Radio’s Having A “Tough Time”, But Radio Bosses Aren’t Worried Because “Radio Works”

Ciaran Davis (ARN), Cathy O’Connor (NOVA), Tim Burrowes (Founder & Content Director, Mumbrella), Grant Blackley (SCA), Adam Lang (MML) at Radio Alive 2019

The radio industry is going through a “tough” period but the head bosses across Australia’s radio networks are confident it will bounce back because “radio works”.

Speaking during a CEO fireside chat at the 2019 Radio Alive conference in Brisbane on Friday, Southern Cross Austereo CEO Grant Blackley, NOVA CEO Cathy O’Connor, Macquarie Media CEO Adam Lang and HT&E CEO Ciaran Davis discussed how the radio business is changing, what to expect in the new era of audio and their strategies for growth in a dynamic media landscape.

According to Davis, it’s not just radio doing it tough, but the entire advertising sector.

He said: “The overall advertising sector is having a tough time. It’s not just radio. [The Royal Commission has] had a knock-on effect for consumer confidence. And when consumer confidence goes, we know one of the first things that go is advertising,”

Davis continued: “And every call [from investors]starts with: “Is it radio’s turn to be in the newspapers?” to which Davis replied: “That’s crap. Our sector is as vibrant as ever, we are producing content, every network across the country is producing live content, live local and free, that’s engaging, and that’s growing audiences.

“And at the end of the day, in an environment like this, that’s challenging from an economic perspective, we know radio works.”

Davis believes once consumers regain trust in the market, it will then lead back into radio, suggesting he is “one hundred per cent confident [radio] will bounce back.”

O’Connor said it’s going to be tough for the rest of the year, but that the audience is “still in very strong growth” thanks to new opportunities and players in the market.

She said:” Strategically radio has the smarts. We’ve got the investment. The Australian networks are well supported. And we are successful, and from success comes investment. There’s enormous optimism in my mind about radio as a medium.

“I think it is newsworthy that radio is having a little bit of pain at the moment. It’s just been one of those years. But radio always performs over the longer term.”

Blackley said SCA isn’t shocked by the performance of the network but rather is “concerned” about the drop in radio overall, which he said has permeated across all of SCA’s business. However, he simply puts it down to a “cyclical downturn.”

He said: “We have seen substantial declines in the overarching market. The top five sectors: government, banks, food, auto, are all down about $80 million in three months. Purely on that measure, and everyone’s taken a bit of pain.

“We are in the resilient medium [radio], and I do confidently feel in the future there will be a resurrection to normal buying patterns.

“But we’ve all enjoyed pretty good time this time last year, we cycled ever some relatively good times. And we actually perform much better than a lot of other sectors, so I don’t think it’s going to stop [advertisers] writing money.”

On whether the industry is experiencing a media recession, the panellists unanimously disagreed.

Blackley said: “I think we’re in pretty challenging times. If it didn’t get better, I think we could technically [go into a recession]. But I think there’s a lot of variables at this point.”

Lang also said the industry is not in a recession but rather “the golden age of all others”. He did suggest, however, not enough spend is put into the radio medium, and questioned why.

“There’s 92 per cent of money that’s probably not showing enough favour to [radio]. So I think there’s plenty for us to fight for. And secondly, we are very subdued economy [but] we keep proving with radio advertising and involvement in our businesses, radio works.”

Davis said radio is “ahead of the curve” in terms of TV, newspapers or outdoor in terms of what’s next but that it will still be a challenge for everybody to solve to find out the next growth category.

On whether radio networks need to be part of a bigger media group to succeed, the answer is twofold.

Just today Seven West Media (SWM) it will merge with Prime Media Group through a 100 per cent scrip-based Prime scheme of arrangement and sell its Western Australian radio assets (Redwave) to Southern Cross Media for $28 million.

Despite this, Blackley said SCA doesn’t see scale as a “requirement to survive”.

He said: “We’re very comfortable in our own skin, we’re very comfortable with the business we have. But we want to do more within that audio spectrum.”

Lang took a similar stance, saying that while networks don’t need to be part of a bigger group (despite the fact Macquarie is primarily owned by Nine), there is strength in it.

“With Nine, I think it’s a fabulous opportunity. I think the combination of radio and television of digital property is very logical. And commercially you can see for example Ben Fordham and his radio show is quite capable of being amplified, as we do already. You can pop it on the TV and you can pop with digital properties.

O’Connor said there are benefits to both sides of the argument.

She said: “I think there are enough proof points that being part of something and being diverse is great. But equally, being standalone is also great.”

She argued it largely depends on the shareholders.

She said: “For us [NOVA], we are independently owned, but our recent strategies have been around partnering. We’ll continue to do that and keep having the conversations at board level like every company in a sector that’s pretty dynamic would be doing.

Davis said it’s important to think about how a business will look in three years’ time, saying if the right opportunity came up for HT&E, it would look at partnering with bigger shareholders.

On radio co-existing with tech giants like Facebook and Google, the panellists mostly agreed it’s about peaceful co-existence rather than trying to put up a fight.

O’Connor said: “I think they’re important platforms in a radio business for us to work with. And particularly, they give you access to big audiences for your content. At the start of the journey we [had the mindset of] let’s beat them, and now it’s let’s co-exist with them.

“Of course the nirvana for any media company is to have your own platforms with your
own digital connections and be able to monetize those in a way that takes marketers and brands on the journey across your assets. Everyone’s trying to do that. ”

“Currently though, we see [Facebook and Google] as important platforms for marketing our content. We think there are legitimate audiences to be built there.

Davis said he prefers to not think about the tech giants too much.

He said: “I think we are all consumed about Google and Facebook without actually looking at ourselves and saying, ‘Well, what can we do to counter what they’re good at?’

“Many a platform has tried to come into the radio space. They can do a lot of content, but they don’t have local personalities. And I think we’ve got to get out of the mindset of trying to be friendly on the enemies to Google and Facebook and actually look at our own industry and be confident in the talent and the output that we have.

“Audiences will decide how and when they want to consume content and where they want to do it.

“I tend to be of the view that I couldn’t care less what they do. Internally we say we’ve got to work with them. We’ve got to partner with them all that sort of stuff. But at the end of the day, let’s just focus on what we do and do well.”


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