Comment from Peter Saxon
One thing they never teach you at management school is the role that luck plays in running a successful business. And nowhere does luck play a greater role than in the creative fields of music, movies, TV and Radio.
About 12 years ago, SCA, which was for decades considered the most professionally run radio network in Australia, blinked. The company Chairman at the time, Max “the Axe” Moore-Wilton, more used to managing airports than talent, felt that Kyle and Jackie O, who’d racked up several demerits from the ACMA had become more trouble than they were worth – let alone the extra half million dollars that they were demanding to stay at 2DayFM. Those on the board who’d witnessed the demise of 2UE a decade or so earlier, after Alan Jones jumped ship to 2GB, fought against letting them go but were defeated. Thus began an unlucky streak for SCA.
Meanwhile, across the bridge at ARN, things were looking up following the appointment of Ciaran Davis as CEO and Duncan Campbell as Chief Content Officer. Although staff morale, ratings and revenue were generally all up, the Mix-FM brand in Sydney stubbornly lagged behind the pack… more so since Nova Entertainment had turned Vega into smooth – a feat akin to turning lead into gold.
Having run out of ideas – short of enticing K&J, away from 2Day – they couldn’t believe their luck when Kyle walked through the door offering the duo’s services on a plate. But while it was sheer luck to be presented with the opportunity, capitalising on it is something else. The board had to be convinced to back the move with real money. What if it doesn’t work? What if SCA was right, and K&J were, indeed, more trouble than they were worth?
They needn’t have worried. Within a couple of surveys, Kyle and Jackie O’s listeners had migrated from 2Day-FM to the newly minted KIIS-FM. The board of directors was smiling, the shareholders were laughing and the C-Suite could declare, with some credibility, that ARN would one day soon realise its vision to own the number 1 & 2 Breakfast shows in both Sydney and Melbourne.
To that end, having won the trust and support of the Board, in 2017 management decided it was time for another throw of the dice – even more risky than before. They axed the Jo & Lehmo breakfast show on Gold 104.3 in Melbourne and replaced them with Christian O’Connell – a radio star in the UK but a complete unknown in Melbourne. Most pundits, including this scribbler, were incredulous that ARN would blow up a breakfast show, returning perfectly decent ratings, in favour of a stranger with a Pommy accent who thought that AFL was company in Essex called All Fertilised Lawns . CCO Duncan Campbell agreed that the change was risky but insisted that while Jo & Lehmo’s ratings were okay, GOLD needed to do much better if it was to achieve ARN’s goal of #1 FM in Melbourne. The rest, as they say, is history.
GOLD indeed went to #1 FM on the back of O’Connell’s talent and Campbell and Davis shot to management stardom.
Boldly balancing risk and reward is one thing – winning when your peers were sure you’d gotten it wrong is another. For a brief time, humble pie edged out smashed avocado as the most popular dish among the chattering classes of the broadcast business.
When it comes to Boards of Directors, nothing succeeds like success. And the ARN Board was hungry for more, ready to rubber stamp virtually any far-fetched idea that this dynamic duo would put to them. In late 2023 they delivered. It was the most audacious plan yet. They would buy out rival network SCA. They would cherry pick SCA’s best, most profitable assets and sell off the rest. The result would be the biggest, strongest audio network Australia had ever seen. It would be the iHeart of the South Pacific, virtually unassailable.
The first hurdle to overcome was the fact that they could only own two stations in each market. Normally, in such situations where an expanding network found itself inadvertently acquiring more than two stations in one or more markets, the regulator would give them a year or more to find a buyer for the excess assets. For ARN, it would be a particularly messy, drawn out and costly process, given the number of licenses it would need to divest. To avoid this, management devised a clever plan by which they would have a buyer already lined up, ready to take over the assets that ARN deemed to be superfluous to their needs.
In metro markets, ARN would pick the Triple M stations for their strong branding and keep KIIS as their other brand nationally giving them the maximum two stations in each city, filling the gaps they currently have with only one station in Brisbane and one in Perth – leaving those gaps to the new buyer. Still, the buyer would get some strong assets, such as Gold in Sydney and Melbourne (but not necessarily the on-air talent: Jonesy and Amanda and Christian O’Connell, that go with it) together with FOX as well as the once mighty 2Day.
In the regions, ARN would pick up additional valuable markets such as Newcastle and Townsville. On the Gold Coast, they’d acquire Hot Tomato’s closest competitor, TripleM. The buyer would be left with the lower rating SEA-FM.
ARN would certainly have taken over SCA’s LiSTNR business and foist the TEN affiliated, loss-making television network upon the buyer.
Their ready buyer, waiting in the wings to take on ARN’s discards was a venture capitalist called Anchorage Capital Partners (ACP). Only one snag: there was no binding agreement in place. There was plenty of enthusiasm and, no doubt, some sort of “heads of agreement” but any actual sale would be contingent upon a lengthy due diligence process which could only commence after the stock exchange (ASX) and SCA had been officially notified of ARN’s intention to take over its rival. It’s not that SCA was unwilling to sell, it’s just that they were willing to hold out for more money. So, while ARN was making offers and SCA was batting them away, both companies were collaborating in the background to provide the vast array of documents necessary for ACP to complete its due diligence. And when they finally did their sums, ACP decided to walk away from the deal because they couldn’t see enough value in it.
Bad luck? Perhaps.
While the mathematical laws of probability can’t foresee the outcome of any one random throw of the dice, it can predict, with uncanny accuracy, how repeated throws over a long period of time will pan out. The lesson for high rollers is that, with luck, sometimes you can beat the house in the short term, but you can’t be lucky all the time in the long term – especially when the odds are stacked in favour of the house.
The problem for ARN and their plan to buy out SCA was that the deal was too complex. It had too many moving parts. Too many things to go wrong. NASA has a name for such “things that could go wrong.” They’re called “single point failures.” When they deployed the James Webb Telescope into deep space in late 2021, they identified some 400 single point failures (SPF) – a term to describe a single action or component that, if it failed to operate precisely as intended, it would likely ruin the entire mission. Of course, ARN’s takeover bid comprised far fewer SPFs than a rocket launch, but there was no way to thoroughly test and retest each component of a business deal. After all, a sales pitch ain’t rocket science.
Yet, with all the checks and testing through super-computer modelling available to NASA, what’s the last thing the boss says to the astronauts and those in the mission control room just before liftoff? “Good luck everyone!”
Often, the failure of one component leads to another. And, just as good luck tends to come in streaks, bad luck can too.
ARN management had plenty of reasons to believe that the Kyle and Jackie O breakfast show would be a hit in Melbourne. It’s not like they were complete unknowns there, having delivered a daily Hour of Power to KIIS101.1 over several years with hardly a complaint against them. And, via television appearances, a sanitised version of Kyle had become a household name across Australia. Besides, they all said that the idea of importing Christian O’Connell from the UK was laughable – and who’s laughing now?
So, in the same way they’d made way for O’Connell by sacking Jo and Lehmo, they dumped Jase & Lauren and replaced them with a time & temp jock who’s job (according to some pundits) was to keep the seat warm and the ratings low, so that when K&J finally arrived, the bar to claiming early success would be low.
But management’s predictions were based on a lot of assumptions… which is another way of saying informed guesses. When Lady Luck (who hasn’t bothered to update her pronouns since Genesis) came calling, everything they’d assumed turned to crap. Melburnians, who are conditioned from birth to reject anything from a city north of them with two “Ys” in its name, found a cause célèbre in keeping them out, lest they poison the minds of impressionable Toorak grannies. Worse still, the organisation, affectionately known as the Mad Fucking Witches suddenly became aware of the nasty things K&J were saying on air and were determined to poop the party by screaming “Brand safety! Person the lifeboats – women and children’s brands first.” Luckily, with their tiny audience share in Melbourne, the ensuing advertiser boycott didn’t amount to much. But when some of those same brands worked out that they were also supporting the same content in Sydney, the revenue loss became a problem for ARN.
To add insult to injury, Lady Luck still had a few tricks up her sleeve. The hapless Jase and Lauren who’d been sacrificed on the alter of their replacements were offered a lifeline by KISS101.1 rival, NOVA100. The educated guess at the time was that, ‘If Jase & Lauren, struggled to pull a six share on KIIS, why would they do any better on NOVA? And, once K&J started their show on KIIS, surely Jase and Lauren would be cactus, right?’ Ummm, no.
As of the latest survey, GfK Survey 8, Jase & Lauren scored an 11.5 share of Melbourne’s Breakfast audience ahead of K&J’s 5.0 on KIIS. With great respect to Jase & Lauren, my (somewhat educated) guess is that it’s not so much that they have suddenly discovered a hidden talent that they didn’t know they had, it’s that Melbourne has discovered a way to clearly demonstrate their dislike of having a Sydney show foist upon them and the way in which the foisting was done.
If that wasn’t embarrassing enough, ARN’s largest shareholder, Allan Gray, sells up citing the company’s poor investment returns as the reason. Ouch!
Whether the cascading calamity of the aforementioned events was more to do with bad luck or bad management may be moot, clearly the outcome would not be near as bad if ARN hadn’t signed Kyle and Jackie O to a staggering 200 million dollar contract over 10 years. At least it included heavy penalty clauses for absenteeism. Yet, by my observation, one year into said 10 year deal, Kyle has taken more sickies this past 12 months than in any other similar period before. My mail is that he’s racked up an estimated $400,000 in penalties, so far. But if you’re making $10 million, it’s not even a parking ticket.
If the SCA Chairman Max “the Axe” Moore-Wilton thought that Kyle was more trouble than he was worth earning about 2 mill p.a. then ARN has confirmed that the trouble is worth way more than that.
Note: Early on Monday morning, as I was finishing up this story and ready to press the button marked “publish” when I heard the news about Kyle’s medical emergency.
Having watched and listened to Kyle in various media, since the announcement, my K-dar tells me that for all his light-hearted banter, he understands how serious the situation is, as he broke down at the thought that he could miss out on watching his young son grow up.
After Kyle’s previous coronary incident in 2017, I wrote, “You Can’t Make Light of Chest Pains Mate – It’s Too Serious.”
I write with some authority… in the words of Leonard Cohen from the song Sisters of Mercy: “I’ve been where you’re hanging, I think I can see how you’re pinned.” Back in 2017, I opened up about my own medical history resulting in a triple by-pass at 43 years of age. And now coincidentally- or as luck would have it, 30 years later, like Kyle, my own condition has also recently taken a turn for the worse to the point where my cardiologist (aided and abetted by my loving wife) has warned me off the demon drink from what was a joyous life-long study of the vintner’s art – a veritable highway of delight – has now been reduced to a narrow laneway of lament that’s only open to a trickle of traffic, two days a week.
If nothing else, it has certainly focused my thoughts on what’s important and what’s not in life’s ultimate lottery.
As my mentor, the late Keith Graham who founded and Chaired the original 2WS (now GOLD1017) and its parent Wesgo, used to say: “I wouldn’t be dead for quids.”
Keith’s luck deserted him completely when he died aged 53. In 1984, he was a passenger in a car with three other Wesgo Directors when it hit a pothole on the shoulder of a rural highway on the Sunshine Coast, rolled and burst into flames. His great friend and Wesgo Managing Director Bob Scott, who was also travelling in the same car, managed to escape the flames with barely a scratch while Keith and the other two directors died at the scene. Go figure.
Life coaches often say, “You make your own luck.” Or, “The harder you work the luckier you get.” If I had to register my agreement on a scale of 1 -10, I’d give it a solid 5. Sounds gung-ho and way too glib for me. By definition, “luck “ good or bad, is what happens independent of the planning or prep you did or didn’t do. Nonetheless you can increase your odds… your chances of success if you really want to. After the first doctor who told me to lose weight, cut out smoking, cut down drinking, exercise more and do less partying and get more sleep, I asked: “Will that make me live longer?” He answered: “Not necessarily, but it will certainly feel that way.”
As for Kyle, I’ll keep calling him out when I think he could do better on the radio. But I sincerely hope the surgery goes well and he’s back on his feet soon. Best of luck, mate.
Peter Saxon – Managing Editor