Comment from Peter Saxon –
Over the weekend, at a dinner party hosted by a charming couple we’ve known for some years, where neither they, nor any of the other guests, were remotely connected to the broadcasting industry, they were aware of Kyle and Jackie O having landed a deal for $20 million per year over 10 years. It’s worth noting that of the 10 seated at the table, only two were K & J fans. The others had mixed feelings about Sydney’s number one Breakfast duo. All of which augers well for any Breakfast show that would be thrilled to nail a 20 percent share of a major market.
Having established that my line of work dealt with such appraisals, the diners asked if I thought they were worth that much.
I explained, that to estimate their value, one first must ask how much it would cost KIIS106.5 if they defected to a rival station? As evidenced by the last time they were ‘traded,’ from 2DayFM to KIIS (then MIX106.5) a decade ago, the cost of losing most of your audience to a competitor would far outweigh the cost of keeping them.
In direct value, a station might earn around 20-25 per cent of its entire income form the Breakfast shift, Monday-Friday, not counting the fact that a strong Breakfast show will likely help lift the audience for every other day-part. On top of that, there are numerous opportunities for ARN to further monetise their talent through networking and podcasting.
Apart from the direct revenue that having the top talent on the top station can bring, the ‘intangibles’ that come with it, can help to significantly inflate the overall value.
For example, in 1973, the Whitlam government gave approval for the National Gallery in Canberra to purchase a painting called Blue Poles by American artist Jackson Pollack for the (then) astonishing sum of $1.3 million. Roundly criticised at the time as a waste of tax payer money, the painting is now valued in excess of half a billion dollars. But that’s not the point. After all, neither the National Gallery nor the Australian Government is in the business of buying and selling art for profit.
The aim was to add a layer to the culture and soul of our nation beyond koalas and kangaroos and thus help put us on the world map as an arts and creative destination as well. While that may sound a bit wishy washy to some, it counts as an “intangible” value to others, worth its weight in gold. Likewise, the Sydney Opera House which represents much more than a just place to stage musical performances. It has become an instantly recognisable symbol of Sydney, Australia in the way that the Eifel Tower is to Paris France. Like any great brand, it’s an intangible, yet can have great value, that can’t readily be calculated in the same way that sales revenue can.
Owning the number one station in a market is more than the fact that advertisers will put your station first on their schedule and be prepared to pay the highest price – although that’s not a bad start. Some say it’s about “bragging rights,” but what does that mean in real terms? It means a lot of things are automatically stacked your way because people tend to want to deal with the best, not second best or last. It can mean that…
- Promoters of all the biggest international touring acts will come to you first to partner with them.
- You’ll get first dibs on celebrity interviews.
- You can demand bigger and better prizes for giveaways.
- Top talent with big celebrity status will be more in-demand for television and other media appearances as well as create more socials thus helping to elevate your station’s profile
- Everyone that works at your station will be more energised by being associated with #1. They ‘ll be more popular at parties.
The owner of the number one station in the nation’s biggest market is generally perceived to be the strongest network, almost regardless of individual station performances in the other areas – much in the way that the boat that gets “line honours” is widely considered the winner of the Sydney to Hobart yacht race, not the handicap winner. In radio, line honours is great for bragging rights – even better for the share price.
Perter Saxon – Managing Editor