CNBC reports that Netflix bid $300 million for LA’s Regency Outdoor. There are other bidders. Insider’s thoughts:
- The bid is new evidence streaming and social media companies value out of home.
- Regency does lots of business with cable TV, TV and the movie studios. How willing are they going to be to do business with competitors. Insider also wonders if the DOJ will want to vet any Netflix transaction for anti-competitive possibilities.
- Netflix understands data. Out of home is becoming more and more about data, especially in urban areas.
Insider asked some out of home execs and dealmakers for their reaction and here’s what they said.
Nancy Fletcher, President and CEO, OAAA
We welcome Netflix’s potential investment in out of home media ownership.
Netflix is a top customer of out of home (#11 in 2017), along with other media/tech leaders Apple, Google, Amazon, HBO, Samsung, Disney, and Comcast.
They know that OOH – in the real world — amplifies other media with powerful creative and contextual relevance
Max Drachman of Kalil and Co
I had two thoughts when I heard about Netflix. The first being that it is not a surprise they have an interest in Outdoor. We have sold many Outdoor companies to groups outside of the space, because they are attracted to the fundamentals of the business. Regency’s position in Los Angeles offers them considerable inventory they can use to promote their original content and brand in the entertainment capital of the world.
The second thought I had was one of concern because they would be entering the space at a PhD level, as opposed to finding more of a layup. To buy a billboard company in a competitive market with some of the most sophisticated landlords in the country comes with quite a bit of risk. Not to mention, navigating the typical billboard ground dynamics on a trail blazed by one of the business’s most widely known mavericks presents its own challenges. That said, they have plenty of resources behind them, so I’m sure they are up to the challenge if they end up as the buyer.
Gabe Oliverio of Johnsen Fretty and Company:
This makes a lot of sense for a Netflix. I would not be surprised if there are other content players and outside-industry bidders for those assets.
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My two cents…
Regency has many permed locations on Sunset Blvd with other advertisers like Gucci, Apple and others, so Netflix is obviously thinking long term. They probably anticipate future opportunities to convert some locations to digital and maybe someday run full motion trailers. However, I think that they are primarily following the Amazon and Alphabet trend to buy complimentay assets that diversify their holdings. Out of Home is a relative simple business for a company like Netflix to manage. We think it’s a wise move by some bright and creative people.
Thanks for your perspective. We have felt strongly that new strategic players will be looking to OOH as an investment opportunity.