“They’re both carrying a lot of cost,plus Kyle and Jackie O want a lot of money[from ARN]. Strategically,the deal makes sense,” Roeling said.
ARN is in the final stages of its negotiations with its star duo – Kyle Sandilands and Jackie Henderson – who are reportedly on the cusp of signing a 10-year contract worth $200 million.
Thanks to the pair,KIIS has locked up close to 15 per cent of Sydney’s breakfast market,with a cumulative daily total audience for the show standing at more than 750,000. Keeping the pair and expanding their hit show into other markets,including Melbourne,is key to Davis’ plan of building a network of 10 metro stations that speak to every segment of the audience.
“What we’re trying to build here is a network built on KIIS targeting females 25 to 54,and males 25 to 54[Triple M],backed by really good talent,” Davis said.
While it isn’t a ratings juggernaut,Southern Cross-owned Triple M has one key thing going for it. It’s got a direct line to an audience that’s hard to reach – younger and middle-aged men. It gets this audience thanks to broadcast deals for the AFL,Test cricket and other sports,leveraging that content on its digital platform LiSTNR,and underpinning its live radio offerings on a combination of rock,sports and comedy.
With talent such as Mick Molloy,Marty Sheargold (who has taken a leave of absence this week due to ongoing mental health issues),and other known sports personalities,Triple M’s cashed-up male audience is a boon for advertisers.
“I think you’re taking two of the strongest assets and combining them,which would give them disproportionate reach in market and disproportionate share of advertiser revenue,” said Claire Butterworth,national head of investment at global media buying group GroupM.
Under ARN’s proposed deal,Southern Cross’ podcast network LiSTNR and ARN’s iHeartMedia,the two largest digital audio companies in Australia by some distance,will end up under one umbrella.
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Meanwhile,a new,privately owned entity would house the leftover radio assets (Pure Gold and the Hit Network),alongside its underperforming regional television assets.
Davis said the deal,while disruptive,offered a path to securing the futures of both companies.
“We’re both losing money at the moment,we’re both on a path to profitability,” Davis said of the digital assets. “But that extra footprint,that extra scale is something that will allow us to compete with the global players.”
ARN’s complex solution to making the deal happen could also test the limits of existing media laws,a feat last performed in 2017 when the Turnbull government removed a law preventing one company from owning more than two out of the three mediums:TV,newspapers and radio stations.
This opened the door for a merger between Fairfax and Nine in 2018. Nine owns this masthead.
Barrenjoey analysts have raised the prospect of whether ARN and Southern Cross will lobby for the abolition of the radio licence limitations,citing audience fragmentation and growing digital competition – similar to the argument used six years ago.
“Some consolidation would be beneficial in fragmented market,” Hatched’s Roeling said.
GroupM’s Butterworth said Australia’s radio market needed “stronger content producers and stronger Australian content”,adding that an ARN/Southern cross combo could “challenge the likes of Spotify”.
Lofty ambitions aside,Davis’ immediate challenge will be to convince Southern Cross’ four other big shareholders to sign up.
Southern Cross’ annual meeting,scheduled for October 27,should provide a glimpse into which way they are leaning.
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