ScreenFX Shares on AIM suspended

Adrian J Cotterill, Editor-in-Chief

Shares in Avanti Screenmedia soared yesterday following the news of a simple loan – the shares reached the heady heights of 7 pence at one point – closing at a magnificent 5.65 pence – it is magnificent when you bought at 1.5 pence and at 3 pence to average out an earlier buy at 8 pence 😉

However, across from London and up to Manchester – similar comany ScreenFX was not faring so well.

In late breaking news the board of ScreenFX asked for its shares to be suspended as it had so far failed to raise half of the £2.5M it said it needed.

The Manchester Evening News quoted a source close to the company “bosses were confident of finding a fresh backer to satisfy the firm’s urgent short-term working capital needs”.

I don’t think this will be that easy.

I have blogged before about some of the problems besetting ScreenFX – their chairman Mike Cottman kindly took the time to comment on my blog by writing a very honest and incredibly good reply to all of my points (he should and does know more about the business than an armchair critic like myself).

I have spoken in confidence with some of the investors who have in turn spoken to ScreenFX and I don’t think, bottom line, that the investors know what sort of company that would be buying into.

By that I mean; I am not sure if ScreenFX know what sort of company they have been (whether they honestly know what they did wrong), what sort of company they want to be or indeed what sort of company they should be.

They have (tacitly) admitted that they are not large enough or experienced enough to be a proper media sales company on the behalf of other digital networks – all their digital customers left to do it themselves.

ScreenFX then made a big deal advertising the fact that they were looking for someone who would sell media for them on their own network(s).

In actual fact they got these announcements around the wrong way – leading to several screen networks having to issue press releases to clarify the situation.

I think that like almost all of the very early pioneers in the digital out of home industry, ScreenFX have spent far too much money in building networks (everyone believing that this was a ‘land grab’).

Tesco’s allegedly spent £30 million on 100 stores, Avanti Screenmedia spent big on physical networks and even more on buying the rights to advertise in certain areas – even with one 1/4 miillion pound deal to a pub chain (to take it away from god forbid a ‘competitor’) even before any network had been put in or any advertising revenues had been secured.

ScreenFX failed to work well with the media buyers and planners (the real key holders in this ad-driven market place at the moment) and failed to convince them that the ScreenFX networks were compelling enough for advertisers.

During the early years, Avanti Screenmedia at least invested in a fantastic research team and continually released research to the market – something that ScreenFX failed to do.

ScreenFX may be able to turn it around but they have a big job ahead of them.

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