ScreenFX to abandon third party media sales?
Adrian J Cotterill, Editor-in-Chief
Yesterday it was reported that ScreenFX is looking for a third party to undertake media sales across its own networks. This is an about face to recent press on them trying to sell off their Shopping Mall network (in order that they could focus on TrainFX).
The cynic in me would say that they failed to find a buyer or at the very least finally figured out what business they are in or should be in (of which more later).
I think the story is significant but not exactly in the way that ScreenFX and their adviser, Trinity Media Services are trying to ‘spin’ it.
Source: http://www.mad.co.uk
Author: Arif Durrani
Published: 31 July 2007 12:00
ScreenFX opens sales pitch
ScreenFX, the digital outdoor advertising company which specialises in shopping centre sites, is opening a pitch for its sales business.
The new partner will be responsible for securing advertising revenues
from agencies and poster specialists in a move set to raise the profile
of the digital outdoor sector.
Eight companies, including outdoor giants JCDecaux, Clear Channel, CBS
Outdoor and Titan, have been invited to pitch.
ScreenFX currently has agreements with 53 retail areas in the UK. The
tender process is being handled by the former corporate development
director of Maiden, Francis Goodwin.
Goodwin, now managing director of Trinity Media Services, said: “This is
an extremely significant development for the mall sector of the outdoor
advertising market. ScreenFX has digital rights to the best property
portfolio in the UK including nine of the top twenty malls.
“It has pioneered this sector in the UK and with the addition of an
established sales partner. I predict this will be the fastest growing
sector in outdoor advertising over the next decade.”
In the last few months, BabyTV and the The Life Channel both brought their national media sales in-house and took it away from ScreenFX. When I first announced this, Can Media (the owners of The Life Channel) rushed out a press release the next day to say that the ‘split’ was amicable. I have no reason to believe this was NOT the case, in fact my July DOOHAN contains a ‘clarification’ on Can Media’s National Sales strategy as it was subsequently described to me – bottom line it makes a lot of business sense.
However, with these two networks gone from ScreenFX’s 3rd party portfolio, the only network left is MIS’s Community Channel, formerly known as SubPostmasterTV – albeit the largest screen network in the UK (almost twice the size of number 2 on the list).
David Ravenscroft, CEO of MIS told me today, and I quote “we no longer have a formal agreement with ScreenFX though they continue to source National Advertising Campaigns on a case by case basis. We are currently reviewing how we source National Advertising”
I think several things have happened here: –
- ScreenFX failed to find a buyer for their Mall network (their first attempt at an exit strategy / turnaround)
- ScreenFX finally realised that their media sales function was just not large enough to compete with the big boys
- ScreenFX finally realised that their ACTUAL assets are the agreements they have in place with the landlords, property developers, Transport and Mall owners
Realising this last point is NOT insignificant. It means that they can continue the slimming down of their operations: –
- They have actually closed down their London Office
- I believe that all of the POPtv folks who came on board when POPtv was acquired in 2006 have now left)
- At least half a dozen others have gone from various parts of the business in the last few months.
If they can leverage their existing “media rights contracts” (undoubtedly the asset of the business) and let someone else bigger focus on the media sales it will do well for their revenue and hopefully their stock price (Screen FX Plc ORD GBP0.001 (SFX)).
I would be surprised if any of those mentioned in the article (JCDecaux, Clear Channel, CBS Outdoor, Titan) are ACTUALLY that interested in winning the business however and would expect to see a smaller “Poster Specialist” win the business.
I would like to see Avanti Screenmedia try to win the business. Combining National Media Sales for MallFX with their own Shopping Mall network would make a lot of business sense.
Avanti Screenmedia are another company that needs a little focus. They have got a great new CEO on board, someone with a really good media background – time I think for them to get out of the leisure sector (Magnetic and MVN) and focus on their other networks.
August 2nd, 2007 at 16:50 @743
This is an interesting perspective but reading between the lines I feel there is a sense of positivity about Screen FX. If they can focus (set their goals) and continue to streamline their business model, there is no reason why the company cannot increase shareholder value quite drastically.
August 2nd, 2007 at 17:24 @767
Adrian,
I’ve read your comments with interest with regard to our National Advertising Sales Agreement [NASA] Tender process and thought you might like me to clarify a few points and explain our strategic approach.
In essence, the strategy being executed by the new management team is:
1. To focus on our core business – the Mall market. SFX has led the way here, is the current market leader and, I believe, delivers an excellent product from a performance and operational perspective.
2. To develop only one new and emerging market – our TrainFX business. This is being rebranded for a launch extension into London and I’ll be happy to share more with you on this in due course.
3. To divest SFX of any non-core businesses. Historically, SFX has enjoyed healthy relationships with a number of digital businesses – – the National Sales role with the Life Channel, BabyTV and MIS [SubPostmaster TV] as you mentioned. It is our decision that we should exit these relationships and focus on our core product – – this is a decision that we have explained to our partners in these businesses and agreed mutually with them. These are businesses that we respect and still enjoy good relationships with. We simply do not have the manpower or financial resources to do all things at this stage of our development. In addition to this, we have closed down our other internal brands – – HealthFX and LiveFX – – for the same rationale.
I believe these decisions make a lot of sense for SFX and its shareholders – – domination of your core market is a sensible route forward. Having a potentially explosive new market under development is also prudent. You are correct, of course, that the result of all this is a slimmed down overhead and a headcount reduction – – again, sensible for the company and its shareholders.
As you surmised, through its discussions with the key Outdoor players, SFX has a clearer understanding of the value of its Mall business. Furthermore, this process has confirmed our strengths and weaknesses.
On the plus side, we know that our digital offering is of a very high quality and that we have much more experience in this field than the big guys. On the minus side, we have been unable – like other small digital players who are building new Outdoor markets – to get any meaningful National sales revenue on to our screens. We do not have the muscle, the contacts or the ability to pay the over-riders that the big players have.
Furthermore, the major Outdoor players are expert at what they do – – the selling and marketing of the Outdoor industry. The marriage value in the two is, therefore, extremely attractive if it can be harnessed. As such, it is our view that we should endeavour to join forces – – allowing the minnow [SFX] to “coat-tail” the big guy [a major Outdoor player]. Here again, maximum shareholder value can be delivered. SFX builds out the estate and executes flawlessly. The Outdoor agency simply sells our product [their core skills] and enlarges its Outdoor footprint at the same time. It’s designed to be a “win- win” for all. Smart? We think so.
Finally, like you, I see sense in consolidating our industry. There are a number of smart operators in the emerging digital business and it makes sense to share some of our mutual challenges – – I sincerely believe the NASA arrangement will help to crystallise this process.
I hope this overview helps to give a better understanding of the process we have set in motion and the reasoning behind our strategy. If you’d like to discuss SFX strategy further or the broader Out of Home digital industry, please don’t hesitate to get in touch.
Mike Cottman
Executive Chairman
SFX