The move, which needs governmental approval, takes the question of market control fully into the outdoor arena. Lately, ad agency media buyers have been troubled by consolidations occurring in radio.
Admitting "a lot of overlap," Outdoor Systems said it's likely to have to give up some properties.
"In any one market we'll have 40% to 50% maximum market share," said an Outdoor Systems spokesman, who added that 3M's business is 80% local ad space. Outdoor Systems' boards are for predominantly national ads.
Buyers of outdoor are devoting more ad dollars to the medium; some advertisers have hiked outdoor budgets as much as 20% this year.
WILL FIGHT PRICE HIKES
"Only time will tell what effects these [deals] will have," said Jack Cohen, director of print and outdoor media buying for DDB Needham Worldwide, New York. "As a buyer, I'll fight tooth and nail if they try to increase prices."
After the deal is completed, the new group will control about 96,000 boards out of about 400,000 nationwide. The spokesman said 26,000 of the total would be transit sites.
Karl Eller, president of No. 2 Eller Media Co., had been eyeing the 3M division as well.
After this deal, he said, "I don't know how much more consolidation there could be."
Previous outdoor deals have not resulted in much concentration, however. The record $1.2 billion purchase of Eller Media in March was by an outsider, broadcast group Clear Channel Communications. Before that, Outdoor Systems' purchase of Gannett Outdoor and Eller's of Patrick Media were made when each of the acquiring companies was considered a smaller player.
In the outdoor business for more than 50 years, 3M decided to shed its unit to focus on core businesses. Just last month, it sold its Media Network Inc. to Time Inc.
The sale of this last property will mean the dissolution of 3M Media, which last year caused some controversy by deciding to stop carrying tobacco advertising.
"There has been very rapid expansion recently and we didn't have the market leadership we had at one time," said Marc Adam, VP-marketing, National Advertising Co.