In Australian business there are no more cleverer buyers at than Millionaires Factory.
A lot is being written about the coming valuation and float of Macquarie Media, the operator and owner of Sydney AMP talk stations, 2GB and 2CH, owned by John Singleton (80%) and partner, Mark Carnegie (20%), but the real story is in the continuing instability in staff numbers from the top, to the bottom of the business.
Singleton may have called in leading receiver and administrator, Max Donnelly to be executive chairman of the company to ‘prepare it for sale”, but the company seems to cutting costs on its own, without to much prompting from Donnelly (but maybe from Singleton on the sidelines).
But the departure of 14 staff from announcers to the general manager, Louise Barrett over the past three weeks, is an indication of a company in no shape for anything bar a fair bit of intensive care. (See the following stories for more)
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But in the Sydney Sunday Telegraph today, Singleton took the drama to a new high, accusing staff of ‘undermining’ Macquarie Media head Angela Clark because she was an attractive woman and young. He spoke of “lazy staff” and warned them they had to improve.
And Clark said in the paper that a total of 32 staff had left 2GB this year, but she defended the latest resignations and departures as being ‘normal’ for this time of year.
Amid a photo of a friendly Ray Hadley and Alan Jones ‘joshing’ with each other (they are only ‘guys’, after all) it was an incendiary sort of article that will only act to undermine the value of Macquarie and 2GB in any float.
But it does not answer the questions why the upsurge in problems and drop in moral in the station, which has followed the appointment of Clark to the senior job earlier this year.
There’s been a major problem for months since when former long time boss, George Buschman quit earlier this year to the Southern Highlands, south of Sydney.
He quit after the back office merger with 2UE failed to get approval. He had built a top sales team, along with Louise Barrett who has been in the business for years.
But the new head of Macquarie Media, Angela Clark, a 32 year self starter with an outdoor sales background, seems not to have been able to drive the sales team as it was driven in the past.
There’s been a clash between the Buschman-Barrett client-based approach to a more agency-based approach from Clark, which now seems to be the new mantra.
But the real story is the fact that Southern broadcasting’s Radio 2UE is taking sales from 2GB, even though 2GB is the top rating radio station in Sydney.
By being successful, relative to 2GB, 2UE is saying to advertisers, you have to put more money with us than you would normally, simply because we are taking audience from 2GB, especially in the mornings and drive time.
Macquarie and Singleton are known to be concerned that, as the top rating station, 2GB is not getting a much larger share of ad revenue in Sydney, like when 2UE was the top rated station. But they are ignoring that at time, the next rated station was music and 2GB was a bottom dweller.
As an aside, the one other factor is the way the ABC station 702 (2BL) has been taking audience from the commercial talk operators. In Breakfast Angela Catterns is very active, Sally Loane in mornings is doing OK while Richard Glover in drive is close to the most popular person in the timeslot.
Every listener they attract is lost to 2GB or 2UE or 2CH etc (much like the way ABCT TV has been draining viewers from the commercial networks this year, especially on Sunday, Monday, Thursday, Friday and Saturday nights).
The ABC’s performance in the Sydney radio market has improved since Alan Jones moved from 2UE to 2GB and boosted the latter to Number 1, where it remains, but not with a matching share of revenue.
Singleton obviously wants to be in a position like the Nine Network in TV where its share of revenue (39%) is much greater than its 32% or thereabouts of audience.
So he’s going the sales route as a way of trying to shake-up the company’s performance.
But I reckon a far better option would be to watch Macquarie Bank and its Regional Radio arm, assumed under RG Capital’s former boss, Tim Hughes.
Macquarie Bank has already spent well over $300 million assembling around 90 regional stations (see the DMG Jocks Journal).
A major capital city AM operation based in Sydney would be ideal, anchoring the group, giving it a programming and marketing hub in the richest market in the country.
Then the company could network high profile starts like Jones and Hadley across Australia in a way that would give it more control on reach, costs and on income (although revenue from selling people like Jones to other stations would be eliminated).
But by offering advertisers much greater reach outside Sydney a combined company would be able to have a rising share of ad revenues, lower costs and a much better integration.
It would also benefit Regional Radio by giving it a reason to be in business rather than just another opportunistic attempt by Macquarie Bank to mine investor wallets.
With 2GB and 2CH aboard, a combined company would be a much better proposition for investors next year than a hotchpotch of small regional and near city stations.
See the good Mark Day piece in Thursday’s Media section in The Australian – Macquarie float will net Singo, Jones
He didn’t canvass a trade sale for Singleton.
After spending well over $300 million on assembling Regional Radio, it would not make any sense for Macquarie to baulk at spending $60-$70 million more to buy Macquarie. The cost savings and revenue advantages would make it a quick payer, as would buying it now, cutting the costs that Max Donnelly has been hired to cut before floating the company.
What Singleton has effectively done by first allowing costs to get out of control, overseeing an exodus of staff, and hiring Donnelly, is to tell the rest of the industry that 2GB is fat, slow and under-performing.
Its valuation at the moment would be low, and certainly at the lower end of the range in the Mark Day story.
An ideal situation to a smart buyer, if Singleton and Carnegie can be induced to sell.
And in Australian business there are no more cleverer buyers at than Millionaires Factory.