Redbus entrepreneur on lookout for turnaround 'challenge'

Dan Milmo and Cosima Marriner
Thursday January 12, 2006

The Guardian

Simon Franks, the British entrepreneur who recently reaped $35m from the sale of his Redbus film distribution business and has since focused on the outdoor advertising industry, has said he is scouting for struggling companies he could potentially turn around.

Mr Frank's main business is now Redbus Outdoor, which sells advertising space in supermarkets and on university campus billboards, following the $35m (£20m) sale of Redbus Film to US film company Lions Gate last October.

Redbus Outdoor has exclusive contracts with Sainsbury's and Somerfield for the advertising panels on their trolleys. It also owns the advertising rights to the shopping baskets in Tesco convenience stores. Since its debut last summer, Redbus has run in-store campaigns for Visa, Masterfood, Unilever and Nestlé, which it has said delivered double-digit sales increases for the advertisers.

Redbus is now in talks with the other major supermarkets. "I think the other retailers will come on board [this] year," Redbus Outdoor boss Antony Ceravolo said. Redbus is also likely to expand into Germany, as well as into other "destination advertising environments" such as cinemas and pubs.

"Redbus Outdoor is all about destination outdoor advertising, rather than targeting the consumer in transit," Mr Ceravolo said. "Our audiences are in a more captive frame of mind, they're more purchase-driven."

Supermarket advertising accounts for 60% of Redbus Outdoor's revenue. The rest comes from contracts with Britain's red-brick universities. It sells university billboard space to consumer, entertainment and technology companies.

Redbus Outdoor is already profitable and has set a target of £20m annual profits within five years. It is growing at a faster rate than Redbus Film, which was booking £20m by its fourth year of operation. Mr Franks said he prefers advertising to film because it provides stronger cash flows and is less risky.

"You're effectively buying property and renting it on a short-term basis. It's very cost-effective as your costs are covered by the rent," he said. Whereas Redbus invested £25m in its film division, Redbus Outdoor has only required a few million pounds. Redbus Group also owns the online DVD rental firm Video Island.

The 34-year-old Mr Franks is now keen to prove Redbus can transfer its success with media companies to other industries. "Everybody thinks we can only do media - the next deal we do we'll be looking to do a non-media deal," he said and added that he wanted to buy a business in need of turning around. Mr Franks said. "I'd like to find a situation that is very challenging."

But he admitted such an opportunity could well be found in the media sector. "The UK media is so ripe for consolidation," Mr Franks said.

With £23m in the bank, Mr Franks said he has little need to take Redbus public. "Being a public company in the media sector is very, very difficult - it often forces management to make decisions that aren't great but maintain the share price," he said. "Staying private gives you flexibility and the ability to do things quickly."