Peter Saxon chats with the ARN boss.
The musical, How to Succeed in Business Without Really Trying debuted on Broadway in 1961, before Ciaran Davis was born. But someone like him may have inspired the composers to write the lyric, “You have the cool clear eyes of a seeker of wisdom and truth” for the musical’s hit song I Believe in You.
It’s obvious as you walk with him through the narrow corridors of the ARN HQ in North Ryde that the people who greet him really do believe in him. And it doesn’t look like he’s trying very hard at all. Could be that that is the very secret of his success.
Before Ciaran Davis arrived in Australia to take over the running of an underperforming ARN he had already worked in radio in 10 different countries.
radioinfo: Is radio like any other business or is there something special about it?
Davis: At the end of the day it’s not a complicated business. You realise that if you get good content, you get good ratings. You get good salespeople, you get good revenue and we try and keep it simple. That’s always the philosophy whoever I’ve worked for has had: keep it simple not too complicated.
But I think there is a realisation that has to go with it that it is all about content and sometimes you have to invest in that area a little bit more than what a normal business might perceive as the agreed risk level. It’s important that to keep radio alive, to keep your ratings alive, you have to invest in content and really good talent.
radioinfo: As an accomplished international CEO do you perceive this business to be like any other or is there something special about radio?
Davis: I think you have to have a passion for what you do. We all talk about the radio bug. You’ve been at it a long time you know what that feels like. I think, though everybody who likes working in any industry has a bug for that industry. So, I don’t think we need to glorify it too much, but we are all in it because we love it. And I’m in it because I love building a business and returning good returns to the shareholders
It was a business that was just happy to be third in the market. It was culturally just prepared to accept where they were.
radioinfo: It’s no secret that when you arrived at ARN three years ago it had been underperforming for some years. What was your assessment of the situation, the key areas that you identified as needing change?
Davis: When I first joined it was a sleeping giant. It was a business that was just happy to be third in the market. And I think it was a business that was culturally just prepared to accept where they were. So I think the biggest challenge we had was to instill into the organisation a sense of pride and ambition. A sense of determination to go after the competition. A sense of belief that what we were doing was building a network that could be the number one network in Australia. That should be the number one network in Australia, based on the brands that it had and the demographic profile it had.
Very quickly what I found was that there was a huge layer of the organisation that really just wanted go in one direction. Whatever direction we went in, didn’t matter. They just wanted to go in one cohesive direction.
Because it wasn’t performing, you can very quickly get good gains and show people that what we are doing is actually about investing and growing the business and the belief came through very quickly with the staff in terms of what we were trying to do.
All along I do believe that its important to be open in communication to staff . So I would do regular briefings. I would travel round the country. I would do presentations. I tell people the good news and the bad news. Because I just think that with 430 odd people working here if you can get that ball of momentum going with you then you can do pretty incredible things.
radioinfo: How would you define leadership?
Davis: Gosh, you could write a book on that one…
radioinfo: You could. But this is radio, you only have 30 seconds.
Davis: Great. I think its having a vision. Having a purpose, having a belief and then bringing people on the journey with you – and explaining what the vision is and letting people have a go.
One of the things that we found when we first got here was that the level of risk taking was quite low in the business. Nobody was prepared to give it a go and give it a shot and make mistakes. What we’ve tried to do with all areas of the business is to take a risk… be a risk taker. We will never shoot someone for having a go and trying new things. Because radio has to try things new over and over again.
radioinfo: As of, say, three months ago, how many of your goals on the road to re-invigorating ARN had been achieved?
Davis: Probably all of them. Well, not all of them. I’d say 90% of them. I’d say over the last 12 months we’ve been building what the next three years is going to be looking like. So we’ve been working with APN and Clear Channel to lay down the basis in a three year plan to where we think we can take this business.
radioinfo: So now you add to that the signing of arguably the biggest breakfast talent on FM at the moment, Kyle and Jackie O. When the deal was finally inked, was that a true yeehaa moment?
Davis: No.
radioinfo: No air being punched in the boardroom?
Davis: No, because at the end of the day its actually that the work starts now. But we’ve always felt that we should be attracting talent like this to our organisation. What we’ve got to do now is to make it work.
You’ve got to ask yourself: will the audience transfer?
radioinfo: Having done your homework on the acquisition, what were the main challenges or hurdles you needed to overcome to make it all add up?
Davis: You’ve got to ask yourself: will the audience transfer? That’s obviously the big one. Of course, they’ve been number one for 51 books in a row and they have a very loyal following. But you can see throughout the world and in Australia here that audiences do not necessarily travel. So we had to convince ourselves that in this case they would, which we have done.
Then you’ve got to look at the risk in terms of what is the impact of the old, controversial Kyle. How much are advertisers turned off by that. So, we spent a lot of time talking to the market about that and we convinced ourselves around that one. We talked to the shareholders who’ve been incredibly supportive the whole way.
It just made sense. In my view, Kyle and Jackie O are the biggest breakfast show in the world. They have an enormous and very loyal following and we had a gap in the market and we believe that advertisers will follow.
radioinfo: As you say, the big question is: will the audience transfer? If you were making book at Centrebet, what odds would you give that they will?
Davis: Hmmmm. I’ve got to find the right analogy for you. (20 seconds silence) Ok I’ll give you a good example. The All Blacks have this inner belief that they are going to win every single game – it’s been instilled in them over and over again that they have this strong belief.
They played Ireland a couple of weeks ago. I don’t know if you saw the result, but Ireland were winning 22 nil at one stage. And in the 81st minute they were still five points ahead. I saw an interview with Richard McCaw afterward, and he said that even then, in the 81st minute, they new they were going to win. And they won. They scored a try and they got the conversion and they beat Ireland by two points.
I think that rather than give you an odds on success, I’ll tell you we have a very strong belief here that what we are doing is the right thing. Kyle and Jackie have a strong belief that what they bring to the table is going to make it successful. And when you have that belief in me and in Duncan, the sales teams and the marketing teams, it’s an incredibly powerful thing.
You asked: was there a eureka moment last week? Well actually we sat down that Friday afternoon and we talked through how the day went and what was going on. But the sense of purpose and the sense and desire to succeed is extraordinarily strong to the point that I haven’t seen in this organisation before.
radioinfo: What if SCA somehow nails some killer talent to do breakfast, like say, Hamish and Andy? Would that change… if not the odds, then your level of confidence?
Davis: I don’t think so. Because I think Hamish and Andy are very strong but I think Kyle and Jackie have a formula in breakfast and a format in breakfast and a way of doing things in breakfast and a loyalty in breakfast and a strong following in breakfast that is slightly different to what a Hamish and Andy would have in the style of show they had at Drive.
In my view, they are underestimated in Australia and are one of the best breakfast shows in the world.
radioinfo: I spoke to Duncan Campbell the other day about whether listeners would come across from 104.1 to 106.5 and he said, From a listener’s perspective they’re just moving house.
But you’ve had to do a lot to the house to accommodate them, haven’t you? You’ve embarked on some major renovations from building new studios to changing the station’s brand and presumably much of the format and the current line-up. Surely that wasn’t an easy decision to make was it?
Davis: In my view, they are underestimated in Australia and are one of the best breakfast shows in the world. I’ve worked in numerous countries, English speaking and non-English speaking, and every program director will listen in to Kyle and Jackie O to find out how they do things – how they come up with things. The competitions they’re running, the interviews they are doing. They are the benchmark across the world.
So in terms of the house being built: when you bring in talent like that, it’s a great foundation. And if you want to keep the house analogy going: that foundation wouldn’t have sat very well on the MIX brand.
And you’re right, we’ve done a lot of research on it. We’ve been looking at how we would build on the Sydney market and what we would change in the Sydney market for the last 12- 15 months. We were just waiting for the right moment in terms of what we could and couldn’t do. And this is the moment.
radioinfo: Given the high value you place on Kyle and Jack, were you surprised that SCA couldn’t or wouldn’t come to terms with them and let them go?
Davis: In some respects, yes. But they were there a long time. I think in terms of what I’ve learned in the last few weeks they need and want a challenge – a new motivation. And from Austereo’s perspective I can understand the reasons why they would have said enough’s enough. So when we heard they were not renewing, we certainly viewed that as a huge opportunity.
But I suppose everybody in the industry new that the contract was coming to an end. Everybody knew that it was or was not going to happen and probably everybody was planning: well if they came in, what would we do? And we were just the exact same.
What I am very encouraged by is that the project that we want to pursue here in talking to Kyle and Jackie O in the last few weeks how energized they are and how the meeting of the minds are in terms of what we want to achieve and what they want to achieve and that’s a very exciting thing to be a part of.
radioinfo: So, giving the moving house analogy yet another nudge, how many of their housemates from 2Day will be moving over to MIX (now KIIS 1065)?
Davis: We will be obviously resourcing up the show from what the current show has but we have some really good people here who work on the breakfast show, really strong people, here. But we will be adding to it.
radioinfo: I understand you’re looking for a program director for the station.
Davis: Yes, that’s right.
radioinfo: And I understand there’s one available who used to work with Kyle and Jackie O…
Davis: There’s probably a couple available. Yeah, there’s a few…
radioinfo: But there’s one in particular… I think you know who I mean. Am I on the money?
Davis: I think what we did, was we focused on getting the primary talent across, which was Kyle and Jackie O. And now the building of the show around them starts.
radioinfo: So when will you announce that Derek Bargwanna is the new program director of KIIS.
Davis: When any PD is signed sealed and delivered, we will announce who that PD is.
radioinfo: I’m informed that Lars Peterson and Richard Mercer, The Love God are moving to an older station that ARN just happens to also own. Has that been confirmed?
Davis: Not confirmed, no.
radioinfo: Clearly, if you’re hoping that Kyle and Jack will bring their audience with them, then the MIX format needs to change to what appeals to the K & J target listener. But is there room in Sydney for three stations targeting under 40’s?
Davis: When you add the Kyle and Jackie O show to any format you’ve got a winning radio station.
radioinfo: But surely, there isn’t room for three?
Davis: We’ve looked at that and the format that we are putting in place and the breakfast show that we have as the potential number one radio station in the market. We believe that with Jonesy and Amanda on WSFM we are going to have the number one and the number two FM breakfast shows in the market and when you add this new station in Sydney (KIIS) to the MIX network we are going to have a very, very strong commercial proposition around 25-44 females.
radioinfo: Put another way, if there isn’t room for three under 40’s stations in Sydney, then one would naturally have to drop out.
Davis: I think it’s going to be an extraordinarily competitive battle next year.
radioinfo: But one that you intend to win …
Davis: Absolutely! But we are not sitting here naïve in terms of what the competition intends to do and what they’re plotting because they are equally competitive.
I think from a radio perspective, the Sydney and Melbourne markets are going to be incredibly interesting in terms of competitiveness. And that’s good for listeners. But its’ also good for advertisers. We will all be out there doing more innovative and integrated stuff for clients.
We’ll all be spending more on marketing to try and drive more listenership. We’ll all be out there talking up the power of radio and the power of our brands on it. And in today’s world where radio is perceived to be a traditional media that’s an incredibly powerful thing and story to be telling the market.
radioinfo: Assuming that the whole plan comes together and ARN ends up with the number one and number two FM stations in Sydney and perhaps a similar result in Melbourne along with outright number one stations in Brisbane and Adelaide, what does that do to revenue? I mean, ARN turned over around $150 million in revenue last year. How far north do you expect it to go in a full year with the changes you’ve made?
ARN is not going to be a radio business. Our plan is to become a contemporary media business.
Davis: I’m not going to give you a figure but we are talking about a three year plan in terms of what we want to achieve. The Shareholders have been incredibly supportive of that and with that. We want to be the number one network in Australia – whether that’s in ratings or revenue or share or profit, I don’t care.
But what we would also do with that potential output for revenue there are so many projects that we want to take on and we want to build. ARN is not going to be a radio business. Our plan is to become a contemporary media business. There is an awful lot of other projects that we want to get involved in. If we get success with this then we have shareholder commitment to be able to reinvest back into the business to grow into other areas.
radioinfo: ARN is not going to be in the radio business? That’s a big call. Some in the industry would want to take you to task on that…
Davis: Radio will always be at the core. But if you look at iHeart Radio, people said that that’s going to kill your radio business. Absolutely not! It’s actually going to grow our traditional business. It allows us to offer new ways of getting to our audience. New ways of talking to our audience and new ways of getting advertisers talking to our audience.
radioinfo: Speaking of iHeart and similar music streaming services. How do you see its future?
Davis: The possibilities are only starting and I think we are talking to a mass audience. And the more we can individualise that the better- the better data we get on our listeners the better from an advertiser’s perspective.
What we have to be really careful of is radio’s true power is live and local. So, when people ask are we going to syndicate this show across Australia. No way. In my view a Sydney breakfast show is never going to work in Melbourne. But what iHeart does allow us to do is get a closer relationship with listeners.
We are now using iHeart Radio to do our music playlists. We don’t do our own research any more. We can track what songs are listened to the most often – what demographic it is. And the content directors are actually looking at those playlists and they are actually building their FM playlists with that.
What we are finding is that from a commercial perspective that advertisers are playing with iHeart. They want to see where it is. It’s not necessarily a profit generator at the moment. But it’s better, in my view, that the radio industry – whether it’s Songl or Rdio, or whatever it is – the industry is actually being proactive in terms of defining its role in the future as opposed to waiting for a Pandora or a Spotify to come in and take over the market which other mediums have done.
So, what we need to do as an industry is to be a lot more confident and powerful in terms of our communications out in terms of what we are doing. The level of integration that we do across any network is extraordinary. The value that we offer to advertisers is extraordinary.
You cannot get the integration on TV and you cannot get that same integration on outdoor and you cant get it in print. And you actually can’t get it on online either. So, we have to tell out story completely differently and we have to be a lot more confident out there. Because that share of 8% of revenue that radio gets needs to grow from 8 to 10 – 12%.
radioinfo: Many before you have said the same. It was a pet cause of Austereo’s Peter Harvie.
Davis: There are encouraging signs in the industry. We have a new marketing and branding committee within Commercial Radio Australia. And its heartening to see that all networks – not just the music networks, but Macquarie and Fairfax as well – are coming to those meetings with a common purpose to actually raise the profile of radio… to raise the level of dollars that come into our industry. To look at things slightly differently and to try bigger and bolder things to actually raise the voice of radio. And I think that next year could be quite exciting in terms of what we are trying to do there.
radioinfo: Which leads me to my final question. What is your prediction for the industry in 2014?
I think for the industry: it’s going to be incredibly short term as we are seeing at the moment… I don’t think that’s going to change.
I think we are looking at about a 3-5% growth in terms of the overall revenue pie.
I think digital is going to come under increasing pressure in order to demonstrate its effectiveness. No denying, it’s had great growth and we see magnificent percentage jumps but actually what we need to now understand is that that level of creativity is not there in the industry and they’re going to have to prove how effective it is.
The more we are out battling. The more we are out promoting our own story. The more we are talking to advertisers directly, the better radio will be.
We are all going to spending more on marketing. We are all going to be investing more in our sales collateral and in our sales capability.
If you take Sydney, we’ve got new breakfast shows. If you take Melbourne, you’ve got new breakfast shows. The Brisbane market is one of the most competitive ever seen. And Adelaide, DMG and SCA are not going to settle for where they are now.
It’s a big agenda!