Village Roadshow have quadrupled the $300 million they invested in their national FM radio network, partly thanks to giving the Libs $3 million and delaying the issuing of new licences to competitors. Now, an Austereo insider has described the horrors of working for them as then attempt to raise $460 million.
Both major FM networks sell themselves as young, sexy, non-stop party types, but behind the glamorous image all is not well. At least at the Melbourne end of the operation staff have been unhappy for some time.
Shifting goal posts
Performance expectations are always high, but combined with a tough management style, courtesy of management bible Thick Face, Black Heart, staff turnover last year was way up.
2000 saw an all out effort by Austereo to prepare for the float. This much was kept secret from employees. What wasn’t kept secret was the way the goal posts were continually shifted and the door shown to anyone who complained.
According to one former Austereo employee, budgets were continually adjusted: “Month by month, all through 2000, budgets kept increasing. It’s not a realistic approach. Selling radio is not like print and television. I mean pressure to do well is one thing, but mad internal competition is unhealthy.”
Still, there is a logic to it. The cost to staff is easily hidden.
This employee found the 1999 Victorian state election particularly tough. “In the lead up to the election all ad airtime was given to the Liberal Party leaving nothing for commercial clients and no room for any other budgets.”
Just how much value does free airtime add to cash political donations? $3 million in contributions to the Liberal Party during the Howard government’s time in office may be more like $6 million when the dollar value of free airtime across the Austereo network is factored in.
The effect of all this goalpost shifting was to force account managers into fudging exercises. It was common practice for staff to only tell management what it wanted to hear. The point? Arrogance and ignorance don’t encourage good business practice.
This is not to say Austereo isn’t a valuable company. But does $1.2 billion reflect its true value? It may be useful for investors to consider the way in which the company’s public image has been developed and how that perception could impact on future performance, particularly in a more open, competitive market.
The Melbourne offices are crawling with former AFL Football players intent on test driving the latest female recruit, all of whom are hired for their looks. Office affairs and sexual harassment are rife. The inhouse chauvinism has, for some time, extended to the treatment of clients. Makes you wonder. FM-land can’t remain an uncontested domain for long and it’s the paying clients who will make or break the future business.
Another source reports that on her first day at the office she was greeted by the boys holding up a round of score cards. This was followed immediately by the arrival on her desk of a copy of Thick Face, Black Heart accompanied by the order to read it. “They made it very clear I was to read this book,” she said. “They were like evangalists with it.”
Never heard of Thick Face, Black Heart? Reviewing the book Professor Peter Sheldrake, executive director of the graduate school at RMIT Business in Melbourne, said:
“This amiable piece of nonsense first appeared in Australia a couple of years ago and it has been reissued in paperback. It has not improved over the years. Thick Face, Black Heart is a travesty of the ‘ancient wisdom of the East’, attempting to insinuate Western individualism and self-interest into classical thinking. It can achieve this only by ignoring the dominant themes of interdependence, deference and harmony that characterise so much of the material it cites – no mean achievement.
“… Nevertheless, beware, for the essential message is about winning, war and duplicity – and not about the ethic of care, consideration and the golden rule. The book could have been called Trick Face, Lack Heart, a guidebook to misleading others and looking after number one.”
Thick Face, Black Heart has been a pillar of management philosophy at Austereo. Maybe it helped get them to the ASX starting line, but you have to be sceptical about its ongoing usefulness. Then again, John Kirby probably won’t care less if he gets his $460 million.