Outdoor

Maisie McCabe, mediaweek.co.uk, 19 January 2010, 11:30am

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

JCDecaux	29%
Primesight	12%
Clear Channel	22%
CBS	23%
Others	14

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."

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All Comments

david wildash - 19 January 2010

Obviously the agencies are pleased with this outcome and no doubt they are relieved that all bookings will be honoured, but think about the phrase, JCD have only purchased assets and not any Titan debt. So what happens to the suppliers that have stood by Titan through thick & thin and are owed large sums of money, are they now to be hung out to dry or will JCD do the honourable thing and honour their Invoices .We hope so . The demise of Titan has a far more of a serious effect other than those on the payroll \(City Rd). Smaller businesses must not suffer and perhaps in the long run they will equally welcome this news

Alex Young - 19 January 2010

WOW David..I understand your concern for the small businesses that may be affected by this but I feel you have missed the main impact. Of course the agencies welcome this as it further guarantees their own position and as for Decaux do you really think they will care re the small guy , come on get real. Titan or Maiden \(SAME STAFF) Have completely misread the market place ,£6 Million for Road side sold to Primesight cheap to say the least ,\(roll over and tickle my tummy time )But what a headache now for Primesight and their 12% of the market place .What will be there percentage if they do not win the Rail concession , there will be a few bowed heads in Charlotte Street. I do not share your opinion that this is a good deal ,a management buyout would of been better with their houses and jobs on the line they may of buckled down and succeeded

Alex Young - 19 January 2010

Peter Blake - 19 January 2010

I can't believe some of the comments from those in the 'industry'- a couple of whom are no longer 'in the industry'. For a former executive of CBS to accuse Titan of underselling rail beggars belief. Correct me if I'm wrong, but hasn't there just been a big clear out of senior management at that company as a result of their woeful performance? As for the statement by the new 'Guardian Angel' of outdoor \(remember that group of volunteers who operated on the subways of the USA but got ridiculed when they tried to export their ideas to the UK) – I think a trip back to the classroom to re-sit the lesson on sentence construction might be in order. Here's the thing. It's not that just that too much revenue has been promised to landlords, its that the business model of UK Outdoor is run principally by two specialist agencies and cannot sustain this many media owners who are willing to pay the going rate for the business. With absolutely no sense of corporate and social responsibility exercised by these behemoths, not to mention any investment in the real long term health of the sector, you really do, as the man says, have to wonder where it will all end up. For those guys over in Charlotte Street, you might want to be updating your roladex of recruitment consultant's business cards - you'll be needing them soon.. Same could be said of the staffers in the specialists agencies though, as it won't take long before the Decaux's and the Clear Channels of this world work out that they no longer need to pay to play. Interesting times we're living in.

Elliot Ness - 19 January 2010

So, less than four years after its fanfare entry into the UK outdoor market as the only realistic saviour of Maiden PLC, US group Titan Outdoor have succumbed to its unique constraints throwing in the towel of independence consolidating the media owner side of a sector where the buying side has been utterly dominated by only two companies since 2005-WPP owned Kinetic & Aegis owned Posterscope- who collectively control more than 90% of the buying in a "market" worth near £1bn pre-credit crunch days of 2008 \(£975m according to the OAA).

Darwinian theory is as relevant to the outdoor sector as any other but UK outdoor is not a level playing field and the afore mentioned absence of true market dynamics in a sector controlled by only two buyers is a bigger contributory factor in Titan's demise than inherited debt or bad contracts, poor or inexperienced Titan management ,or even the impact of the 2008/9 credit crunch.

I would of expected a more fundamental assessment on what consolidation says about the prevailing health of the sector & means for its future from the perspective of those that pay the bills-the advertisers rather than dwelling on how pretty Decaux will make the sites or how fast they'll post them. The blokes from Posterscope & Meridian & the ex-bloke from CBS all state how good the Network Rail portfolio is "a key asset" one called it,"extremely valuable" said another-"the rail audience has always been in a strong & worthwhile place " but under Titan " has been undervalued & undersold".If its so great how come its undervalued & undersold when operated by Titan & how come its now more valuable under Decaux?The audience is the same irrespective of the operator.

The estimates of media ownership are meaningless.JCD might have only 29% share of ownership but that will "not cause the same issues that it might have if that figure was something like 40% or 50%".What ?You mean like the market shares of Kinetic & Posterscope?Hats off to Decaux,you've played the long game extremely well.Best wishes & good luck to the junior Titan staff & all the small suppliers and contractors burnt by Titan's demise.And to the architects of the uneven playing field I hope the "sense of future to the whole outdoor industry" will soon have no place it in for you.

Alex Young - 20 January 2010

Mr Ness ,well said at last the voice of reason

Oliver Reed - 20 January 2010

With the demise of Titan you now only need to make 3 phone calls to book an outdoor campaign across roadside \(any format, or quality level you care to mention) rail, London Underground, Supermarkets and Shopping Malls. If you were feeling generous you might throw a few crumbs Primesight's way but lets be honest the specialists are only interested in managing their relationship with Clear Channel, Decaux and CBS. The days of the specialist are numbered as their presence is purely to safeguard the big three's interests within the agencies \(i.e. Decaux have a 1/3 of the outdoor market therefore they deserve 1/3 of any outdoor budget irrespective of the brief!) Thankfully clients and agencies are growing tired of carbon copy plans \(5000 x 6s, 2000 x 48s etc) and shifting their budgets in to more accountable and better value for money opportunities.