Tony Bell is one of the few Australian media executives who has managed television and radio stations in both regional and metro markets. He knows the limitations of regional market revenue and also the synergies that can be achieved by economies of scale through growth. Tony Bell speaks to radioinfo about the proposed changes to media regulations announced last week, and about belt tightening at 2UE.

While individual stations and markets may have their ups and downs at times, overall Southern Cross is one of Australia’s media success stories. At one stage in its growth, the company owned regional radio and tv stations in the same market through the grandfathering provisions of media laws at the time.

radioinfo: What do you think of Communications Minister Coonan’s changes to Australia’s media landscape?

Bell: I think they are entirely predictable and in line with the discussion paper issued by the department.

There are a few additions that were not foreshadowed, for instance the measures to ensure specific levels of commitment to localism in regional radio and television multi-channelling.

radioinfo: Those measures have made some regional radio operators a little hot under the collar. As someone who managed both metro and regional radio and tv stations, what do you think about this element of the new regulations?

Bell: Through grandfathering provisions in the last round of cross-media ownership, Southern Cross retained control of a regional radio station in a market where we had a television station, so I have some experience with what we can expect in the future if a television licensee owns a radio licence in the same market.

My advice is that there are limited synergies between the two. News is presented in a very different format. Radio presents news in four minutes compared with television’s twenty minutes. There are no programming synergies and few sales synergies, even though this would be contrary to popular belief. The two mediums are far too separated in advertising rates, broadcast material and meeting the objectives of the advertisers. There are, of course, promotional synergies.

radioinfo: Regional operators are angry that the proposed localism provisions will force them to make programs that are not sustainable on revenue grounds, just to give backbenchers in rural electorates a chance to be heard on the airwaves.

Bell: Regional radio has rationalised its business structures to be viable and it needs to maintain viability in a more competitive market. New media will encroach on traditional revenue streams and radio will feel a margin squeeze, so I hope the government will take long term viability of regional radio into account when it considers applying localism restrictions.

If there are to be restrictions, we should insist that the current levels of localism represent a ceiling on future requirements in each market. The localism model which government may be considering could replicate the regional television local news and current affairs quota system. My opinion is that localism should be left to the licensees and competitive forces.

radioinfo: There is a lot of speculation that your company is positioned well to be either a buyer or a seller in the changes that will come under the new ownership laws. What are your intentions?

Bell: I think I would have to announce that to the market before telling radioinfo. We are realistic enough to understand that we have an open share register and that this will inevitably cause some speculation about these things.

radioinfo: Your share price seems to have benefited by people speculating about what you might do.

Bell: I think the share price fairly reflects the value of the business, no more, no less. There is no premium on the share price.

radioinfo: Can we now turn to 2UE, where there has been a lot of changes, staff losses and the resignation of the General Manager. What is happening?

Bell: 2UE is probably in its best position for success since we’ve owned it. We have continued to invest in the business to ensure continued ratings and revenue. The client base is excellent, but the costs were too high. It had the same cost structure as when it was number one, so obviously that was not sustainable.

radioinfo: So should you have cut deeper earlier when 2GB began to get the upper hand to have avoided this level of pain now?

Bell: No. It was a deliberate strategy to maintain the level of operations during a volatile period when two competitors were targeting the same demographics, 2GB and Vega.

Now that the market has stabilised and we know where each station sits, we can now make adjustments based on realistic future market share and revenue.

radioinfo: Have there been any other resignations from the management team. The program director for instance?

Bell: Yes. Sandy Aloisi has chosen to resign. There is no animosity, it was just her time to sit back and take a breather for a while.

radioinfo: Now that you will be able to legally own a radio and tv station in the one city, will you be trying to buy talk station 5AA Adelaide from DMG to complete ownership of a national talk radio network?

Bell: Should the proposed cross-media rules change, we would love to complement our Talk Network stable with a radio station in Adelaide. As for 5AA, it might take more than a couple of bottles of St Hallets Old Block Shiraz to persuade Paul Thompson to settle on a sensible price.