Merger with 2GB would let 2UE off the hook

Opinion from Peter Saxon.
A loyal listener rang Jason Morrison’s Drive program on 2UE on Monday. ‘Mate is it true, what I read in the Tele over the weekend? You’re not leaving are you?’

Another caller professed undying loyalty as he explained how he’d followed Morrison from his early days at 2SM through to 2GB and then moved with him to 2UE. He vowed to switch stations again just to listen him.

Morrison was clearly touched. You could hear the tears welling up in his eyes as he tried to placate his fans, but in reality, it was more about consoling himself as he spoke of his second child, due to be born in just over three weeks time. ‘That’s all I’m really focused on at this point,’ he said.

The caller pressed Morrison for the reasons why 2UE decided not to renew his contract, but he could only hint at the fact that there was much more to it than he dared to reveal on air. “Out of respect for my employer,” said Morrison, “I’ll let them give their reasons when they make a formal statement.”

As anyone who has been around this business for any length of time would guess, Morrison’s respect is not so much for his employer as it likely is for the gag order that’s been imposed on him and the considerable financial cost to himself if he should breach it.

UE is already embarrassed that the news of Morrison’s departure (and that of the almost certain exit of Paul Murray to follow) has been leaked on twitter and then by Michael Bodey in the Oz before they could put out a properly spun formal statement.

Radio serves two masters, its listeners and its shareholders. As with most businesses, the shareholders come first – except that without listeners the shares would be worthless. So, yes, listeners are important. Vital, in fact. Staff? On air staff are only as good as their ability to attract an audience and sales staff only as good as their ability to monetise that audience which in turn drives up the share price. Unless you’re a tech or a bean counter, if you can’t demonstrate a proclivity to productivity in one or the other, you’re not gong to last long in commercial radio.

One thing listeners don’t like is change. And Fairfax Radio has done an awful lot of that lately, with more to come – especial in Sydney and Brisbane, their two most underperforming assets.

With the possible exception of 3AW and Fairfax’s music stations, I’m guessing that in 2014 the rest of the network will sound nothing like it did in 2013. Conservative talk talent like the discarded Hardgrave, Cary, Morrison and probably Murray, is not easily replaced. It seems unlikely that they will be. In their place will be a different style of presenter taking the stations in a different direction. What that will be, is yet to be heard.

Next Monday, with the release of Nielsen Survey 7, Fairfax Radio will find out what listeners think of their stations. Barring a miracle, it’ll be pretty much the same as they’ve thought since the beginning of the year.

Then, a few days later, at the Annual General Meeting on Thursday, they’ll find out what the shareholders think. Barring a miracle, it’ll be pretty much the same …

However it’s at this meeting where management has their best opportunity to pull a rabbit out of the hat. Knowing that a ‘steady as she goes’ approach won’t cut it, they’ll come prepared with the decks cleared and the giant ship pointed in a new direction, well adrift of the iceberg.

Of course, the big bunny that could just be ready to be pulled out of an oversized hat in time for the AGM is the merger with 2GB. That’s the clincher that would make sense of it all.

According to former Fairfax Radio boss, Graham Mott, merger talks have been going on since 2003. They were revived in 2008 and again in 2011 when, says another insider who wishes to stay anonymous,  it came so close to being a done deal that a list of who stays and who goes had been drawn up.

This time, though, it looks as if the merger will finally go through. If for no other reason that, just like combatants in a long running war, both sides have had enough. It happens in real estate too. After about six months of house hunting, buyers start to tire of being out bid at auctions, so they start to make more compromises and stop looking for a bargain as they become more realistic about the market.

Both the Fairfax and the MRN camps have by now had a gutful of being one city short of Australia’s highest achieving network and are ready to deal.

With 2GB part of Fairfax, there’ll no longer be any need for 2UE to compete with it. In fact, as part of the deal, there’ll probably be a non compete clause, forcing 2UE to change format which will let it off the hook with the shareholders and give it breathing space to regenerate an audience.

If all that comes to pass, the only question left is what gets sold, 2CH or 2UE? Unless the new government fast-tracks changes to the cross-ownership rules, the newly merged entity won’t be able to keep both.

Peter Saxon

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