Opinion from Peter Saxon

The proposed merger between the Fairfax and Macquarie radio networks has now been put on hold until at least March while the Australian Competition and Consumer Commission examines the deal to make sure that neither listeners nor advertisers are harmed in the process.

“Of particular interest to the ACCC is the effect of the proposed transaction on the quality of news and other content provided to listeners and also whether the transaction would cause the price of advertising on radio stations to increase due to less competition,” wrote the ACCC in a letter to advertisers – according to a report in The Australian.

No doubt the advertising industry is overjoyed to have the ACCC ride to it’s rescue to protect it from the avarice of radio.

The letter specifically asked advertisers, “Do you consider other forms of advertising close substitutes to radio advertising and capable of reaching the audience at which your advertising is aimed?”

I guess the answer depends on whether you’re buying or selling. 

Surely, it’s self-evident. You’d expect, that if any station’s sales team was doing their job properly, they’d have sold their clients on the proposition that, indeed, radio in general, and their station in particular, is the best way to reach the client’s target demographic.

BTW, I can’t imagine CRA would be chuffed to have the ACCC “push polling” their members’ clients in this way.

Unsurprisingly, given that the deal is under investigation, neither Fairfax nor Macquarie were prepared to comment. Nor was anyone from either organisation quoted in The Oz which was left to speculate that,“Macquarie and Fairfax will argue the internet, the rise of digital broadcasting and online streaming services have sharply increased competition for advertisers and substantially increased choice for listeners.” … not to mention all the traditional media – including television, newspapers, magazines, outdoor and direct mail. 

Since, historically, radio can only muster around 8% of all national ad dollars it seems clear that advertisers have plenty of other choices and are using them 92% or the time.

Yet, apparently, the ACCC is worried about 2GB + 2UE having a stranglehold on Sydney’s 55+ demographic.

It’s curious they should suddenly be concerned about this. After all, 2GB’s sister station 2CH has targeted a 55+ audience from well before the ACCC was born. 

What if an existing company, say, SCA or Nova Entertainment decided to have both their stations in a market target the same age group? Would or could the ACCC intervene? I am unaware of any specific rule that exists to prevent both stations in a duopoly from doing just that.

Besides, competition between radio stations is already well regulated by the rule that any one entity can own no more than two stations in any one market. Which is why the new entity will divest itself of 2CH leaving it with the regulation two stations in Sydney – same as every other network and same as it had before.

While it is touching that the ACCC wants to protect advertisers  like Coles, Woolies, Caltex and the big Banks from possible price hikes by just two of Sydney’s radio stations, a more legitimate concern is whether listeners will have enough choice of voice in news and views. The existance of the ABC kills that argument. Mix in the internet and it’s obvious that consumers have more choice today than in any time in history.

I don’t wish to pre-empt the results of what will, no doubt, be a rigorous investigation by the ACCC. However, I can see no reason why they might want to scuttle the proposed joint venture. 

Nonetheless, to assure listeners that the watchdog has been sniffing around, looking after their interests, perhaps 2UE and 2GB could make regular on air announcements along the lines of: “The new owners would like to advise listeners that no advertisers were harmed in the making of this merger.”

Peter Saxon