APN News & Media’s $268 million purchase of the remaining 50 per cent of the outdoor ad company Adshel will accelerate the company’s push into the lucrative digital outdoor advertising market.
Adshel operates a total of 22,000 digital and static advertising panels in Australia and New Zealand, generating revenue of $170 million and earnings of $42 million in the year to June 30.
Full ownership of Adshel will allow APN to speed up its plans to convert another 1500 static or printed panels to digital in the next three years.
“It will allow the Adshel management team to drive the strategic direction of the business and pursue opportunities that facilitate growth, including a continued focus on innovation and the progressive digitisation of the portfolio,” says APN CEO Ciaran Davis in a statement to the ASX. “As the demands of advertisers rapidly change, this transaction will increase the effectiveness of implementing integrated marketing campaigns at scale, across all of APN’s businesses.”
"Adshel is behind competitors on digital," says Davis. "The Adshel acquisition is consistent with the plans we have outlined to focus on our assets in high growth areas, and provides APN with an opportunity to further pursue growth in the outdoor sector.”
The traditional printed billboard will continue to have an important place in the outdoor industry, according to Charlotte Valente, head of marketing at Adshel. “Adshel still has over 16,000 static or paper locations,” Valente told B&T. “Our static product is still very relevant in today’s media plan.”
The push to digital has driven the booming outdoor advertising market over the past couple of years. Researcher Standard Media Index says outdoor has enjoyed a 12 per cent growth year on year in the six months to July 2016.
“The primary driver of that has been the digitization of the inventory,” says SMI’s Jane Schulze. “There's been a lot of investment in digitizing billboards and those campaigns have a higher value because there’s extra elements to them, be it video or whatever.”
Brendan Cook, CEO of ASX-listed outdoor market leader oOh!media, says the company has invested probably $100 million in its digital transformation in recent years. “We’re a fundamentally different business from where we were even 18 months ago,” Cook told B&T. “We’ve had to fundamentally change our business structures and transform ourselves into a technology media company and that’s what we are – we’re a new technology media company built on the premises of location.”
APN will launch a fully underwritten institutional placement and entitlement offer to raise $273 million to fund the Adshel acquisition. The company, which is awaiting approval to sell its Australian print media assets to Rupert Murdoch’s News Corp, expects to complete the deal on Tuesday.
APN has also announced it’s buying Conversant Media, which publishes websites including The Roar, Lost at E Minor, Techly and INC.com. About 70 per cent of Conversant's content is consumed on mobile.
APN recently sold its regional newspaper publisher, Australian Regional Media, to News Corporation for $37 million. ARN owns 76 printed newspapers across Queensland and 60 websites. The deal still requires regulatory approval.