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What to expect from QMS in 2019

QMS Media Group has re-aligned its operations, positioning itself as a segmented media group with out of home as a main driver of the company’s growth.

An announcement on the ASX today said the business would now operate in three separate divisions: QMS Media, MediaWorks and QMS Sport.

Nettlefold said the streamlined division came off the back of the proposed merger of QMS New Zealand and MediaWorks

It follows the group’s announcement it would merge its New Zealand assets with MediaWorks and take a 40% stake in the Kiwi business.

The transaction is subject to final binding terms and conditions, but will be complete by quarter two of calendar year 2019, should it be approved.

Barclay Nettlefold, QMS Group CEO and managing director, told Mumbrella the merger in New Zealand was part of the group’s broader efforts to provide better clarity around the structure of the business.

“What we are trying do is simplify our business, we are trying to streamline QMS so the market can really focus across our three attractive business segments, being the QMS Media Australian business, which the leading out of home media specialist, and we have 80% digital penetration. We want to segment that into one piece,” Nettlefold said.

“The second piece is now in process which is the New Zealand piece, and the third is sport.”

The New Zealand merger proposal followed major consolidation in the Australian media industry, with Ooh Media and Adshel merging and JC Decaux and APN Outdoor coming together. Earlier this year, Australian businesses Ooh Media and APN Outdoor entered a bidding war for Adshel, which saw Ooh Media buy the business for $570m.

But after Ooh Media won the bidding battle, French outdoor giant JC Decaux bought APN Outdoor for $1.119b. Locally, it was rumoured QMS Media was looking for a potential buyer.

The potential merger marks the end of a busy year for QMS Media, which promoted its chief sales officer, John O’Neill, to the role of Australian CEO, won its first airport contract in the Australian Capital Territory, and acquired sports media company TGI to build out its sport offering.

It also followed finalisation of the Nine and Fairfax merger.

On the proposed merger, Nettlefold said there was “real synergy” between radio and out of home, which led to merger discussions.

QMS Sport wants to grow its sports business next year

“We’ve always been looking at our point of difference to market, as the leading out-of-home company in New Zealand. I’ve continually stated that we think there is a real synergy between radio and out of home and how it operates outside of the home. UBS were looking at the various options associated with the MediaWorks business, and we just opened up some general discussions,” he said.

“It was about how do we take QMS to the next level in that market, how do we differentiate ourselves from the potential of JCDecaux and Ooh Media and that’s really what we are looking at.”

But Nettlefold isn’t the first outdoor player to see synergies across radio and outdoor. Until recently, local business Here, There & Everywhere, had both radio and outdoor assets, in ARN and Adshel.

Despite the split of HT&E’s two assets, Nettlefold is adamant the two mediums can work together, if done right.

“[MediaWorks’] radio asset is a fantastic asset, with very strong market share, and certainly there will be some clear direction from us with regards to how we start to expand our growth to cater to the strengths and weaknesses of the MediaWorks operation,” Nettlefold said.

“We’ve actually done it before, in a previous life, 20 years ago. You have to get the branding right. What MediaWorks are doing – they are moving all their radio team under one roof – Michael has already identified that. That’s a great initiative and outdoor will do the same.

“We’ll bring our outdoor team in under the same environment. They will take the brand. We are working to change the brand – we want a localised brand because MediaWorks is known as a local media company.”

According to Nettlefold, the merger is about cross-platform opportunities, but unlike other mergers this year, he said no roles should be affected.

“This isn’t about cutting heads, like the other companies are doing, or the Nine and Fairfax. This is about maintaining our people and working hard on the revenue synergies,” he said.

“We are not looking at removing any people, because we are expanding our business, not decreasing.”

But while the QMS and MediaWorks merger is a priority going into 2019, Nettlefold did not rule out further mergers or acquisitions within his business.

“We are certainly going to work hard on what is going on with MediaWorks and see how successful that would be, will really determine what we do back in Australia,” he said.

He also said growth in QMS Sport would be a strong focus. At present, the sport division makes up 10% of QMS’ revenue across Australia and New Zealand. The division is currently operated by former IPG Mediabrands chairman and former Mediacom CEO, Mark Pejic.

“We are certainly working aggressively in expanding our footprint, and our rights, in the space, locally and internationally. It’s a high focus,” he said.

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