Posterscope’s former US boss Hansen is charged, China’s Focus Media accused of inflating screen network numbers

Out of home media is booming across the world, especially groovy new digital offerings, but the medium continues to be bedevilled by lack of transparency and, in some cases, accusations of fraud.

Former Aegis-owned Posterscope US boss Todd Hansen and his finance director James Buckley have now been formally charged with an accounting fraud that alleges they inflated Posterscope’s revenues by $19.75m prior to 2009 to earn undeserved bonuses. Hansen is also accused of fiddling ‘tens of thousands of dollars’ in expenses.

It has also emerged that after leaving Posterscope in 2009 (when the $19.75m was written off by Aegis) Hansen emerged, rather surprisingly, as one of the bosses of big outdoor owner Clear Channel in the US.

At the same time mysterious investor group Muddy Waters has accused China’s Focus Media Holding (recently valued at $3.6bn) of inflating the size of its digital screen network and also illegal acquisition practices. Muddy Waters short sells the companies it investigates. It was recently responsible for a collapse in the share price price of another big Chinese company, the Sino-Forest forestry business.

“Focus Media claims to operate 178,382 screens but the actual number in Focus Media’s media kit is less than 120,000,” Muddy Waters says.

“Focus Media has claimed to acquire, write down, and dispose of companies that it never actually purchased. Investors should be concerned about to where cash actually moved in these transactions, and about the integrity of reported results.”

Muddy Waters claims that out of $1.6bn in acquisitions made by Focus Media Group since 2005, $1.1bn was later written down as impaired assets.

These are two separate events in a huge and hugely-fragmented global out of home media market (and both Hansen and Focus may yet confound their accusers).

But there do seem to be billions of dollars of advertiser’s money washing around the market with precious little evidence that it’s being spent productively. The companies who are supposed to prevent this happening (and charge generous commissions for doing so) are the big out of home specialists Aegis’ Posterscope and WPP-owned Kinetic.

Who may have a few questions from their clients to answer in due course too.

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.