City Of Sydney Contract Sheds Light On Ad M&A
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So what was all that recent bidding and dealng about in the listed outdoor advertising sector?
After close to $2 billion was committed in mergers and acquisition activity in the country’s outdoor advertising sector - the reason for the shake up - the competition to win the country’s most lucrative outdoor ad deal with the Sydney City Council (estimated to be worth over $500 million or more) is no longer.
The City of Sydney Council yesterday said that its outdoor advertising tender originally opened last December, was being withdrawn and would be re-offered from today.
As a result outdoor advertising giants and telecommunications providers will need to re-submit expressions of interest (EOI) to the council.
From today the council is going to ask for renewed submissions for its street furniture contract which will aim to overhaul the city’s outdoor assets from digital signs and advertisements to free public WiFi.
The council denied the return to start of the process for Expressions of Interest was due to the flurry of takeover bids in May and June involving the country’s largest outdoor advertising and street furniture providers which saw JC Decaux (JCD) win APN Outdoor with a $1.119 billion bid and Ooh Media triumph in the battle for Adshel with a $570 million offer to Adshel’s owner, HT&E.
JC Decaux holds the contract, having won it in 1998 ahead of the Sydney 2000 Olympic Games, but the council claims the out-of-home industry, and the expectations of consumers and residents, had rapidly evolved since last December with the Expressions of Interest were first called. But the only thing to have changed between late 2017 and now is the flurry of corporate wheeling an dealing among the most likely candidates for the contract.
With the takeover bids made, but not yet consummated the question is whether the council will get enough bids - will Adshel or Ooh Media or both make offers - Ooh Media seems to be the most logical candidate.
And will JCD or APN Outdoor make separate bids - the answer would have to be JCD trying to retain the offer having committed itself to paying nearly $1.2 billion to improve its chances?
And with more prominence given to free WiFi by the council, the way is opened to the likes of Telstra, TPG and Optus to bid for some or all the contract (perhaps in partnership with a smaller outdoor group).
The council says that regardless of who wins the tender, existing street furniture items in the City of Sydney area (Glebe to Oxford Street Paddington and into south Sydney) will be progressively removed and replaced with new assets from 2019.
The new contract will include more than 2,500 pieces of street furniture, spanning bus shelters, kiosks, public toilets, seats, litter bins and communications panels, as well as free public Wi-Fi.
Lord Mayor Clover Moore said yesterday returning to the EOI stage of the process was an opportunity for the right service provider to help define the future of Sydney’s street furniture and digital signage.
“Our street furniture and outdoor advertising contract is one of the largest of its kind in Australia. We need to find the right service provider to give our residents, workers and visitors the free Wi-Fi connection and smart, well-designed street furniture a global city deserves,” she said.
“[The new street furniture] will bring new technology to our streets, deliver free internet to our devices and enable smart city platforms, changing the way our residents, workers and visitors interact with our city,” she said.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.