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Blog Post By Brendan Perring

I read it on the grape vine


I read with interest in a recent issue of The Economist a report analysing the major waves that have been caused by the decision of CBS Outdoor’s parent company to split its outdoor advertising arm in two, creating a new American entity that will become a separately managed real-estate investment trust, REIT, with a standalone stockmarket listing.

The decision was announced on January 16th by the head of American media giant CBS, Leslie Moonves, with both its European and Asian outdoor operations being put up for sale.

This has necessarily caused a feeding frenzy, with major rivals JCDecaux and Clear Channel hungrily eyeing a business valued at $6bn, which contributed some 13 percent to CBS’ revenues for the first three quarters of 2012. Ocean Outdoor is another major player on UK shores which has made serious efforts over the last two years to expand its market share both digitally and in premier print billboard sites, but has not yet quite the clout to consider any offer.

This has necessarily caused a feeding frenzy, with major rivals JCDecaux and Clear Channel hungrily eyeing a business valued at $6bn

The decision seems a strange one at first,  America’s outdoor print and digital outdoor advertising market is worth $6.5bn and grew 4 percent in 2012, with 2013 expected to exceed this figure still. And the growth of this sector in the UK is also without doubt, you only have to drive into London and this becomes obvious as megalithic digital LED screens scream for your attention.

Indeed, some 20 percent of outdoor advertising revenue is now generated by digital screens in the UK. However, it is well known that CBS hit troubled waters in the UK after it massively overpaid for its London Underground advertising contract and maid a poor return on the investment. And the move by Moonves is no-doubt a smart one long term, motivated by huge tax breaks in the restructured entity. What will come out in the wash for the wider UK outdoor billboard poster printing sector is harder to tell, but one thing is for certain, this is one sector that continues to laugh in the face of an otherwise economically stagnant UK.

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