Credit: Casey Horner via Unsplash
James Taylor, the former managing director of SBS, is taking the reins at oOh! at just the right moment, despite Australia’s biggest outdoor media specialist issuing a profit warning.
Taylor, who replaces media industry figure Cathy O’Connor, is starting at oOh! December 8 on a base salary of $1,344,000.
When appointed in August he described the outdoor media sector as “exciting” and the “fastest growing” in the Australian media landscape.
However, oOh!media this month issued a profit warning, reporting a subdued advertising market.
The company now forecasts December quarter revenue to be slightly below the same three months last year.
oOh! delivered September quarter revenue growth of 7%, slightly ahead of the 5% indicated at its half year results announced in August.
But the market has since turned into the close of the year, and “softened significantly”.
For Taylor, this means he is starting at a low point in the advertising market. It’s not just outdoor, the slump appears to hit every corner, even the digital depth, of the advertising market
The next move is up, or should be according to market analysts.
Investing in oOh!media has never been for the faint-hearted, with fixed-cost leverage to advertising cyclicality compounded by concession renewal risks, according to Brian Han, director at Morningstar.
But the long-term structural outlook is positive, he says.
“Abrupt weakness in outdoor advertising markets is the key culprit, with the recent Auckland Transport concession loss also hurting in New Zealand,” Brain Han at Morningstar wrote in a note to clients.
“The update highlights the perils of a high fixed cost business such as outdoor advertising.
“Despite a better-than-expected 7% lift in third-quarter revenue, the downturn in October was abrupt and mirrored the challenges recently suffered by advertising peers such as Seven and Nine.”
Investment bank Macquarie describes oOh!media see-sawing through 2025.
“Australian ad spend looks to be at a low point in September / October with suggestions of improvements,” analysts write.
“That said, there is a risk that the ad market does not recover as quickly, given short visibility, and with limited catalysts, noting that the rates cut cycle has possibly already ended.
“Either way, we continue to see out-of-home as a structural winner, with growth driven by pricing (lower cost segment) and increased inventory (digitisation + new assets).
“We also see (industry measurement initiative) Move 2.0 as an industry catalyst, which better measures out-of-home advertising effectiveness, and with an expected launch in early 2026.”
At investment banking and financial services company Cannacord, analysts noted other Australian media businesses have reported softness in October, suggesting wider market challenges.
“Despite the downgrade, we remain positive on the structural growth outlook for OOH as a format” they said.
And oOh! Is the predominant exposure on the ASX.
Canaccord has oOh! as a buy.
Brian Han at Morningstar hopes Taylor, the incoming CEO, is not faint-of-heart when it comes to dealing with a volatile stock price and investor sentiment.
“He has notably overseen the growth of SBS On Demand's audience and advertising revenue while forging deep industry relationships across the media and advertising industries,” Han said.
“He is a TV insider who can tear mass-audience advertisers and agencies away from TV and badger them with data showing the mass-audience appeal of out-of-home at lower cost-per-thousand.”
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