iSite Media, New Zealand’s largest out of home advertising supplier, has entered into an agreement to purchase all of OTW's billboard sites. But the deal will only go ahead if the Commerce Commission believes it won't substantially lessen competition in the market.
- A public version of the application will be available shortly on the Commerce Commission’s website at www.comcom.govt.nz/clearances-register.
It's thought OTW, which was founded in 1991 and has sites in Auckland, Hamilton, Wellington, Christchurch and regional areas throughout New Zealand, has over 100 sites, which would bring iSite's total billboard number to over 500, 70 percent of them in Auckland. This would add to its transit options and the advertising concessions at Wellington and Queenstown International Airports.
This move follows APNO's purchase of Oggi's outdoor assets for an undisclosed sum and the purchase of what was then the country's third largest billboard company, Media1, in 2008. APNO now has over 650 billboard sites around the country.
Wayne Chapman, iSite's chief executive, was unable to talk in too much detail about the deal due to confidentiality clauses and the pending ComCom clearance process, but it was required to tell the stock exchange about the purchase and a release said the deal was worth "under $10 million".
iSite was recently 66 percent owned by Wellington Airport and 33 percent by Infratil until July this year when it became a wholly-owned subsidiary of Infratil.
Chapman says the assets "bolt on" very well to its existing sites and will give it strong strategic position in Auckland. He hopes to commence operating the sites in the final quarter of the year and he's comfortable the company has put a good case together to gain the required regulatory approval for the takeover.
"The acquisition highlights our commitment to a vision of a vibrant and competitive OOH market in New Zealand," he says. "Further, it enables iSite to compete more effectively and positions the company to benefit from anticipated market and sector growth [OMANZ recently announced quarter two gross media revenue was up 8.3 percent on same period last year]."
So is this a case of the smaller players looking to escape because the going's got too tough? Or a case of the big players swallowing up the minnows in their quest for market share?
"If you're not one of the top two or three players, it's hard with the market conditions the way they are," says Chapman.
OTW owners Mark Venter and Mandie Skerrett said: "After many years of operation it was important that our valued commercial and customer relationships pass to an operator with closely aligned values, reputation and commercial practices. We will work closely with iSite to ensure a seamless transition and thank everyone for their support over the years.”