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ACCC boss hits out at Ooh Media and warns outdoor merger failure offers lessons for media consolidation

The chairman of the competition watchdog Rod Simms has accused the CEO of Ooh Media of failing to understand the concerns of the company’s customers after Ooh Media and APN Outdoor scuppered their $1.6b merger bid.

ACCC chair Rod Sims described a “considerable disconnect” between the views of the out-of-home companies and their customers

Speaking with Mumbrella, Sims said he had a huge amount of feedback from advertisers using out-of-home properties and their concerns about the impact on the market.

“I seriously think, and I don’t mean to be rude, but I think the CEO of Ooh Media needs to re-engage with his customers” Sims told Mumbrella.

 

“We had tremendous feedback from his customers and the customers of APN about their concerns about the merger. So it wasn’t just our view there’s not strong substitutability between outdoor media and other media sections, it was also the view of many customers and we could not see evidence that there was strong substitutability between, say, advertising out-of-home and advertising on Facebook.”

He said companies were not “sitting there tossing a coin” on advertising out-of-home or on Facebook and described a “considerable disconnect” between Ooh and APN’s thinking and that of their customers.

Brendon Cook: Not interested in wasting 12 months “educating the ACCC”

Speaking with Mumbrella after announcing the deal was scrapped, Ooh Media CEO Brendon Cook described those opposing it as being “fundamentally inaccurate” and said he did not want to waste the next 12 months “in court” and “educating the ACCC”.

While Sims hinted strongly he was opposed to the merger when the ACCC released its Statement of Issues two weeks ago, he said the decision to scrap the merger was entirely that of Ooh Media and APN Outdoor.

“The companies have got to make these choices, but I guess it is understandable, we came down with very strong concerns and so I think their decision is understandable and it’s their decision. But we did have strong concerns about the merger,” he said.

Sims also warned the failure of the bid could offer lessons to media companies seeking to merge if media reform legislation passes as expected.

“I think there are [parallels],” Sims said.

“In both cases they are dynamic sectors and they are changing and the digital revolution is affecting both markets, there’s not doubt about that. We’re as aware of the shift from newspaper advertising to Google and Facebook as anybody. We understand all that. We’re also the telco regulator I’d remind people, so we’ve got tremendous expertise in the digital economy.

“The other key similarity is it depends on substitution. When do you draw the line?”

Sims said each case would be judged on merit.

“The digital revolution will mean that some media mergers that previously we would have blocked we would now let through. On the other hand, it is frankly silly to suggest that you’d let through them all. We have some suggestions we should just close up our merger branch and don’t worry about any merger whatsoever.

“To give an example, and I’m not saying anybody’s ever suggested this, but I do not think you would be surprised to hear that we would have major problems with a merger between News and Fairfax. I mean major problems. Of course the digital economy affects that, but I don’t even think Fairfax and News would think they could get away with merging.”

He said while the digital economy changed the market it was a question of assessing fact.

“But there will still be segments of the market and particular transactions you don’t want to happen.”

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