Complementary inventory and client opportunities: what Ooh Media’s acquisition of Adshel means for New Zealand—UPDATED

Following June’s announcement that Ooh Media won a bidding war to acquire Adhsel, the Australian Competition and Consumer Commission’s (ACCC) has today announced it will not oppose the acquisition.

Ooh Media’s plan to acquire 100 percent of the share capital in Adshel from HT&E Limited has until now been subject to the ACCC approval.

In today’s release, Ooh Media CEO Brendon Cook said the acquisition was an important turning point for the Australian Out of Home industry’s competitiveness in the Australian media market.

“For oOh!media, the acquisition of Adshel will add a missing piece to our diverse Out Of Home portfolio, by adding a national street furniture and transit offering.

“Adshel is an excellent business with great people and provides a massive audience reach through what we see as a great street furniture offering, plus its rail network in Sydney and Melbourne delivers the CBD audience, an area we know has real value to advertisers.”

He said through the acquisition it will deliver better service to advertisers and at the same time fast-track innovation in its product offer, therefore, providing it with exciting opportunities for the business and its growth.

“The digitisation opportunity in the Adshel business is expected to provide a significant avenue for further growth beyond what has been achieved to date,” he said.

He said the company would commence integration as soon as possible, which would include the Adshel business being brought under the Ooh Media brand.

Original story published 26 June:

Over the weekend, news broke of Ooh Media winning the bidding war to acquire Adhsel from Here, There & Everywhere (HT&E) for $570 million.

Completion of the acquisition is expected this year and is subject to the Australian Competition and Consumer Commission’s (ACCC) approval.

Following the news, Adshel sent out a release to say business as usual is the order of the day.

“Adshel will continues to trade as normal and will accept and deliver business for the remainder of 2018 and beyond. Your Adshel team remains the only way to buy any of our market-leading solutions,” read the release.

It’s been a big year for the company in New Zealand following the launch of Adshel Live Day Buying in December, as it’s launched Adshel Live Unbundled and added 60 screens to its Adshel Live network.

Just last week it introduced Reach Builder, a new campaign delivery method offering advertiser’s greater audience reach across Adhshel Live’s network of over 250 screens. It will allow advertisers to vary the locations they appear on each day, distributing campaign messaging to additional areas and audiences, thereby increasing the reach of their campaign.

Meanwhile, for Ooh Media, in its announcement of the acquisition, CEO Brendon Cook said Adshel is complementary to its existing portfolio and it is excited to be entering the new segments of street furniture and rail.

“The digitisation opportunity in the Adshel business is expected to provide a significant avenue for further growth beyond what has been achieved to date. We are confident that Ooh shareholders will enjoy the benefit of cost synergies arising from the acquisition.”

When asked for details about what the acquisition would mean for New Zealand, Cook says it’s excited about the opportunity to combine the two companies.

“Both businesses have great people and the combined product, systems and data offerings will bring a dynamic way for advertisers to engage clients.”

Ooh Media in New Zealand has also had a big year, expanding its Wellington presence with 16 new retail panels before rolling its digital network into Wanganui.

And in February this year, it announced it has continued double-digit growth in revenue, up 13.1 percent, with digital revenue as a percentage of total revenue increased to 59.8 percent for the full year ended 31 December 2017.

At the same time, Outdoor Media Association of New Zealand (OMANZ) released a report showing OOH revenue grew 18 percent for 2017.

As well as revenue growth, in 2017 Ooh Media and APN Outdoor advised their proposed merger had been terminated.

The rationale behind the merger was to create a service offering across key OOH formats, including roadside billboards, transit, rail, airports, retail, offices and other bespoke venue environments, and it would enable the merged group to benefit from the digital and classic OOH capabilities of both businesses across the enlarged portfolio.

However, the proposal was terminated after the ACCC’s Statement of Issues outlined its preliminary view that the proposed merger would likely result in a substantial lessening of competition in the supply of OOH advertising services. 

Now APN Outdoor is also getting in on the consolidation action with news that French outdoor advertising company JCDecaux has agreed to buy it for $1.119 billion.

Like the Ooh Media purchase of Adshel, JCDecaux deal will also have to seek approval from the ACCC. It will also need to go through the Foreign Investment Review Board (FIRB) and the New Zealand Overseas Investment Office according to Mumbrella.

Talking to Go Media’s general manager Simon Teagle, it’s no surprise there is a lot of action in the industry as he says it’s an attractive medium and inevitably there are large global companies looking to get in.

“There’s still a lot of opportunity in out of home, there’s lots of investment going on in the sector,” he says. “It’s an attractive medium to be working in.”

Looking outside of the OOH industry, we asked media agencies for their thoughts on Ooh Media buying Adshel and the tone is largely positive, with the belief it will drive best practice and open opportunities for clients and planning teams.

Scott Keddie

OMG New Zealand chief investment officer Scott Keddie says the proposed merger will give both Ooh Media/HT&E an estimated 35 percent share of the total OOH Market (source: SMI last 12 months) and a powerful offering across smaller format OOH static and digital formats in the New Zealand market.

But given the fragmentation of format sizes across the New Zealand OOH landscape with many OOH vendors operating across multi-format inventory portfolios, he doesn’t foresee this causing significant concern across the New Zealand market. He does add it’s perhaps a different story in Australia given Ooh Media has a greater share of the market.  

And considering a competitive advantage, Keddie points out that the contractual agreements between OOH vendors and councils/landowners dictate what they can offer to the market.

“These agreements can come up for renewal regularly, and with new entrants and increased capital expenditure available, the OOH market continues to evolve and change, which is exciting. The proposed merger will certainly provide a compelling reach offering across New Zealand and will be well supported by an established digital OOH framework.

“It’s a positive move in the New Zealand market as consolidation will continue to drive best practice and deliver world-class inventory to the market – there continues to be a lot of interest in the OOH market – a lot more than its share of market would suggest.”

Sean McCready

MBM co-founder and owner Sean McCready also sees it being a bigger deal in Australia than New Zealand, saying Ooh Media has a much smaller portfolio here than across the ditch.

“Here they have mall signage and on-campus sites targeting tertiary students. In Australia, they also have a large billboard presence and a number of airports.”

He says in New Zealand,  Adshel and Ooh are complementary and while there’s a risk of price increases as a combined unit, it could simplify the buying process with opportunities to create efficient path-to-purchase packs that cover street furniture to shopping malls.

“My understanding is that Adshel is a very profitable business in New Zealand (they have a near monopoly on street furniture advertising) so it will be interesting to see who ends up managing the combined unit and then what other site contracts they go for.”

Alex Lawson

Carat New Zealand general manager Alex Lawson also sees the news in a positive light, saying on the surface this feels like a good move for Adshel and Ooh Media here in New Zealand.

“The size of Ooh in Australia it gives both a level of scale and the potential for further investment that could open even further opportunities. Both have been on a journey into digital, data and personalisation in the last few years and with their complementary asset suites combined it will create some intriguing possibilities for our clients and planning teams alike. I’m excited to see what will come from it.”

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