maiden/BTA deal with no strings attached. But it also issued a statement saying that the deal did not set a precedent and that every acquisition would be looked at on
an individual basis. Perhaps remembering that the natural state of markets is monopoly, the OFT would be wise to stick to that policy.