Media Diversity: Why the Hyenas are circling

August 16, 2017

 

 

When you stand back and look at it, Australia’s commercial radio networks are doing pretty well, especially when it comes to fulfilling their obligations to listeners.

 

Right now, most networks are trading very profitably, their advertising inventories are reasonably solid and they’re growing year on year.

 

Over the past decade, we’ve seen commercial radio rise to the surface to finally become ‘the darling’ of the media pond.

 

Of course, that may only be a relative position, with newspapers drowning in a sea of red ink and television looking to grab hold of any available life-preserver to keep it afloat.

 

Radio’s success and other media’s hard luck stories are the primary reasons that I see lifting the current so-called ‘2 out of 3’ media ownership restrictions as downright dangerous.

 

The move is certainly not in the best interests of those who work in commercial radio or their listeners.

 

As for the rest of the proposed amendments to the media laws currently before parliament, I’m quite happy, but the ownership provisions; nah, they don’t sit well with me at all.

 

In recent times, the big boys in the media industry, particularly those from television, have decided that changing these ownership laws serves their interests, and right now, they’re turning the thumbscrews on coalition MPs and senators to make sure it happens.

 

The key reason is television is eyeing off profitable radio operations that could bolster their bottom line, and, the hyenas are beginning to circle.

 

You see, just a few years ago, TV was ‘everybody’s sweetheart’ when it came to the media sector.

 

That was in the days when metro TV account managers simply had to turn up at their desks before nine, line their pencils up in alphabetical order, wait for the phones to start ringing and fill out the booking sheets.

 

It was a golden age.

 

Then, Foxtel arrived.

 

Instead of combatting the pay-tv problem head-on by investing in high quality programming, TV executives started cutting back on operational expenses for fear they were going to lose advertising revenue, and eventually, losing revenue became a self-fulfilling prophecy.

 

 ‘Look’ they cried to various Communications Ministers ‘Foxtel’s offering up to 50 channels. How are we ever going to compete?’

 

After years of this bellyaching, it was decided to give the networks enough digital spectrum to allow them to offer multiple channels.

 

‘Great’ the networks said ‘Now we’ll each have four and five channels’ and they whispered amongst themselves ‘This will give us each four or five times our current revenues’.

 

Well, unfortunately, going digital turned out to be a case of ‘be careful what you wish for.’

 

The reality these TV networks quickly faced was that the TV advertising pie can’t magically expand by 500% overnight.

 

So, free-to-air networks ended up with only a very small increase in revenue, but were lumbered with several times their previous costs to pay for additional programming on the extra channels.

 

Things started to go south.

 

TV networks, like most big businesses these days, are driven by the demands of their shareholders.

 

Modern public company shareholders don’t think about investing for three years down the track.

 

They’ve been programmed to expect strong, sustained and often unrealistic returns every reporting period and they don’t care how they get them.

 

As a result of shareholder pressure and multi-channel operating costs, most TV networks have resorted to ‘slash and burn’ mode, cutting expenses to the bone at every turn.

 

In doing so, some have eroded their news gathering capabilities and relegated the needs of their viewers to being a secondary consideration.

 

This is not a healthy operating environment for an industry that relies on the sustained popularity of often high-risk entertainment and information products.

 

Experienced news journalists are being replaced by kids barely out of college, and, the majority of shows that have been produced across all networks during the past 10-15 years are little better than rubbishy game shows, reality programs for the intellectually-challenged, and, low cost soapy drama, much of which could be better acted by would-be thespians from the local high school.

 

The focus of free-to-air TV’s complaints has more recently shifted from Foxtel to internet services like Netflix, Stan and Amazon, whom they say are stealing a progressively larger share of their viewers month by month.

 

Do you really have to wonder why?

 

Perhaps, it may have something to do with the lack of sustained speculative investment free-to-air television networks have been prepared to make in quality drama programs or showcase events during the past 20 years.

 

In the eighties and nineties, networks were compelled to produce high-quality Australian drama under a quota system, but not so much now.

 

Investment in major high quality productions has become the exception rather than the rule.

 

Quality local programming is very expensive and high risk, and, therein lies the crux of the matter.

 

The owners of Australia’s television networks now only see themselves as financial operations; solely, in the business of business.

 

They are missing the bigger picture of why their network was originally granted a licence, and, from the sounds of it, so have the coalition politicians they’re pressuring to change the rules.

 

Operating a television or radio station is different from almost any other business.

 

The company holds the licence, under which they operate each station, ‘in trust’, and, that licence implicitly brings with it many responsibilities that don’t exist in industries like, manufacturing or finance.

 

These responsibilities are to inform and entertain your audience to an acceptable quality standard, which is very difficult to attain if you are perpetually cutting costs and failing to invest for the future.

 

In television or radio, it simply can’t be all about the bottom line all the time.

 

Operating within a creative industry often means taking calculated risks that an executive may never be expected to do in more conservative lower-risk sectors.

 

The risk-averse appetite of today’s commercial television environment would never have allowed for the development or launch of World Series Cricket.

 

Kerry Packer’s accountants were tearing their hair out when he’d sunk $6-million into a concept that few of his executives had much faith in; at a time when $6-million was real money.

 

But, Packer stuck to his guns and changed the way cricket is played and televised around the World, ultimately compounding his fortune along the way.

 

Today, it appears, as an industry, television is more interested in cutting costs than taking chances and generating new revenue.

 

Yet, anyone who has operated radio or television networks successfully knows that growing revenue is the only way to build a strong long-term business.

 

Cutting costs, as a strategy, only works over the short term.

 

Now, these executives, who have done such a bang-up job on the nation’s free-to-air television networks, are demanding legislative changes so they can acquire all other forms of media, including commercial radio stations, in the same market and package them with their TV operations.

 

Radio, with its lower cost base, is running along pretty well right now, and sure, there’d be a one-time bucket of gold at the end of the rainbow, come sale time, for the shareholders of radio networks.

 

However, to change the existing media ownership laws would give free reign, to those who have made an art-form out of ‘ripping the guts’ out of commercial television, to do the same for radio.

 

There are thousands of people employed in commercial radio across the nation.

 

To buy the most successful radio networks, TV operators would have to borrow heavily and to satisfy their lenders and shareholders, ‘synergies’ would have to be found.

 

‘Synergies’ is a nice way of saying hundreds of people, possibly more, would be thrown out of work in the electronic media industry.

 

Television and radio newsrooms would be merged, and, journalists would be ‘rationalised’ to a level, that would make the 2GB/2UE newsroom merger of two years ago, look like a ‘walk in the park’.

 

Radio and TV sales operations could also find themselves thrust together to help cut staffing levels.

 

In the end, changing the media ownership laws will ultimately see many professionals, who have dedicated their lives to serving the radio and television industries, joining the lines at Centrelink.

 

Changing media ownership laws equates to an attack on the diversity of media ownership.

 

I do not believe that reducing ownership diversity is in the best interests of the people of this country.

 

If, as will likely happen, the pressure exerted on the politicians by media moguls is just too great to resist and these changes do go forward, it should not be without compromise.

 

My suggestion is this.

 

For every radio station absorbed into a television network or newspaper conglomerate, a new equivalent radio licence should be issued by ACMA for that licence area.

 

In this way, the number of independent voices we currently have, which is really very few, will at least be preserved.

 

To those media operators, who don’t like the idea of preserving media ownership diversity and competition or properly serving their audiences; you may like to hand your licences back to ACMA and consider some other line of work.

 

Banking, perhaps?

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