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Talks over News Corp offshoot may create world’s biggest billboard firm logo

Talks over News Corp offshoot may create world’s biggest billboard firm

· JC Decaux merger deal could be worth $1bn 
· Murdoch wary of doing further business in Russia

  • The Guardian, 
  • Friday September 12 2008

JC Decaux confirmed yesterday that it was in talks with Rupert Murdoch’s News Corp about merging with News Corp’s Russian-based outdoor advertising arm. The deal, which analysts reckon could be worth up to $1bn (£570m), would see JC Decaux, based in Paris, leapfrog its American rival Clear Channel Communications to become the world’s largest outdoor advertising specialist.

News Corp chairman Rupert Murdoch has grown increasingly uneasy about the News Outdoor Group business, which employs 4,500 people across eastern Europe, Russia and Asia.

Last year News Corp admitted it was looking at a sale of the business and last month Murdoch made it plain in a conference call with Wall Street analysts that he was falling out of love with doing business in Russia. He stressed the Russian-based business was growing, but added: “I’m sorry, the more I read about investments in Russia, the less I like the feel of it.”

Just last week News Outdoors’ Moscow HQ was raided by investigators from the prosecutor general’s office as part of a criminal investigation into the first deputy chairman of the Moscow committee for advertising and information. In June, News Outdoor Russia was accused of receiving illegal discounts on billboard advertising in Moscow from the committee from 2002 to 2007. Moscow’s city government sought more than 200m roubles (£4.4m) in damages, but its claim was rejected in court.

The company said last week’s search was carried out as part of the inquiry into the official, not the company, adding: “There is no case of any kind initiated against News Outdoor that would be the reason for the inspection.”

Several foreign firms have found themselves the target of heavy-handed harassment at the hands of Russian regulators and officials – usually interpreted as attempts by the Kremlin to crack down on non-Russian businesses.

This week British American Tobacco was targeted with threats of legal action by Russia’s consumer rights agency, Rospotrebnadzor. Its director, Gennady Onishchenko, said he had signed a lawsuit against BAT for “misleading” consumers and infringing their rights. He would not give details.

Last week, BP agreed to make wholesale changes to the management structure of its troubled TNK-BP joint venture to appease its four Russian billionaire partners.

The changes included the removal of its chief executive, Robert Dudley, who left the country in July after what he claimed was a sustained campaign of harassment.

Its rival, Shell, meanwhile, eventually handed a large share of its Sakhalin gasfield business to the state-owned Gazprom after destabilising criticism from regulators.

JC Decaux said yesterday that it was in exclusive talks with News Corp about the business, and any deal would involve a mix of cash and shares and result in “a combination” of JC Decaux and News Outdoor.

The News Corp subsidiary has operations in Russia, Bulgaria, the Czech Republic, Israel, Poland, Romania and Ukraine; in south-east Asia it has businesses in Malaysia, Indonesia, Thailand and Vietnam.

News Outdoor added that, “as a result of the deal, JC Decaux will gain a control stake in News Outdoor Group and will become the world’s number one outdoor advertising operator while News Corp will become a shareholder in JC Decaux”.

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