Consumer watchdog says both acquisitions are complementary in the out-of-home advertising space, in contrast to its former concerns about an oOh!media/APN tie-up
The Australian Competition and Consumer Commission (ACCC) has given the green light to both oOh!media’s acquisition of Adshel, and JCDecaux SA's acquisition of APN Outdoor Groupin the out-of-home advertising sector, arguing the two do not lessen market competition.
The two deals were announced in June amid a flurry of merger and acquisitions activity that saw rivals striving to outbid and outplay each other in order to secure a larger slice of Australia’s outgrowing -of-home advertising revenue.
JCDecaux was the first to secure its purchase, with a $1.09 billion bid for the APN Outdoor Group on 21 June. The deal was conditional on APN dropping its bid for fellow OOH player, Adshel, which had been lodged in May, just days after oOh!media placed its own $470 million bid in for the latter business.
It was oOh!media that eventually came up trumps on Adshel, concluding the bidding war with a $570 million offer for the HIT&E subsidiary on 25 June.
In a statement, ACCC chair, Rod Sims, said both transactions were mostly complementary in terms of growing out-of-home reach.
“This is very different to the proposed tie-up in early 2017 between oOh!media and APN Outdoor, where the companies were in direct competition with each other,” he stated.
At the time, the ACCC raised significant concerns about a oOh!media/APN merger, stating this would create a market leader with more than 50 per cent of all OOH advertising and even higher percentages of ownership across segments such as roadside billboards. Before releasing its final decision, however, the merger was abandoned.
The latest two cases, however, are unopposed. The consumer watchdog noted APN’s strengths lies in large format billboards and airports, while JCDecaux operates street furniture. In a similar vein, oOh!media’s heritage has been large-format billboards, airport and retail categories, against Adshel’s street furniture focus.
“The information before us, including bidding data for sites, indicates that the respective merger parties rarely compete head-to-head,” Sims continued.
“Some market participants expressed some concerns, in particular about the possible anti-competitive bundling of different out-of-home categories. However, the major media agencies and large advertisers did not generally express strong concerns, and the ACCC considers that bundling is unlikely to have a significant impact on competition.
“The merged companies will continue to compete with each other and with other out-of-home advertising providers. We consider that the options for advertisers and site owners will not change significantly and so neither of the proposed deals is likely to substantially lessen competition.”
CEO of oOh!media, Brendon Cook, welcomed the news and claimed the acquisition of Adshel was an important turning point for competition in the local OOH 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,” he said.
The news comes in the same week as APN and oOh!media reported their half-yearly financials results to the Australian Stock Exchange.
APN reported a 9 per cent rise in first-half revenue year-on-year based on ‘rebased growth’ to $168.4 million, with underlying EBITDA up 17 per cent to $39.7 million. Statutory net profit using rebased growth also increased 33 per cent to $17.8 million.
Among the contributors to the result were a 10 per cent rise in billboards revenue to $92.9 million for the first half, plus 18 per cent growth in digital sales to $71 million. APN now has 134 large-format digital panels across A/NZ.
APN has also just secured a further extension of its long-term contract with Sydney Airport, a deal that sees it taking over internal and external OOH sites at Qantas’ T3 Terminal along with Terminals 1 and 2 until 2025.
Ooh!media, meanwhile, reporting double-digit revenue growth for the half-year to 30 June 2018, up 11 per cent year-on-year to $192 million. Gross profits were $87.6 million, again up 16 per cent compared to H1 2017, reflecting a 2 per cent gross profit margins to 46 per cent. A key highlight was 16 per cent sales growth in road products.
The group said it now maintains 8000 digital panels across A/NZ, 12,000 classic panels and eight online platforms. One of its biggest initiatives right now is building an ‘organisational transformation platform’ that will enable clients to plan, buy and place campaigns across both types of inventory.
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