As well as announcing a new CEO, ScreenFX announced (but didn’t give any names away) a 10 year advertising deal as in the press release below.
Our initial take on this is we like it. We have been extremely critical of ScreenFX in the past but we definitely feel that this is a step in the right direction for them – we think their aim now is perhaps finally to niche.
Last year ScreenFX (we feel) effectively admitted that they did not have the skills, experience or size to undertake National Media Sales across the UK and went in search of a leading advertising group to do this for them – much to the chagrin of the other digital screen networks that they were supposed to be selling advertising for at that time – who in turn quickly dumped them and went elsewhere!!!
Our bet is that the unnamed outdoor advertising group is Clear Channel. Whether it is or not; this advertising commitment is a very good one for ScreenFX as it should allow them to focus on building out new venues.
We are meeting with their new CEO Thursday, I doubt whether he will be able to confirm or deny any of this (and that’s fair), but he should be able to tell us their plans for TrainFX etc. (we have not received any indication that they are NOT still trying to sell this network).
Watch this space.
Screen FX PLC
23 January 2008
Press Release 23 January 2008
(“ScreenFX” or “the Group”)
(to be renamed Vision Media Group (International) plc or “VMG”)
National screen advertising 10 year commitment
with outdoor advertising contractor
ScreenFX plc (AIM:SFX), the digital advertising and communications specialist, announces that, as Vision Media Group (International) plc (“VMG”), the Group has agreed a ten year commitment with one of the world’s leading outdoor advertising contractors (“the contractor”) for the procurement of advertising across VMG’scountry-wide mall network of digital screens.
The contractor anticipates that the Group’s portfolio of approximately 300 screens across 24 shopping malls will deliver significant annual net advertising income for VMG through a revenue share agreement over the duration of the contract.
VMG will also receive one-off up-front guaranteed payments from the contractor in exchange for its right to gain exclusive access to VMG’s substantial portfolio of convenience store sites across the country for the purpose of installing traditional free-standing road-side six-sheet poster units. The contractor will take responsibility for the procurement of any necessary planning permissions, sourcing the poster units, and installing and maintaining the units throughout the duration of the contract.
This contract is subject to certain service level agreements being agreed over the course of the next four weeks. It includes an incentive to the contractor to over achieve on malls sales targets such that in the first year the contractor is entitled to receive shares in VMG of 5% of the equity in the event that net sales revenue exceeds the agreed target. In addition in the second and third year, in the event that targets are exceeded, the contractor is entitled to receive 10% of the value of VMG’s net revenue sales targets in shares of the Company. In aggregate, over the three year period, the maximum amount of shares available under this incentive scheme to the contractor will be capped at 29.9% of VMG’s equity.
Executive Chairman, Mike Cottman, said: “This agreement is the culmination of the hard work undertaken by both ScreenFX and Screen Media Networks, the two companies that have come together to form VMG. This is the first time that a smaller digital company has secured the endorsement of one of the leading outdoor advertising players in the UK. The contractor has shown tremendous confidence in our shopping mall and convenience store portfolios and their expectations are exciting for what this will mean financially to us.”
“We believe that as a result of this contract, VMG will benefit from in excess of £2.5 million of gross margin from the first full year of operations under this contract. This landmark announcement represents the point at which the major restructuring and turnaround of the business, a process undertaken throughout 2007, is now approaching its completion stage. Whilst we have much to do in execution terms over the balance of 2008, we can now focus on delivery and becoming a successful and profitable outdoor media contractor in our own right. We would like to take this opportunity to thank our institutional investors for their continued support throughout this period of transition.”
– Ends –