Billboards send a media message
Outdoor advertising is already one of the most profitable parts of the troubled media industry and it has an even brighter future, judging by dystopian science fiction films.
Characters in those movies tempted by a new life on a distant planet, or the idea of shacking up with a holographic girlfriend – just have to look up to the digital billboards hovering in the sky.
According to the Advertising Standards Authority, spending on billboards and other outdoor advertising rose to $140 million last year, from $83m in 2014.
The business probably can’t claim to be part of the ‘‘fourth estate’’, and possibly no-one will ever win a Pulitzer Prize for a billboard, but with corporate survival at stake, media firms can’t afford to be too aloof.
Michael Anderson, chief executive of MediaWorks, owner of TV channel Three, admits that 10 years ago, had he been in TV or print, he would have been ‘‘looking very disparagingly at ‘out-of-home’ advertising’’.
But this week the loss-making radio and television firm ‘‘accepted reality’’ by agreeing in principle to take over the New Zealand arm of trans-Tasman billboard business QMS Media, which owns hundreds of conventional and digital billboards at the likes of airports, sports grounds and traffic intersections.
‘‘Right now, everyone is looking at out-of-home as the only significant growth medium out of all of the traditional media,’’ Anderson explains.
‘‘The key is ‘digital’ has fragmented all of the content platforms but it has been a friend to out-ofhome.’’
It is not a sad thing but just a reality – ‘‘a reflection of consumer changes and technology changes’’, he says.
With binding terms yet to be decided, there is incomplete information on which to judge whether the proposed deal is a good one for MediaWorks.
But it is probably a more positive development than the one most media pundits were expecting to be signed off by its owner, United States private equity firm Oaktree.
Anderson says no cash would change hands, with QMS NZ and MediaWorks instead simply pooling their resources, so Oaktree’s exposure to the New Zealand market won’t increase.
But it had often been assumed Oaktree was keen to quit its investment in MediaWorks as soon as possible, perhaps at the cost of breaking up its television and radio business.
Instead, Oaktree would retain a majority shareholding in the larger, combined firm, with Melbournebased QMS holding a ‘‘material but non-controlling stake’’.
Anderson says the takeover sends a message to staff and MediaWorks’ partners that it is not ‘‘a victim of the market and we are tackling the market head-on’’.
MediaWorks has trumpeted the takeover as creating a ‘‘one-stop shop’’ for customers wanting to buy out-of-home, radio, television and online advertising.
Whether ‘‘one plus three’’ really equals much more than ‘‘four’’ in the above equation is perhaps a moot point.
Anderson does point to some synergies. ‘‘The key with out-of-home and why it is such a valuable asset for us, is it is the preferred marketing platform for both radio and television,’’ he says.
‘‘When we are looking to promote our shows we use out-of-home.’’
But he acknowledges the deal won’t be a silver bullet for the problems that MediaWorks – along with all other traditional media businesses – faces.
QMS NZ made
‘‘There is no ‘solution’ for the media. There are directions and strategies and approaches and evolution.’’ MediaWorks chief executive Michael Anderson
aprofit of $4.3 million in the year to June, down from $5.9m the year before, as its revenues fell 7 per cent to $43m.
Its Australian parent blamed the drop on a ‘‘decline in business confidence’’ in New Zealand that created ‘‘generally softer market conditions’’.
Anderson says the whole advertising market has been ‘‘incredibly impacted this year for reasons that are perhaps a little difficult to understand’’.
But it would appear there is a real prospect that QMZ NZ’s profit contribution could cancel out MediaWorks’ losses, which Anderson reined back to $5.7m in 2017.
‘‘Having spent five years at Fairfax as a director and now a couple of years here, there is no ‘solution’ for the media. There are directions and strategies and approaches and evolution,’’ he says.
Anderson appears to acknowledge one of those other strategies could be seeking to become a free-to-air partner for Spark, with the sports rights the telecommunications company is rapidly accumulating.
Spark has teamed up with TVNZ to show next year’s Rugby World Cup in Japan, but Anderson says that ‘‘wouldn’t stop us talking to Spark about a whole range of other, different opportunities’’.
He wouldn’t reveal already taking place firms.
‘‘I think all of us need to retain a high level of flexibility.’’ if talks were between the