Velib'

Vélib

JCDecaux vs. Clear Channel

3004 words

Introduction

Since the 15th of July, 2007, the Velib system is available in Paris. It is a public bicycle rental programme, launched by the city hall of Paris and JCDecaux, with 20,600 bicycles for 1202 rental stations. This system was very successful from the beginning with 26 millions of rentals and 200,000 subscribers in less than oneyear after the launching of this system.
The Velib system has benefits. First, it is a great market for advertizing which allows JCDecaux to earn 60 million Euros each year. The second one is that the city hall of Paris receives the revenue of the rentals and don’t have to pay for the maintenance of the system: JCDecaux has to provide all the maintenance services that are estimated between € 40 and€ 50 million. The third benefit of this system is also for the city hall of Paris which can improve its image by fostering ecological transport means and even the mayor’s image for the next elections.

Almost one year passed between the launch of the first call for tender and the launch of the Vélib system, due to a conflict between JCDecaux and Clear Channel which are two major companies in theurban equipment. The conflict between those companies was time-consuming and even money-consuming.
This report focuses on the conflict in Paris, but for the same system (with different names) JCDecaux and Clear Channel had the type of conflict in different French cities like Lyon, Marseille and Toulouse where the two companies try to cancel the markets or to delay the market attributions.

Inthis document, we will present the two main companies who competed for this market: JCDecaux and Clear Channel, and then we will study the Velib’s conflict by seeing the source of this conflict with the offers of each different company, in other words: the story of the conflict. We will also analyze the conflict and see how the two companies dealt with it. At the end, we will see the conclusion andthe recommendations that could be made in this case, and how the conflict could have been managed in another way.

Presentation of JCDecaux and Clear Channel

JCDecaux

This multinational corporation was founded in 1964 by Jean Claude Decaux. It is second largest outdoor advertising in the world and operates in 72 countries with a presence on each continent. JCDecaux has four mainactivities: urban equipment, advertising in transports such as subways or airports, advertising and free-rental bicycles. JCDecaux employs 9940 persons around the world and its salesfigure for 2009 was € 1.9 billion. The main competitors of JCDecaux are Clear Channel and CBS Outdoor.

Clear Channel

Originally, the main activity of Clear Channel was urban equipment as JCDecaux. This company was foundedin 1972 by Lowry Mays. One day, one of its Texan customer was bankrupt and the group bought two radio stations to pay the debts. The CEO saw the great possibility of synergies between urban advertising and radio advertising. In 2004, the group owned 1200 radio stations and 30 television stations. In 2005, the group Clear Channel was divided in three companies: Clear Channel Communications (radio),Clear Channel Outdoor (urban advertising) and Live Nation (events organization). Nowadays, Clear Channel employs 18,115 persons and its salesfigure $ 8 billion.

The Velib’s Conflict

The story of the conflict

Before the Velib system was launched in the summer of 2007, the city hall of Paris launched a call for tender for this system in 2006. This call for tender had many key points.First, the city hall set up this call for tender with a specific number of bicycles: 6,600 at minimum, and 26,000 at maximum. The second key point of the call was that the city hall doesn’t have to pay for the maintenance of the bicycles and the rental stations, and will receive all the revenues of the rentals. In exchange, the company in charge of the system can exploit 1,280 billboards of 2m²...