Turns out even 200 million dollars cannot buy eternal harmony, it can only rent it for a while

Our Executive Director Media and Data Ben Willee talks to Tim Burrows on the Mumbrellacast about the latest news on Kyle and Jackie O.

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Mumbrellacast emergency edition – Tim Burrowes and Ben Willee on the end of The Kyle & Jackie O Show

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Tim Burrows (Host)

I’m Tim Burrows from Mumbrella. Now, we have asked ABES Audio to work some wonders in the past, and this is gonna be another one. It’s an emergency episode to discuss the end of arguably Australia’s certainly, uh, certainly most famous and possibly most successful radio show of all time, which has just come to an end. Um, I’ve had to run into the, uh, the Qantas lounge to do it, just having got off a plane. Ben Willee, executive director of media and data for Spinach Advertising, has jumped on the call with me to give the buyer’s perspective. Ben, this is a really big deal, isn’t it?

Ben Willee

G’day, Tim. Thanks for having me, and wow, this might be the biggest story in Australian media of, of twenty twenty-six so far, and turns out that even two hundred million dollars can’t buy you eternal harmony, can only rent it for a while.

Tim Burrows (Host)

And they rented it for about a year and two months. That was how far they were into this, this, this ten-year deal, which, as you say, was worth two hundred million or, um, twenty million each for the Kyle Sandilands and Jackie Henderson over, over those ten years. So to recap for people who haven’t seen the news, it’s been well reported over more than a week now that Jackie Henderson was taking a break from the show after having had that sort of on-air bust up. Um, we’re now, uh, seeing that she’s not coming back. So the announcement to the ASX tonight is that, um, Jackie Henderson has asked effectively to terminate her contract, which they’ve agreed to, with them saying that they will talk to her about the possibility of an alternative show. So that’s part one, Jackie saying she can’t work with Kyle. Your, your reaction to that part, first of all.

Ben Willee

My reaction to that is this clearly has been a long time coming. I mean, you don’t walk away from the biggest deal in Australian media without something bubbling along the way. Now, we obviously haven’t been privy to what that is, but we saw some pretty appalling… Sorry, we heard some pretty appalling behavior last week, and that was really inappropriate textbook bullying of Jackie O on air, and clearly that’s the straw that broke the camel’s back. And with time, we will definitely find out what some of the other issues are. But I tell you what, Tim, it must’ve been a lot because to walk away from her half of two hundred million over ten years means it must have been something pretty bloody bad.

Tim Burrows (Host)

Yeah. And I suppose what we don’t know are the terms. We don’t know yet is the terms in which she’s walking away because, of course, there must have been some sort of negotiation going on behind the scenes with the ARN lawyers. The fact that they’re talking about her having the potential of a show suggests that maybe they’re not relieved of the whole ten million a year for, for Jackie, but we will, we will have to see about that. Um, the other part which is almost as fascinating for me in this announcement to the ASX is the fact that ARN Media finds Kyle Sandilands’ behavior, phrase, “act of serious misconduct” in breach of their service agreement. Um, so they’re saying they’re taking him off the air, um, for at least the next fourteen days. To me, this feels like we will not hear Kyle Sandilands on ARN Media ever again, potentially.

Ben Willee

That’s a really big deal, isn’t it? I think this is… You’d have to say this is a gift for Michael Stevenson, who’s the, um, Stevo, the CEO of ARN Media, because he’s inherited this contract. And if we you know, from outsiders looking in, there seemed to be very little control he had over Kyle and Jackie O, and that’s caused enormous problems with advertisers. It’s caused enormous problems in, in Melbourne. So maybe this is the gift that he was looking for. And was it Winston Churchill who said, “Never let a good crisis go to waste”? This may be the good crisis he’s been looking for.

Tim Burrows (Host)

Yeah, look, that, that is a very good point because, of course, when the two of them came to negotiate that contract, they had an alternative offer on the table from Southern Cross Austereo. They had the number one Sydney breakfast show. They had history that said a decade before when they had left SCA to go to ARN, they’d taken the audience with them. So that meant that ARN had to give them a great deal to stay, and of course, it really relied on them then doing well in Melbourne. Now, you are in Melbourne. How did that show do in Melbourne?

Ben Willee

Well, I think it’s safe to say, um, it has been far, far short of their expectations, and some might even use the word disaster. I mean, we’re talking about a show that has been as low as a five percent share of audio in the Melbourne market. And look, we can talk a lot about why that may be the case, what they did wrong, but the reality is, is that Kyle and Jackie O had all the power in this situation, so they could keep bleeding ARN Media dry for their ten million bucks a year and not really have to make any concessions to make Melbourne work. And then on top of that, you’ve got the mad effing witches who are very successfully targeting advertisers to not advertise in the show. So not only is ARN struggling because the lack of revenue they’re getting out of the show in Melbourne, but in their key market, Sydney, where their ratings are excellent, you know, and usually just behind the number one breakfast show in 2GB. And what’s happening is, is advertisers are target… Sorry, the witches are targeting advertisers saying don’t advertise on the show, and that has been reasonably successful. And if you look at some of their recent numbers and their share numbers, there’s, you know, a significant amount of money that is flowing to Nova and SCA as a result of advertisers saying, “We don’t wanna be around this content.”

Tim Burrows (Host)

But when the ASX opens up in the morning, it’s gonna be fascinating, isn’t it? Because some of the, uh, some of the market movement I’m sure will be potentially ARN’s share price going up. But I wonder whether Southern Cross Austereo, which has been getting a larger share of the advertising revenue ahead of audience because of ARN’s problems, I wonder if the market will view this as bad news for Southern Cross Austereo.

Ben Willee

I hadn’t thought of that, Tim, but it’s a really interesting way of looking at it. And if I was a betting man, I would say that the market will see this as bad news for Southern Cross Austereo. Now, if we wanna do a double blind and flip that on its head, maybe they might say this is actually good news for Southern Cross, ’cause they might be able to pick up Kyle for cheaper than, you know, uh, his huge $10 million salary, uh, generate the ratings, have a bit of control, and then perhaps Southern Cross wins out of this. And this is the biggest challenge for Stevo. He’s damned if he does, and he’s damned if he doesn’t. So he’s gotta try and keep the power of those ratings, but he’s gotta find a way to rein them in, and he may lose that opportunity in the next few months. I also thought it was interesting in the announcement, the ASX announcement, it says, “This announcement has been authorized for the release by the board of ARN.” So, is that an unusual line, or am I reading too much into that?

Tim Burrows (Host)

My take on that is I think I usually expect to see it in anything that goes on the ASX. So I’m sure it has been discussed by the board, but I’m not reading too much into that particular part of the, the announcement. The other thing, of course, you know, when we’re talking about, um, headaches is, yes, Michael Stevenson, potentially the opportunity to get rid of an onerous contract, but he will also be having a, well, already be in quite a serious conversation with Dave Cameron, the new head of Metro Audio, who I believe only started yesterday, Monday morning having previously worked at Southern Cross Austereo as the chief content director. Because potentially he is looking for two new breakfast shows in Sydney and Melbourne, when most talent have already been contracted for the year. Like, where does one even begin for something like that?

Ben Willee

I don’t know where to start because what we’ve seen certainly is the talent that was on air in KIIS in Melbourne has moved over to Nova and have created a really successful show over there.

Tim Burrows (Host)

Yes. This is the Jase & Lauren show.

Ben Willee

Yeah, the Jase & Lauren show. I think that’s a, that’s an enormous challenge for Dave Cameron. And reading that release, I know that Kyle is, is quite emotive often in his decision-making. Well, as we saw last week in his… when he berated his on-air partner. So to say that, um, they publicly said, quote, “His behavior during the show was an act of serious misconduct,” it’s hard to invite that person back into the fold and invite them back on air, isn’t it, after making an accusation like that?

Tim Burrows (Host)

Yeah. And it, it strikes me that this is them positioning themselves for a legal fight because I presume that Kyle Sandilands will have good lawyers who argue that, no, he has a contract and he’s not going to let them, let them out of it. And it strikes me that if they do go legal, this could go on for many months.

Ben Willee

And what an enormous distraction that would be, and that would make it very difficult for them to have a long-term strategy. And coming at this from an advertiser point of view or a media buyer point of view is media buyers love certainty because, you know, if you make a recommendation to a client and that rate’s a lot worse than what you’ve recommended or even a lot better, it goes against your credibility. So media buyers like Kyle and Jackie in, in Sydney because they consistently deliver a lot of ratings. Now, I mean, we’ll be crawling all over the next book when it comes out to see what impact this has had on the ratings, but you’d have to say it’s gotta be significant cause you can’t take off air the two biggest talented… arguably most talented FM show and expect the ratings to stay there. It just doesn’t work that way. So I think that’s another headache for Stevo will be, you know, placating advertisers and making sure he guarantees advertisers the audience that they, they’ve been paying for.

Tim Burrows (Host)

Now, one other option for, for advertisers, and I guess for ARN, is they, they own two networks. So they own the KIIS network. They also own the GOLD network, which has got Christian O’Connell, who’s been successful in Melbourne and is a new presence in Sydney. When you’re having those, as a media buyer, when you’re having those conversations with ARN, are you persuadable to just, if, if you’ve got doubts about where KIIS is going, to just shift your spend across to GOLD instead? Is it as simple as that?

Ben Willee

In part. Look, the way media buyers would look at it, they would look at a combined cost per thousand for both audiences. So, you know, you would pay a bit more where the, where the ratings are and a bit less where they aren’t. But provided you, all of that audience was delivered to you, um, you wouldn’t be too upset. So the Christian O’Connell thing is really interesting. Now, if I was in their shoes, I’d seriously be considering dropping Christian into this, this… You could put Jonesy and Amanda back into breakfast on WSFM. I mean, Christian O’Connell is perhaps the best decision the previous CEO, Cieran Davis, made. I mean, he brought out an unknown pommy to a very parochial market like Melbourne, got rid of the number two breakfast show, and Christian O’Connell has just made himself part of the fabric in Melbourne. His ratings have been really good. AndI think if anyone can move into Sydney, that’s a much easier move than the other way. Um, you know, there’s a lot of English people in Sydney. He’s actually quite well known from his time in the UK. So I think that’s a serious possibility that we may see, even in the short term, putting someone like Christian O’Connell into that slot to smooth things over, to keep the ratings consistent, and to give them, you know, a bit of control in that sector.

Tim Burrows (Host)

That, that’s a fascinating thought. Yeah, it’s worth making the point for people who, who haven’t followed it as closely. When you were talking about Jonesy and Amanda, so this is Brendan Jones and Amanda Keller, who had The Sydney Breakfast Show, they’ve moved to a national drive show still with Gold. They effectively vacated that Sydney slot so that Christian could go national. But it is an interesting emergency move, isn’t it, to put them back in and ask, uh, yeah, ask Christian to bounce across to, uh, to KIIS is a very intriguing thought. Um, look, a final, final thought from me, and I’d love to get a final thought from you as well, is it just strikes me what a pity this is and what a missed opportunity because, you know, if we look back, Kyle Sandilands, Jackie Henderson, that show at its best was a brilliant show that deserved to be heard nationally. I, I wonder if it was just the, the generosity of the contract at the time just meant that they ended up coming in complacent and missed the opportunity. You know, I personally think that Kyle actually found some of his hunger when we were hearing it on the day. You know, ahead of his, his row with, with Jackie, he was, he was arguing with other members of the team, accusing them of being complacent about various things. It felt to me like the week before, Christian O’Connell had been on stage at HEARD, Commercial Radio and Audio’s event. All of a sudden, he’s the star of ARN, not Kyle. Kyle is waking up to the fact that if they want to make it as a show, they’re gonna have to work harder. I was actually hearing in his very aggressive conversation with, with, with Jackie and the team a little bit of that showing through, but it’s just what a shame that things couldn’t have been different because these were two very talented people who will never know whether it was a good strat– It was certainly badly executed, but we’ll never know now whether it was a good strategy or not.

Ben Willee

Look, I, I agree with you a hundred percent, Tim. when they’re good, they are arguably some of the best radio talent in Australia for the FM band and for their audience, and I have absolutely no doubt it was dawning on Kyle, it was finally starting to dawn on him that his contract was gonna send ARN broke, put a lot of people out of jobs if they didn’t take it up a notch. And it just feels to me it’s, it’s too late for that now. The horse has bolted and, um, he might have missed his opportunity, and I would’ve been delighted to see them do well in Melbourne, and I agree, it was a great idea, just poorly executed and it wouldn’t have taken much for us Melburnians, or Mexicans as you call us, to warm to the crazy of Kyle and Jackie O. And, um, you know, the fact that they refused to get on the plane and they didn’t spend any time in Melbourne was sort of a bit of an F-you, and he act– I think he actually said F-you to his Melbourne listeners at one point, or a derivation of. You know, if they had’ve put in those clauses in the contract early on that required the two of them to do stuff, I have no doubt we could be having a totally different conversation now.

Tim Burrows (Host)

Ben, this is one of the media stories certainly of the year, possibly the, the decade. Thank you so much for jumping in at short notice for this conversation.

Ben Willee

No worries, Tim. This is gonna… There’s a lot more to play out on this, so I’ll be, uh, I’m just gonna go and put the popcorn on and, uh, waiting for the next, uh, iteration.