CBS Outdoor has said it will sue Transport for London (TfL) over its contract to supply London’s Underground system with posters in an apparent attempt to claw back the oodles of cash it’s lost since ‘winning’ the contract in 2006.
CBS has indeed plastered some high profile bits of the underground, like Oxford Circus, with nice digital posters but latest figures, reported in Media Week, show that in the year to April 2010 it took £71m in ad revenue and paid TfL £71.5m for the privilege and that’s without the many millions spent upgrading the estate with fancy digital sites (also part of the contract no doubt).
They do say that advertising and media folk are incorrigible optimists whereas landlords, as we all know, are cold-hearted skinflints who will take you for every penny, given half a chance.
Such seems to be the case in the UK outdoor industry anyway.
The incorrigible optimism case could hardly be more clear than in this instance. Back in 2006, when CBS negotiated its contract, the once high-flying outdoor company Maiden had sold itself for a seemingly bargain basement £7m to another outdoor optimist Titan Outdoor.
Maiden, then a quoted company, had become unstuck through its £26m a year contract with British Rail. On the face of it British Rail seemed a great estate, stations being packed full of commuters and other passengers waiting impatiently for a train to arrive. What a captive audience!
Unfortunately advertisers, media agencies and the all-important big poster specialists WPP’s Kinetic and Aegis Group’s Posterscope didn’t quite see it that way. Maiden ended up owing its banks £39m and that was that.
That was also that for US-owned Titan which also failed to make the railways pay and sold out in 2010 to French poster giant JC Decaux (which may well be eyeing distressed CBS Outdoor right now).
CBS Outdoor, then owned by US media giant Viacom, would have known all this (or the Maiden bit anyway) but a deadly combination of over-optimism and its parent’s rather deeper pockets seems to have persuaded it to shell out the best part of £1bn on a contract wholly dependent on the UK’s rather fluctuating economic fortunes and the willingness of Kinetic, Posterscope (two companies notoriously keen on their high margins) and co to pay premium prices.
So what chance does CBS Outdoor have of getting its money back in court?
About as much chance there is of all those people who have taken out ‘super injunctions’ to prevent their affairs being aired in public following the example of BBC broadcaster Andrew Marr and ‘fessing up.