Industry welcomes consolidation in out-of-home market
Media agencies and outdoor specialists have welcomed JCDecaux's acquisition of the assets of Titan Outdoor, in a move that confirms the French firm as number one in the UK outdoor market.
Titan: lucrative rail sites are part of the deal
Titan Outdoor entered administration yesterday morning and JCDecaux bought the vast majority of Titan's assets, without taking on the former company's liabilities.
Senior industry sources welcomed the deal. Roy Jeans, chief executive of Interpublic out-of-home agency IPM, said: "JCDecaux will market the products extremely well. Titan's rail assets are extremely valuable. Decaux assured us yesterday it would be business as usual and IPM has a good trading relationship with Decaux."
Tim Sapsford, managing director of Aegis and Publicis' joint venture Meridian Outdoor, agreed. He called it a "great thing for Decaux" and its existing portfolio, and added: "The rigour that Decaux will bring to the posting and delivery of the portfolio will be very welcome."
It is understood that under the laws of TUPE all Titan's staff will initially work for JCDecaux, athough after three to four months there are likely to be some departures, especially among the senior management. Jeans said should this be the case he was disappointed for the team at Titan because they had "worked hard in a difficult market".
Steve Cox, marketing director at Titan Outdoor, said: "Since Titan sold the billboard business we have moved the game up a gear. Sales are up 30% on this time last year so I'm not surprised JCDecaux was interested. By moving the assets into the biggest outdoor company we will be able to up the level of investment and build on this success."
In September, Titan Outdoor sold its roadside assets to Primesight in a deal valued at £6m. Titan was left with its rail, retail and bus assets, which industry sources suggest are more valuable than the roadside sites, although it is not known how much JCDecaux paid the administrators.
Nick Parker, commercial director at WPP out-of-home agency Kinetic, said: "Knowing JCDecaux, it will not have overpaid for the Titan assets. It is a good deal for JCDecaux; time will tell if they got a great deal or an exceptional deal."
For the last week there has been mounting speculation about whether campaigns scheduled to run on Titan's portfolio would be honoured. Tony Mattson, group business director at Interpublic agency Universal McCann, said: "There was some doubt over whether campaigns would actually happen, but in the very short term Decaux taking on the business means everything will continue as normal. All in all it's good news."
The purchase of Titan's assets gives JCDecaux a firm position as market leader and approximately 29% of the outdoor market, but outdoor buyers appear unconcerned by its increased market share. Mattson said he was less concerned than if rival media owner Clear Channel had bought Titan because Clear Channel has more similar assets to Titan.
Arum Nixon, associate director of outdoor, radio and press at Publicis media agency MediaVest, said: "It is yet more consolidation in the market. Basically there are the big four media owners and that's pretty much it. But JCDecaux markets its products very well and it is taking on a portfolio in fairly good shape."
Kinetic estimates for UK outdoor media ownership following JCDecaux/Titan deal
Industry reactions to consolidation in the out-of-home market
Tim Bleakley, former managing director of sales and marketing, CBS Outdoor
"The Network Rail rail portfolio is a key asset that has been undervalued and undersold for some time. You once got a feeling that it was hampered by Titan's small share of the market and lack of financial muscle. That estate is now set to prosper under the control of a strong parent. From the point of view of JCDecaux the deal couldn't be better: it now has a compelling portfolio that comprises planes, trains and automobiles. That will get more important with the advent of digital media and the oncoming of London 2012."
Eric Newnham, global chief executive, Kinetic
"This is a positive change for better ownership and gives a sense of future to the whole outdoor industry. But there are still some outstanding questions to be resolved. For example, Clear Channel is still in debt - where will it end up? The Network Rail billboard contract remains up for pitch, as are the tender contracts for BAA's new media contracts."
Glen Wilson, managing director, Posterscope
"A rail audience has always been in a strong and worthwhile place in the outdoor landscape, and Titan put itself into a good position, which hopefully Decaux can evolve. The new security of its combined market share should give confidence to invest in new infrastructure and events that will benefit advertisers and media owners alike. A 29% share of the market is unlikely to cause the same issues that it might have if that figure was something like 40% or 50%, in which case the market could be more seriously affected."
Ivan Clark, outdoor consultant
"In times of economic hardship the intricacies of business are always likely to be tested, and those that are losing and backed by borrowed money will be in the most serious trouble. Perhaps for Titan this was always going to be a matter of time. This move will expand JCDecaux into areas where new audiences are available, such as a retail and mall offering. Either way, now is a good point to evaluate the working mechanics between outdoor specialists, media agencies and landlords. The dynamics have to change. It can't be good for the long-term health of the business if more revenue has been promised to landlords than advertisers are actually prepared to pay."
This article was first published on mediaweek.co.uk
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