TRANSCRIPTION OF FINANCE NEWS NETWORK INTERVIEW WITH oOh!media (ASX:OOH) CEO, BRENDON COOK
Joining me today from oOh!media to discuss its full year results is CEO, Brendon Cook.
Brendon welcome to FNN, could you start by explaining who ioOh!media is and what it is that you do?Brendon Cook: oOh!media is effectively an outdoor media company. By outdoor media, we have big billboards on the metropolitan highways around Australia. We’ve built big billboards on all the regional highways around Australia and we have signs in 340 shopping centres around Australia with various groups like Colonial, Centro, Stocklands, Mirvac etc.
Okay and now to the figures. Net profit after tax was $7 million up 43% on revenue of $109.7 million, also 28% higher than the year before. What were the main drivers?Brendon Cook: I think like all businesses, there’s usually a multiple of drivers. There’s some industry and certainly we’ve seen industry growth in 2010. There’s the product mix and one of the strategies we’ve had has to been to develop the big billboard product in the metropolitan and regional areas, and the retail offering. And create that into a media vehicle that’s become very attractive for clients, as it delivers results for them which are usually around recall, intent to purchase, actual purchase of product etc.
People - we’ve had a very stable people base and that certainly has assisted in ensuring that over the last five years, we’ve had growth on growth on growth. And of course research, we invest a hell of a lot in research around proving to advertisers the value and the power of the medium, so that their investment is certainly worthwhile from their point of view.
Okay, you mentioned growth on growth, what is the value of the outdoor advertising market in Australia and what has the growth been like in recent years?Brendon Cook: The industry’s approximately $550 million. Up till calendar year 2009 when the GFC hit, the industry had experienced six years of growth. In 2009 the industry was down about 12%, however, it reclaimed that this year in in 2010 to be up 19% on 2009 figures. However, oOh!media as a business, we’ve had eight years of consecutive growth. During the GFC when the industry was down 12% we were actually up 19% and in 2010 again, we outstripped the industry performance. And if you actually take a two-year average from 2008/09/10 etc that average in 2009/10, the industry grew 3% and we grew 21%. So certainly as an industry and us as a company, it’s been a growing sector.
Now as competition from viewers intensifies, do you expect this growth to continue?Brendon Cook: I think one of the great values of out-of-home media now is the way people are viewing on more devices. So as we see more free to air television, more pay channels, more ability to view online, internet protocol TV – all those changes mean a fragmentation of viewing habits.
What we know is consistent however, is that people are travelling on roads or away from home more than ever before. So if you actually look at it from an audience point of view, there are only two areas where the audience is continuing to grow, that is at home and online. And so from our perspective, the fragmentation is actually good because advertisers still need a tremendous broadcast medium and outdoor is a tremendous broadcast medium.
Okay now you speak about some recent changes there, but you’ve been involved in the business for thirty years. What are some of the biggest changes you’ve seen over that time?
Brendon Cook: There’ve been a number of changes, firstly consolidation. You know we ourselves have bought fifteen businesses over the last eight years. That consolidation has meant you’ve got bigger players - bigger players mean professionalism, investment in product look, research etc.
Integration – if we take our big billboards and our retail in our regional and metropolitan locations, clients today buy the multitude of products; they mix the assets they’re buying. And I suppose with continued development and investment in research, not only on recall and intent to purchase but audience measurement, being able to explain what is the quantum of the audience that exists in outdoor. All those changes have meant that clients are prepared to invest more money in the outdoor sector than they previously did.
And what trends do you see emerging?Brendon Cook: I think there are two primary trends that will start to occur. One is the integration of different outdoor product types will continue to accelerate and that therefore, will mean a greater investment by clients in the medium. The second is mobile technology – outdoor is an obvious place when people today are literally having their lives in their hand.
To integrate, both from a technological point of view where you can have scandali scanners and augmented reality, and photographs right down to basic SMS. And even today, basic SMS on a sign is escalating in terms of the response results you get. So we see mobile phones and outdoor being one of the great media combinations that will evolve over the next five years.
Now you recently raised $20 million, where are the funds going?Brendon Cook: We’ve used that to effectively pay down debt. We had a residual payment finally due on the Sports and Outdoor business which is a regional New South Wales inventory and we’ve obviously paid that debt down, and secondly - reducing any other core debt.
Now following the capital raising, who are the major shareholders in oOh!media! ?Brendon Cook: Respectively our two biggest shareholders – have been for four and five years, WPP the large worldwide communication group and Macquarie Bank who invested five years ago as part of our growth and acquisition strategy. We then have a number of institutions clearly and also major individuals like myself who have obviously been involved in the business and/or have supported the industry sector for some time.
Okay now it’s probably fair to say that some investors might have overlooked the outdoor advertising segment in favour of mainstream media. Now apart from your company, is there any other media company that solely focuses on outdoor advertising?Brendon Cook: We’re the only listed outdoor advertising business in the Australian market. Worldwide there are businesses like JC Decaux on the London Stock Exchange, Ströer on the German Stock Exchange and numerous American listed vehicles on the New York Stock Exchange. And we feel that’s an advantage because it does allow the market to get a clear and concise understanding of the industry category.
Okay now last question, what’s ahead for shareholders in oOh!media over the next six months?Brendon Cook: Well oOh – we’ve had a very continuous and strategic plan for a long time that we’ve communicated every year and that is we will continue to look for organic developments that are value accretive. And should any acquisitions arise that we feel will meet our investment profile, and ones we can develop and grow their value, then we’ll also look at those businesses. The business is on fine track, the growth has been continuous now for eight years. We don’t see why that should change.
Brendon Cook, thanks for the introduction and congratulations on the results.Brendon Cook: Thank you very much.
ENDS
