2UE will move from Greenwich to Pyrmont and will combine its news, sales and production operations with 2GB, in a joint venture deal that will save significant costs for owners Southern Cross Broadcasting and Macquarie Radio Network.
Staff have been told of the deal today in meetings at both stations. 2UE’s lease at Greenwich is up at the end of the year, making a move necessary at that time. The station will now relocate to the City West Office Park in Pyrmont – the same building as 2GB, 2CH and Nova.
Other back office infrastructure will also be combined between the two operations including administration, finance and IT.
A joint venture company will be formed to facilitate the deal and is likely to be called the “Sydney Radio Network.” It will “provide non-commercially sensitive services to 2UE, 2CH and 2GB.”
A full merger of the company’s Sydney operations would not be possible under ABA rules, which prohibit ownership of any more than two stations in a market, but, if the report is true, there is no Broadcasting Services rule that would stop the two stations working together, but there are ACCC anti-competitiveness rules that may come into play if the stations colluded on price sensitive material.
Commenting on the joint venture proposal the ABA’s media spokesperson Donald Robertson told radioinfo: “The ABA hasn’t seen all the details of the proposal yet, but will be analysing it when it does. The ABA is particularly interested in how the arrangements might affect the provision of news and advertising services on the radio stations concerned.”
Macquarie Radio Network CEO George Buschman told radioinfo about the deal:
“The Macquarie Radio Network and Southern Cross Broadcasting have agreed to establish a joint venture company designed to improve efficiency at both radio networks.
“Services such as sales support, technical support, news and advertisement production will be outsourced to the joint venture company.
”It is designed to substantially reduce costs and improve efficiency at all three stations. It will remove duplication in non-commercially sensitive areas of our business. The end result will be a better product for all our listeners.”
Buschman says 2GB will “remain the Number One talk station in the country” saying the joint venture will enhance the quality of programming on each station.
“It will not change the individual style, content or sound of our programming at either 2GB or 2CH. The joint venture company will not manage editorial and programming decisions at 2GB and 2CH.
“We will remain at the forefront of providing our listeners with the best radio in the country.”
In an ironic twist, Mike Carlton will once again share the same lift as his arch rival Alan Jones, but at least there should be a bit more laughter in that lift each morning with the addition of Nova’s Merrick and Rosso.
Alan Jones and Sam Chisholm played a major part in the deal making process that took place between Southern Cross CEO Tony Bell and Macquarie owner John Singleton.
Macquarie is also said to have explored other mergers and acquisitions in the past year, including a merger of RG Capital Radio and Macquarie, as well as buying out CanWest’s major stake in the Ten Network.
A statement to the Stock Exchange from Southern Cross’ Tony Bell said:
Southern Cross Broadcasting [has reached] agreement in principle with Macquarie Radio Network (“MRN”), the operator of Sydney radio stations 2GB and 2CH, to establish a joint venture company to provide operational and sales services to their respective Sydney radio stations.
The joint venture company, provisionally named Sydney Radio Network will provide a range of
cooperative services including sales, commercial production, news, and technical support. The
purpose of the company is to share operational costs in non-sensitive areas. Sydney Radio Network
will appoint Southern Cross Media Sales as its agent for Sydney and interstate agency sales.
To comply with control provisions in the Broadcasting Services Act, Sydney Radio Network will not
provide any services which would permit its officers or directors insight into, or participation in,
significant decision making processes of each licensee. It is intended that all management control
related matters, editorial and programme content will continue to be provided individually by each
station’s existing structure. The changes will not affect the vigorous level of competition between
2UE and 2GB/2CH, which will retain their unique sound, editorial view, programming and
management.
The outsourcing of services to Sydney Radio Services will substantially reduce operational costs for
2UE and 2GB/2CH. 2UE plans to relocate from its existing premises in St Leonards upon the expiry
of its current lease to the City West Office Park in Pyrmont in the same complex as the Sydney Radio
Services operational centre.
Tony Bell, Southern Cross Broadcasting’s Managing Director, said today “This is an important
development for 2UE and will substantially reduce its cost base. Whilst we remain fierce competitors
with MRN, we are taking the opportunity to jointly access outsourced services in areas in which the
stations currently have significant duplication of costs. It will, however, in no way affect the ongoing
management and programming of 2UE…”
Sydney Radio Network will phase in the proposed operational services over the next two months.
Read what the papers are saying about the proposed merger in PAPER CLIPS.