Comment from Brad Smart

 
Politicians are funny, and, often insecure, creatures.
 
Seems they never want to be the bearer of bad news …. it always has to be ‘sugar-coated’.
 
This appeared to be the case for Communications Minister, Mitch Fifield, during a radio industry function at Parliament House last week.
 
Instead of telling radio representatives straight up that they didn’t have the numbers to get the media laws relaxed, he chose to make the pill a little easier to swallow.
 
That ‘relaxation’ would have allowed big media conglomerates to own all three types of traditional media in a single market, so, when Minister Fifield took to the podium, he tried to break the news gently by singing the Meatloaf song ‘Two out of Three ain’t Bad’.
 
Very funny in a crazy ‘Sing along with Mitch’ sense, and to be fair he could hold a tune, but this was important news.
 
Singing telegrams, Mitch, should be left to Western Union.
 
For the past two years, some very serious media players have invested heavily in trying to change the media landscape to reap a big financial benefit, and, right now, they will not be happy campers.
 
When the table-thumping subsides in the corporate boardrooms, directors and their shareholders will quickly realise the political opportunity they were counting on to reap millions in capital gains, has just evaporated like water on a summer’s day.
 
Personally, the political outcome was music to my ears, no matter how oddly it was delivered.
 
As far as I am concerned this decision will maintain some semblance of media ownership diversity, at least, over the short term.
 
As part of their lobbying campaign, these heavy hitters in the media industry have been pushing the line that digital media has taken such a slice of the advertising and audience pie, that the radio industry is no longer viable by itself.
 
Recent figures, however, have not borne that out.
 
Radio is a strong, influential and profitable medium, when it’s in the hands of professional operators.
 
With a positive indication of those media law changes looming last year, some of these ‘doom and gloom’ merchants have been setting up the business side of their operations to take a windfall profit.
 
I am sure they fully expected these profits to be well in excess of any normal commercial transaction.
 
Radio should never be about windfall profits; it should be about producing sustainable ongoing returns from the marketplace.
 
Only a relatively few commercial radio licences have been issued in this country, and as such, with each licence comes an implicit responsibility to serve the listeners of the licence area.
 
Owning a licence should be treated as a privilege, not with contempt.
 
If you want to see how it should be done, look at some of the regional markets.
 
You have large operators like Grant Broadcasters, the ACE Network in Victoria and Bill Caralis’ Broadcast Operations.
 
These groups are privately held and they have all been dedicated radio operators for decades.
 
Sure, they’ve each accumulated a lot of stations over the years to create the economies-of-scale that are necessary to survive and grow, and, no doubt, they all report a good return on their radio investments.
 
All of these regional operators are in the business of radio, and, there’s no hint amongst any of them of waiting for the laws to change to ‘carpet-bag’ their stations for a quick buck.
 
Unfortunately, others within the industry appear to be in the ‘business of business’, not commercial radio.
 
Being in the ‘business of business’ would be just fine, if anybody off the street could pick up a commercial radio licence at any time, but, as we, in the industry, know, that is not the case.
 
Only the deepest of pockets can now join that exclusive club.
 
Last year, expecting media law changes to be ‘a given’, some major media owners started rubbing their hands together and actively lining up potential suitors.
 
The ‘too good to be true’ concept was that some of the current owners would leave the radio stage with an impressively-large bag of cash over their shoulder in exchange for their radio assets going to the richest guy in the room.
 
As a consequence, that buyer would become even richer and more powerful, as a media giant, owning newspapers, radio and television in the one market.
 
No doubt, the giant would then consolidate its newly-acquired radio assets by pushing a number of highly-skilled and experienced professionals out the door in their search for greater efficiencies.
 
I don’t believe this would be a healthy outcome at all for media in this country.
 
This ‘deserting the ship’ scenario was more the attitude you’d expect of investment bankers than committed commercial radio operators.
 
I suspect it’s the result of certain radio networks now being owned by public companies, some of which appear to be totally at the mercy of cut-throat accountants and demanding shareholders.
 
You may recall that around 10-years ago, politicians of all persuasions wanted to see more diversity in radio station ownership in order to give different viewpoints (generally their own) a wider range of outlets.
 
It was always a great ideal, and like Motherhood, nobody dared voice criticism, but the reality is that significant diversity of commercial radio is not practical in Australia with a limited population and advertising base.
 
In small regional markets today, an independent operator simply can’t make a living out of owning a single radio station.
 
The figures just don’t work.
 
Add more stations to supposedly increase diversity in some of these markets, and, you won’t fix the situation, you’ll just make it a whole lot worse.
 
Take a look at what happens when you introduce too many stations to the marketplace.
 
The United States has 12,500 commercial radio stations all vying for the advertising dollar, and, in recent times, has seen a significant number of stations, even in some surprisingly large markets, turning off the power, ‘going dark’ and handing back their licences.
 
Obviously, we don’t want to see that here.
 
Fortunately, Australia doesn’t face this over-servicing problem because, since the very early days of radio, the number of stations across the country has been limited to keep as many of them viable as possible.
 
In doing so, ACMA and its predecessors have created a ‘supply and demand’ situation that has inadvertently contributed to pushing up the price of commercial radio stations to the point that only those with very large cheque books can possibly buy in.
 
I really believe the solution for commercial radio in this country lies somewhere between the two scenarios of all-out mass consolidation of traditional media amongst a handful of media corporations and numerous independent small-market operators, of questionable viability.
 
I would say that solution has already been found in the framework, under which commercial radio currently operates.
 
Sure, I’ll admit that, perhaps, from time to time, it’s going to need a little tweaking, but not as far as a wholesale sellout that will lock up media ownership for generations to come.
 
Whenever radio proprietors get complacent, they should remind themselves that a radio station licence is not ‘owned’ by the company that operates the station; it just gives them the right and the authority to broadcast.
 
These licences also carry with them moral and ethical responsibilities for every broadcaster, and, to me, it’s an absolute disgrace to think that a corporation can trade government-owned licences for a windfall profit, as though that licence were just some kind of futures contract.
 
I do not believe that any operator should be given the opportunity to make extraordinary profits from a public asset, simply because they happen to be fortuitously holding a government-issued licence at a particular point in time when the law happens to change.
 
It appears now that political parties are starting to feel that way too.
 
Like most political assurances, the lesson to those lobbying in this case, as we have seen all too often before, is that ‘if an opportunity looks too good to be true’, it usually is.
 
Now that changes to the media laws appear to be no longer a short term option, perhaps, those players, who were focused on cashing out, should now focus their attention to doing what they were supposed to be doing all along – serving their listeners to the best of their ability.
 
If owning radio stations for these groups has become such an encumbrance, perhaps they may consider selling off some of these troublesome assets to independents to increase the diversity of radio ownership.
 
Hmmm … didn’t think so!

About the Author

Brad Smart previously owned and operated the Smart Radio Network through regional Queensland.

He has been a journalist, broadcaster and film producer for over 30 years.

Brad’s articles and podcasts are also available through his website www.bradsmart.com.au