Bell adds an OOH jewel in Outfront Media…now what?

Bell Media’s tentative $410 million deal to acquire Outfront Media’s assets could potentially reshape Canada’s out-of-home advertising industry, and even help the medium as a whole capture a larger share of advertising investment, say experts.

Bell Media announced the acquisition of Outfront on Monday, with Stewart Johnston, senior vice-president, sales and sports, saying that the company’s “diverse array of assets” reinforces its dedication to delivering “impactful, multi-channel marketing solutions,” while accelerating the company’s digital strategy.

“The synergy between Outfront’s established expertise and our commitment to driving innovation will provide clients with tremendous opportunities on a true coast-to-coast footprint,” said Johnston in a release. Outfront operates more than 9,300 displays across the country—approximately 10% of which are digital— with ad revenues of US$91.9 million last year.

The deal, which is subject to regulatory approval and other conditions, is expected to close in 2024.

Through some back-of-the-napkin math, industry experts calculated that the deal is poised to give Bell’s Astral out-of-home unit approximately 40% of the $854 million Canadian market (according to eMarketer data), and hinted that it could potentially trigger a fresh round of consolidation among other industry players looking to keep pace.

Astral and Pattison Outdoor—which claims 55% of the country’s static billboards and more than 6,400 street furniture faces—will control an estimated 70% of the out-of-home advertising revenue in Canada. The rest of the market is divided between larger companies like Lamar Advertising, Branded Cities, digital pure-play Allvision, and an array of small independents.

And while Astral’s street-level digital assets are largely confined to Toronto, thanks to its 20-year street furniture contract with the city that runs through 2027, Outfront boasts an array of digital TSAs in western Canada markets like Calgary and Edmonton, all supported by an extensive complement of static boards across the country. “They can put packages together that I think are really going to be complementary,” said Debbie Benadiba, CEO of out-of-home media agency Talon OOH Canada.

One of the main reactions to the deal among media buyers was surprise, coupled with enthusiasm for Astral’s expanded market coverage outside of Quebec and Ontario, applause for the emergence of another coast-to-coast media vendor, and, for now anyway, some mild consternation about what it might mean for rates.

“I don’t think I saw this coming, but I certainly think the Outfront assets are very complementary to the Astral assets,” said Jennifer Bidwell, vice-president of business solutions with Horizon Media Canada. “You won’t see a lot of duplication outside of a couple of key areas like [Toronto’s Gardiner Expressway] or Highway 50 to Montreal.”

The deal, she said, provides a “huge boost” for Astral, which until now had been relatively easy for media buyers to buy around, particularly when it comes to large-format inventory in the major markets. “The Outfront inventory makes them a must-call,” said Bidwell.

While any media vendor thrust into the position of “must-call” might be tempted to increase ad rates accordingly, Bidwell said she’s adopting a wait-and-see approach. “We have to wait for this to close… but it will be a concern for us because we do buy [a large amount] of out-of-home,” she said. “We want to make sure that the pricing remains attractive.”

Out-of-home is currently enjoying something of a renaissance post-pandemic, with increased advertiser investment being sparked by an increase in digital inventory with programmatic capabilities and strong ROI, said Bidwell. “From branding to location-specific messaging, it’s very effective.”

Benadiba said this week’s deal will help streamline an advertising channel that is currently “cumbersome and fragmented,” with more than 70 vendors of varying sizes. The sheer number of operators can make executing a major out-of-home buy time consuming, she said.

“When you’re an agency like us, managing a lot of out-of-home investment, you want to be able to negotiate and work with fewer people,” said Benadiba, who spent nearly eight years with Bell, including nearly two as vice-president of sales at Astral. “Why would you want to call on 60 different [companies] to do out-of-home? You’re not going to get the proper share of that channel.”

Benadiba said the deal gives Astral “really nice strength” in digital out-of-home, particularly in key markets like Toronto, Montreal and Vancouver, where they will “pretty much own” the market,” she said. “When you put together a digital out-of-home plan for a client, you’d say ‘I need a little bit of Outfront and a little bit of Astral for Montreal,’ now you might only need to call Astral.”

There has also been speculation that Bell may have wanted the Outfront assets as a way of strengthening its 5G network. Speaking with Canadian Press this week, Dwayne Winseck, a professor at Carleton University’s School of Journalism and Communication and leader of the annual Canadian Media Concentration Research Project, theorized that it could use the Outfront locations as sites for the small antennae necessary to build the network.

“A lot of these structures can be used for networking,” Benadiba agreed. “There’s definitely a broader reason than just buying a billings division. There’s definitely a strategic reason why these locations would add value to the communications network.”

Regardless of Bell’s true intent, Benadiba said the deal came as “quite a surprise” to many buyers, who had speculated that Outfront might instead be a potential acquisition target for Rogers Sports & Media, a relatively new entrant in the out-of-home space but a major competitor to Bell across multiple lines of business.

Speaking anonymously, one person who works in the out-of-home business said they had been anticipating a move from either Bell or Rogers, but were leaning towards the latter. “In my mind, just with some of the moves that Rogers has been making, I thought it would be them,” they said.

Rogers established its out-of-home unit in 2021, following its purchase of the Canadian assets of place-based out-of-home advertising company Rouge Media, which operates static and digital signage within university and college campuses, as well as resto-bars and salons. Earlier this year, it announced a partnership with Ongalee to handle ad sales for its restaurant tabletop network, consisting of 7,000 screens in 26 Canadian cities.

“We believed that if you’re Rogers, you can’t just sit in the place-based space,” said Benadiba, whose agency buys out-of-home time and place on behalf of tier one clients including McDonald’s Canada, Uber, Canadian Tire and Scotiabank. “If you’re coming at [clients] with a TV, radio, digital out-of-home buy, you need something bigger.”

With Outfront’s assets now off the table, that opens up industry speculation about where Rogers could potentially look to grow its out-of-home footprint—whether that’s by acquiring a bigger fish in the out-of-home pond, or more assets in the place-based media space in which it currently plays.

“It will be really interesting to see their commitment to [the out-of-home space],” said the insider. “This move by Bell will either make them level up, or potentially invest a little more in place-based media.”

Chris Powell