The potential takeover of Churchill Media, the third-leading player on the billboard market, by Euromedia, the market's number one, is actually the first step towards the entry of an international strategic investor in Romania, sources on the market say.
The information about Euromedia buying Churchill Media first came out last week.
Investment fund Advent International, Euromedia's majority shareholder, is in talks with the world's top two outdoor groups Clear Channel (US) and JCDecaux (France) to sell the entity created by the acquisition of Churchill Media, the quoted sources said. #leadend#
The deal will be complex and could be done next year, considering the talks over Churchill Media's takeover are not over yet.
Swedish investment fund Oresa Ventures, the majority shareholder of Churchill Media started procedures to sell it several weeks ago.
So far, the latest info shows there are three offers for Churchill Media, one of which made by Euromedia and the other two by foreign companies.
Euromedia's and implicitly Advent International's offer can be regarded as surprising, considering the American fund's investment in the Romanian outdoor market was not very fortunate.
The outdoor advertising market has kept at about $12 million over the last three years and the average billboard take-up is 60%-65%.
Advent, which created Euromedia in 1999 by merging two outdoor companies entered this market in Romania nearly six years ago and has to get out now. A company with a 60% market share, an undisputed leader derived from the acquisition of Churchill Media could help the fund get more money.
Euromedia and Advent International representatives did not comment on the information at hand.
The Romanian outdoor market already sees a strategic investor operating, i.e. US-based The News Corporation (NewsCorp), controlled by Rupert Murdoch. NewsCorp holds Exclusiv Media, the second top player in Romania with 27% market share.
Back in 1998, when the funds entered the Romanian outdoor business, the market was estimated to double by 2002-2003.
Only that the downward trend of the overall advertising spending (induced by the economic slowdown), the drop in the tariffs charged by TV stations and the installation of a large number of illegal billboards, made the outdoor market register a disappointing evolution over the last three years.
The average billboard take-up was about 60% last year. Excess capacity was after all one of the reasons for the drop in tariffs and market value alike.
The total advertising market reached $120-$130 million last year, slightly up from 2001. The rebound is expected to maintain this year. The outdoor segment accounts for approximately 10% of the total advertising market.
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