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The market is prepared to pay a total of $200 million over a 10 year period.
It implies that the business entity will make much more than $200 million.
Are they overpaid? If they were paid $600 thousand over 10 years that would be exploitation.
Similarly, it would not be fair to pay a pittance to sporting stars when clubs and media organisations collect millions from advertisers and gate revenue.
Think about the billion dollar deals to broadcast a particular football or cricket code and stars being paid a pittance?
That's exploitation.
Remember that $200 million is for a capital city market. A rural market would not have the capacity to pay for contracts of that magnitude.
The assumption that the duo is able to sustain a large audience over a 10 year period does not take into account of newer entrants who may take a share of the duo's audience.
Thank you
Anthony, Strathfield South in the land of the Drug and Wangal Peoples of the Eora Nation
I think we're missing the point here ...
The question should be: 200 mil - to who?
I don't think they're worth a dime to the hundreds of regional radio staff who are going to lose their jobs when ARN buys SCA and roll out K&J all over regional Australia.
That's the only way management can see to break even after handing these already overpriced on-air clowns the cash they're asking for.
They've painted themselves into a corner, so regional staff and listeners are going to pay the price, thanks to atypically uncreative management approach ... "if ya can't beat 'em - buy 'em." And then sack everyone else.
K&J are certainly not worth 200 mil to regional listeners who want localism, community and a personal shout out - none of which they're going to get from cap-city talent who are too busy trying to get an interview with the latest Kardashian.
The regions also can't rely on the ABC - especially in a crisis - when Aunty takes an increasingly national approach. Regional listeners under threat from fire or flood, wanting immediate, up-to-date info, tune in to ABC to find hours of coverage from the other side of the country.
Emergency personnel will only speak to the ABC, and the ABC refuses to share information - so even as it is, local media have difficulty getting urgent call outs to locals. Regional commercial radio used to take up some of this slack ... but if everything is networked out of Sydney or Melbourne (and it will be given the need to monetize expensive cap-city egos), who is serving regional Australia? The internet? Not when the power goes out, and the mobile phone towers go down.
Regional radio is an absolute necessity, but it seems K&J are determined to play their part in killing it off. Management is happy to be their enabler. Can't wait for the press conference, guys.
The problem with networking programming content into a rural licence area is that rural licence holders must broadcast local content by broadcasting locally between 0500 and 0800.
Furthermore they must broadcast local content in regards to weather, news and emergency services.
The ACMA elucidates this at
https://www.acma.gov.au/local-content-regional-commercial-radio
A few years ago, The SuperRadioNetwork was in trouble for broadcasting Grant Goldman's (RIP) breakfast program from 2SM's Sydney Studio to regional stations.
https://www.abc.net.au/mediawatch/episodes/regional-dis-content/9974746
Therefore it is doubtful that. K and J will take over a regional station's 0500-0800 timeslot violating the law.
The proposed amalgamation of SCA and ARN will result in a divestiture of stations where the combined entity cannot not have more than two stations in a particular licence area, section 54 Broadcast Services Act.
Ultimately it is a management decision to pay $200 million over a ten year period.
It is a risk given possible changes in audience dynamics especially when and how audiences consume their media.
One cannot assume that K and J will attract an audience in a year, or even five years.
You are only as good as your last survey.
To apply the disclaimer used in advertising investment products that past performance is not an indicator of future performance.
I agree with the Secret Fuz that regional listeners want to listen to local content.
However in the recent stories on the Illawarra and Campbelltown markets, Illawarra listeners were listening to local content overwhelmingly over Sydney content while listeners in the Campbelltown area preferred Sydney's KIIS 106.5 over Campbelltown's C91.3.
It is a lesson that just because what works in one market does not necessarily apply to another market.
The pattern is repeated in the ratings for 4BH being high while 2UE's and Magic 1278 are low.
That is the risk management are taking if K and J are networked to capital and regional networks and sustaining it over a 10 year period.
Should management's decision work then that $200m is low compared to the incoming revenue.
Consequently, if the $200 million expenditure has been at the expense of people losing their jobs in other parts of the regional networks in order to pay for the $200 million payment, it says a lot about the tastes of the marketplace and it's the market which supports K and J at the expense of the rural program content.
Again look at the audience for KIIS 106.5 versus C91.3 as an example.
Thank you
Anthony, of exciting Strathfield South, in the land pf the Wangal and Darug Peoples of the Eora Nation.