Opinion from Brad Smart

 
You know, the problem with making predictions is that all too often they come true, even if you don’t really want to be right.
 
When I wrote Magic is not a Lifestyle before the introduction of ‘Talking Lifestyle’ to Melbourne and Brisbane, it was never intended to be an ‘I told you so’ moment.
 
It was written as a word of caution to those, who may have naively thought that simply replacing the Magic oldies format, would surely be a path to ratings glory and riches.
 
Unfortunately for Macquarie Media, the recent ratings figures for the Magic stations in Brisbane and Melbourne both tumbled dramatically with the implementation of Sydney-based lifestyle talk programming.
 
But, who would ever have guessed?
 
The audience share for the former Magic 1278 in Melbourne fell by 50% and for the Brisbane station 30%.
 
In anyone’s parlance, this is a dramatic and serious decline in audience numbers, and, I don’t think the worst of it is over yet.
 
The cautionary note in my previous analysis was what experienced radio executives know happens to an entrenched audience when a station radically changes its format.
 
Those who have been brave enough to walk down the path of a quantum-leap format change know all too well that the audience from your previous format drops away well before you can attract a viable audience for your new program.
 
Anyone who has been through the process knows that waiting for a new audience to come knocking is a nail-biting experience that only the strong-willed and those with deep pockets survive.
 
You see once you’re on this roundabout, once you’ve made this commitment, it’s almost impossible to retreat.
 
Just look at the Ten Network in the television landscape.
 
It was very successful with American sitcoms targeted at a teenage audience.
 
Then, they tried to lift their credibility with more news and current affairs, but they failed to attract a serious adult audience, while, at the same time, losing the teenagers.
 
A year or two later, they woke up and tried to wind the clock back, but they’d already lost faith with their youth audience.
 
That audience had scattered, never to return.
 
You see, it doesn’t matter how smart you are as a programmer, nobody really knows how quickly the audience will drop, how far it will drop and for how long the audience figures will stay down in the doldrums, when you implement the format change for real.
 
When you go down this path, you are playing with fire, so you had better know what you are doing. You can’t just act on a hunch.
 
While Survey 2 is a fairly shocking result for the old Magic stations, as I have said, the worst may not be over.
 
When you have an older audience that’s been welded onto a station for 10 or 15 years, they are more inclined to give the station a second chance, even after the format has changed.
 
The more conservative mindset of an older audience is that “this station has provided me with entertainment for the past decade, I’ll give it a bit longer to see if it comes good.”
 
It’s this group from the previously entrenched audience, that may form the second wave of deserters from the station over the next few months.
 
I’m not trying to be unduly pessimistic here, simply realistic.
 
The fundamental change from music to Talking Lifestyle was certainly a courageous one, but I doubt its wisdom.
 
I’ve spent some time of late listening to the Talking Lifestyle format and it’s professionally produced.
 
Of course it is.
 
The programs are all presented by competent and experienced Sydney-based talk hosts.
 
But, that’s not the issue.
 
It’s all about audience perception and localism outside the Sydney market.
 
If ‘talk’ doesn’t press the right buttons with what’s left of the former Magic music audience, then, eventually, from the listeners’ perspective, it’s going to be ‘sayonara’.
 
The only thing Macquarie executives can hope for is that this reluctance of an older audience to change may delay the listeners’ departure long enough for the stations to start cobbling together some semblance of a talk audience.
 
Unless this radical format change was backed up by substantial research confirming its likely success, then this move says to me that Macquarie Media may well be ‘fair weather sailors’ when it comes to radio.
 
While Alan Jones and Ray Hadley at 2GB and Neil Mitchell on 3AW keep ticking along as their big money earners, I’m sure Macquarie Media’s managers will be quite capable of operating effectively in administrative and supervisory roles.
 
I’m sure most of them are capable of standing happily at the helm as long as the good ship Macquarie doesn’t find itself floundering in stormy seas and heading for the reef at any time.
 
Yet, there appears to me to be a lack of understanding of how to best handle those network assets that are not performing well.
 
Keeping the seafaring metaphor going, it’s when the skies become dark and the wind whips up that you need to be able to draw on a lifetime of hands-on radio experience to get you out of trouble before it’s too late and the ship starts to break up around you.
 
Any radio group that believes it can run a nationwide ‘creative’ network without a highly experienced Program Director rings the alarm bells for me and says perhaps that company doesn’t understand the fundamentals of the industry, in which it is operating.
 
I have serious concerns that in the corporate offices of Macquarie there may be no appreciation that AM radio is entirely different from any other business, including FM.
 
While the ‘Man in the Street’ may regard AM and FM as pretty much the same business, experienced radio people understand it’s the subtleties that need to be mastered before you can cross that divide.
 
My basic ‘Radio 101’ analysis of the impact of a major format change is something any experienced AM radio executive would have known as second nature.
 
While you wouldn’t expect a corporate accountant or business executive, who came from outside the AM industry, to know intuitively what the likely outcome would be, you’d think that they’d find out.
 
The great danger, as I see it, in this change process is that it threatens shareholder value.
 
One of Macquarie’s two profit-centres, in each of Brisbane and Melbourne, has, for the moment, been driven into never-never land, where listeners barely exist, and, possibly, neither does revenue.
 
While the majority shareholders are represented on Macquarie Media’s board and were probably involved in this decision, the minority shareholders, now potentially have their investments at risk if this high stakes gamble doesn’t pay off.
 
Unless these Talking Lifestyle stations can arrest the audience loss in the next survey, and, from there, begin a progressive audience growth, the minority shareholders may well be calling for the head of the executive who made, what they may well perceive to be, a reckless decision.
 
In the early days after the merger, Macquarie Media showed the door to its National Program Director, Clark Forbes.
 
In these turbulent times, had he still been there, Forbes may well have proven to be the voice of reason in discussions over whether the introduction of the Sydney ‘Talking Lifestyle’ programming into Brisbane and Melbourne would be a wise move.
 
Unfortunately, that was not to be.
 
I suspect, at some time in the future, the ‘thought bubble’ light will finally go on in the offices at Pyrmont.
 
Senior managers will wake up and realise that they don’t have all the answers, they can’t keep re-inventing the wheel and that they need creative specialists with experience to help them steer the ship.
 
Hopefully, for the sake of their many employees, this will happen sooner rather than later, so that they can avoid the turbulent and treacherous seas that may lie just over the next wave.
 
Until then, I’m fearful that they’ll continue to navigate the perilous waters of talk radio without a compass.