If you were wondering where Virgin, the much touted suitor for the new FM licences, had got to when the list of bidders was announced last week, radioinfo can now reveal that the Branson brand has linked up with Aussie branding king, John Singleton, in a joint venture with Macquarie Radio Network to set up a “new Australian radio network”.
Richard Branson, Sam Chisholm and John Singleton announced the joint venture between Virgin and Macquarie Radio at a media conference today in Sydney, with Branson on the phone from a family holiday in France.
Chisholm described the JV as “a partnership between Macquarie and our good friend Richard Branson,” saying the joint venture vehicle, registered with the ABA as GT Shelf Company, would be a bidder for all three new FM licences and would also look at further acquisitions.
The group has been working on the Joint Venture for about three months, since Macquarie’s deal with 2UE/Southern Cross fell through.
None of the three would reveal the price they are prepared to pay for the licence, but Singleton said: “When people pay too much they go broke,” indicating that the company has a firm ceiling on its bid.
The new company wants to build “a national FM network,” and if it is not successful in bidding for the new licences it plans to look for other FM licence acquisitions around the country.
“Nova and 2DAY are good, but the other formats have weaknesses,” said Singleton in his characteristic blunt talking style.
Chisholm told the media conference: “This is the first move for Virgin into radio in this country. It will bring a brand new set of rules for the radio industry… There are exciting times ahead.”
Branson said the partnership “is a dream team of radio,” and promised to shake up the radio industry in a similar way as Virgin has done to air transport and credit cards in Australia.
“The Australian radio sector needs more competition,” said Branson. He compared Australia with the UK, Thailand, Paris and China, where Virgin operates other radio stations, saying Australia is “one of the most under served radio markets in the developed world.”
The partnership, a 50-50 joint venture between the two companies, will operate under the Virgin Radio Australia banner and will bid for all three upcoming FM licenses – Sydney, Brisbane and Melbourne.
“The strength of the partnership lies in the power of Virgin’s brand and proven programming experience in FM radio, combined with Macquarie’s outstanding success as a radio operator, its local knowledge, state-of-the-art infrastructure, sales expertise and management,” said Branson, who acknowledged the role of Virgin Radio’s international programming consultant and Australian CEO Ian Grace.
If successful the JV station will target an under 40 audience.
Branson said: “Macquarie’s news and sales teams are leaders in this market and Virgin’s brand and track record in radio is second to none. Virgin Radio Australia will reap the benefits of this combined expertise.
“An added advantage is that the new network will be fully integrated into Macquarie’s existing infrastructure: this is of significant benefit to the partnership from both a cost and speed-of-implementation perspective.”
The Virgin Radio Australia board will include Sir Richard Branson as Chairman, Sam Chisholm as Deputy Chairman and MRN’s major shareholder and Director, John Singleton as a Director. The question of which organisation would take management control of the joint venture has not yet been discussed between the two parties. Further board appointments will be made in the near future.
In media conference questioning after the announcement, the players revealed their opinions on a range of other related topics:
LICENCE LOBBYING
Branson said: “There has been a massive lobbying effort by incumbents to keep new stations out. It’s good the Australian Government has withstood the lobbying – competition is good.”
4TH TV LICENCE
In a light hearted bit of banter about whether Singleton would bid for a 4th television licence if it were available in Australia, he said: “In an instant. Try to hold us back!” and then went on to invite Branson to come in with him on that venture too with the whole room listening in.
ABA 2 STATION RULES
One question asked several times was about the ABA’s ‘two stations to a market’ rule. Singleton made it clear that, as a joint venture, there are two companies involved in the bid and that, as such, they could find a way to own the new FM station in Sydney plus 2GB and 2CH.
Singleton suggested that one way to do that might be for Virgin to take a half share in 2CH as well as its half share in the FM licence. Singleton and Chisholm were quick to say they would work with the ABA to make sure they are within the rules on any proposed deals.
GERRY HARVEY’S INVESTMENT IN WORLD AUDIO
When asked about Gerry Harvey’s recent million dollar investment in WorldAudio, Singleton said with a laugh: “Gerry is my best mate, but like me he’s made mistakes. This is one of them. It’s not a well thought out strategy, it’s more like having a punt on number 5 in the last race at Kembla Grange just for a bit of fun.”
FLOATING MACQUARIE MEDIA
When asked whether he would eventually float his media company Macquarie Media, like he had done with his advertising agency, Singleton said: “We have no need of any capital at this stage, so that’s not driving us.” Chisholm added: “When you get to a certain stage in business you either sell or grow. We will grow.”