CBS CEO Leslie Moonves (pictured) has confirmed that he wants to offload its outdoor business outside the US (including the UK) while it plans to turn itself into a REIT, essentially a property investment company, in its home market.
REITs enjoy various tax advantages so Moonves is evidently betting on this producing a much-needed rise in the company’s share price. US rival Lamar Advertising took the same route back in August.
All of which isn’t particularly good news for the booming global out of home media buying business, dominated by WPP’s Kinetic (which comes under its Tenth Avenue umbrella) and Aegis’s Posterscope.
Apart from the share price implications, such moves also imply that these companies will be more than happy to swap their posters for buildings, if the opportunity arises.
Kinetic and Posterscope need an ever-expanding supply of out of home media to keep delivering their humungous profits. In many cases they already act like media brokers, in effect buying packages of poster sites and other opportunities and selling them on to their clients. If it works, the profits are huge, if it doesn’t they take a heavy hit.
So why don’t they guarantee their supply by becoming fully-fledged out of home media owners themselves? In most countries the powers that be frown on agencies becoming media owners, for obvious reasons (although Aegis owner Dentsu is also a media owner in Japan). But out of home isn’t like TV, press or even the internet. Mostly the matter of editorial independence doesn’t come into it; not with posters anyway, still the biggest chunk of out of home.
If you look at the UK, where CBS has taken a series of hits through over-paying and over-investing in digital posters on the London Underground, there aren’t that many potential buyers from the ranks of other existing outdoor owners and the big boys, JC Decaux and Clear Channel, might be barred from buying on monopoly grounds.
WPP has the financial firepower to move in, as does Aegis owner Dentsu. WPP boss Sir Martin Sorrell has never been afraid to blur the odd line when it suits him: WPP operates the world’s biggest media buying operation under GroupM while it also provides some of the audience currency they trade on, through research giant Kantar.
The digital ad exchanges run by WPP and Publicis Groupe are, in effect, media owners or perilously close to it.
All of which won’t be lost on the wily Moonves as he tries to exit (some of) a business that has not delivered the returns he hoped for.