Tune in, drop out
Posted May 22nd, 2011 by debritz
Fairfax has confirmed it is getting out of the radio business, and is seeking a buyer for its Australian network, which includes 2UE, 3AW, 6PR and, in Brisbane, 4BC and 4BH. I've written quite a bit about this, so I'll try not to repeat myself too much. Instead, I'll refer you to my thoughts here and here.
Now I'd like to address the delicate matter of money. Although Fairfax says it's confident of attracting several bidders, analysts predict the whole network of 15 stations may raise $250 million to $300 million. Fairfax paid $480 million less than four years ago. I don't know how much profit was made in that time, but it doesn't sound like a good deal to me.
And any potential buyer or buyers (if the assets are split up, which seems likely) would need to work hard on answering the question: Exactly what is a broadcasting licence worth these days? Free-to-air broadcast radio has certain advantages in terms of delivery, but it certainly doesn't have the game to itself any longer.
More and more people are choosing to listen-on-demand to podcasts on their computers or mobile devices rather than to scheduled services, and the radio stations are by no means the only ones pumping those out. Anybody with a half-decent PC can produce a broadcast-standard podcast - and it's clear to anybody who's taken the time to search that there are many "civilians" out there who have better program ideas than some of the professionals. (Ignorance of tried-and-tested formats, and freedom from highly paid consultants and their recycled branding concepts can be a very good thing.)
And while much is made of the success of the likes of Alan Jones and Kyle Sandilands, the fact is that big stars are costly to maintain and their continued success - or their portability to other markets - is not guaranteed. (I've noted many times before that Eddie McGuire isn't setting the world on fire at Triple M in Melbourne, which is also where even some of the big names of Sydney's 2GB and the much-touted input of Andrew Bolt are falling flat at talk station MTR.)
Having said that, while I wouldn't be rushing in to be a buyer, there is a chance that somebody will grab a bargain or two in the great Fairfax fire sale. But they'll have to be smart enough to set a low price and stick to it, and to truly understand the changing radio scene to turn a decent dollar. It's a very different market now to when most of the existing players (on air and off) got started, and copying stale formats with recycled celebs and other usual suspects just won't cut it. It'll take smarts, courage and a lot of passion to survive and thrive. More on that later.