The cinema advertising company Pearl & Dean - instantly recognisable to film-goers of a certain age by its pa-pa-pa-pa-pa-pa theme tune - is being sold for a measly quid to a new firm backed by Thomas Anderson, the owner of the Empire cinemas chain. Rose-tinted specs aside, why anyone would want to buy an old-school ad business which made a £13.3m loss last year is beyond us. Answers on a postcard please.
The deal will, however likely come as a relief to current owner, Scottish broadcaster STV, which has been trying to flog the loss-making cinema advertising arm since the good old days of September 2006. Chief exec Rob Woodward said, with disarming frankness, that it had taken so long because Pearl & Dean has been losing money hand over fist: mainly thanks to the fact it had been locked into a cumbersome, loss-making deal with the Vue cinema chain. A deal which terminates at the end of this year, much to the relief of, well, everybody.
Image has snapped up the business for a nominal £1 – on a cash-free, debt free basis. But the deal won’t end up being quite as cheap as it seems: as part of the contract, Image will pay the current owners £9.1m to allow for an upfront payment STV has already made this year to Vue. The first £2.5m is expected to be paid on completion of the deal (that will certainly come in handy), with the rest due in ‘affordable’ monthly instalments.
Pearl & Dean, founded in 1953 by brothers Dickie and Ernie Pearl, and Bobbie Dean, enjoyed some 65% of the cinema advertising market in the 1970s. But latterly the firm has been left behind by structural changes in the market, as advertisers shifted their spend online.
Naturally, Woodward is cock-a-hoop at having done the deal and ditched the debt, and has explained how the outlook for 2011 and beyond is ‘extremely positive now we will not be carrying these losses forward’. The group said the sale would enable it to refocus on its core television market, which is trading in line with the improved national advertising market. Doubtless he is hoping that the sale will allow Pearl & Dean it to up its investments in HDTV in time for the World Cup in June.
Meanwhile, the picture for Image, and its new purchase, is looking a little more uncertain. The Pearl & Dean brand (not to mention its catchy theme tune) may still have some value, and now it is rid of the burden of the deal with Vue, it could actually make a profit – it is still the second biggest seller of cinema ad slots, after all.
But the smart money in advertising these days is looking to the future for opportunities – and with its nostalgic connotations, Pearl & Dean looks like yesterday’s idea.
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