No Country for New Players

July 24, 2015

 

 

How many rookie radio announcers have started their careers in the bush, vowing that one day they’ll own a radio station rather than work for one?

 

Quite a few, I suspect.

 

Unfortunately, that dream is getting harder and harder to achieve, and, the bad news is, it’s going to become almost impossible in the future.

 

Once, most regional radio stations were held by individual owners, generally based in the radio station’s local town.

 

But, that was 50 years ago, before the long arm of network television finally stretched out into the rural areas; a time when revenues for a regional radio station’s ‘Six to Midnight’ program made its Breakfast income pale in comparison.

 

Back then, regional radio ownership was held in many different hands; what the politicians like to refer to as ‘widely diversified’.

 

The idea of someone owing a large network of stations in those days was pretty much out of the question.

 

Some did, but not many.

 

With onerous broadcasting regulations, regular public hearings for licence renewals, lack of access to bank finance, the tyranny of distance, and the lack of reliable transport, putting together a network was always going to be a tough call for even the most ambitious empire-builder.

 

Wind the clock forward to the present day, and, stand-alone independently-owned stations are rare indeed, for a number of very good reasons.

 

Firstly, money has spoken.

 

The most profitable stations have long since been absorbed into groups.

 

The really smart operators got there first, and, with the odd exception, the economics of owning just one regional station these days, don’t add up.

 

Most regional radio station ownership is now concentrated amongst a handful of operators – Southern Cross Austereo,  Grant Broadcasters, Capital Radio, Broadcast Operations, Redwave, Macquarie Regional and ACE.

 

SCA, MRR and Redwave are owned or backed by public companies, but the others are private operators and these groups have been built up by people who, as history has proven, were not only smarter, but prepared to take more risks than the rest of us.

 

As entrepreneurs, they had that special insight that let them ‘see around corners’ when others could only look as far as the horizon.

 

At a time when regional radio’s prospects didn’t look all that great, they intuitively knew it was time to start buying.

 

Back then, these would-be titans didn’t necessarily have the money.

 

Many of them borrowed heavily and risked everything at a time when the more cautious of us weren’t prepared to.

 

As it turned out, they were proven right.

 

The wheel turned, and, over time, they prospered.

 

They also quickly realised that the future of regional broadcasting lay in acquiring enough stations to spread the risk.

 

As always happens in the absence of genuine information, many of these people have been unjustifiably vilified by politicians, so-called media observers, and, even people in the industry, for scooping up so many stations and concentrating regional media power.

 

The truth, as usual, is entirely different.

 

Scale is the key to regional radio survival.

 

Make no mistake, all of these owners have gone through their tough times, and, no doubt, sleepless nights, worrying about how to keep their businesses financially afloat and their employees paid.

Unless you manage to buy a station in a prime area, like Newcastle, Darwin or the Gold Coast, you find out very quickly that your radio business can’t survive for long on the fortunes of a single market.

 

Those independent operators, who have tried to beat these odds, often go through an enormous amount of pain.

 

Australia’s regional radio titans also realised very early-on the need for ‘location diversity’, even if it meant foregoing profits for many years to establish a well-spread group of stations that could withstand the ups and downs of different regional markets.

 

The saving grace of a diversified network is that, barring a nationwide catastrophe, when one market is depressed, you’d expect most others to be faring somewhat better.

 

So, across a network of, say, even 10 stations, you can expect to produce a reasonable and consistent profit, from a mix of local and national advertising, if your stations are well run.

However, if you were reliant on just one local rural community, and, drought hit that area, the drop in local revenue that could quite easily wipe you out in a single season.

 

The major private operators, Grant Broadcasting, Broadcast Operations and ACE, acquired as many stations as they could that fitted their strategies, when the cost of entry was relatively inexpensive.

However, the concentration of regional radio has now escalated the purchase price of any stations that may become available.

 

This, in turn, means that only the big boys can afford to play.

 

Add to this, the uncertainties that are starting to creep into the industry, with the potential exposure to PPCA claims, spiralling power prices, volatile state-owned transmission site rentals, and, the unpredictability of national revenues as State and Federal governments continue to churn.

 

Unfortunately, for those desperately wanting to gain a foothold, the acquisitions of the past three decades mean that there is very little, if any, room left at the table for new players.

 

Regional radio ownership might appear glamorous, but it’s a very tough business that relies on keeping a close eye on every dollar.

 

If you’re currently working for a regional station and think your owners are exceptionally tight-fisted, it’s because operators are constantly trying to keep their heads above the financial mire in troubling times.

 

Today, there are only a handful of stations left as true independents and everyone is watching their every move, like a hawk.

 

Those stations, should they ever be shaken loose, will probably be divided up amongst the smaller, emerging operators; groups like Resonate and Oceania.

 

However, most of these independent operators continue to rebuff the ‘wooing’ of potential purchasers, who seem to contact them so regularly they must be on speed dial.

 

Usually, those callers are the emerging regional groups wanting to get bigger, but, sometimes, it’s those once-rookie announcers, who are hoping against the odds, to break into what is fast becoming a very small and exclusive club.

 

This blog was originally posted on radiotoday.com.au

 

 

Please reload

Featured Posts

The Digital Assassin: Who put the Hit out on Radio?

January 10, 2018

1/4
Please reload

Recent Posts