Friday, 16 October 2009

"Alas... poor Radio"

The radio business can be the most fun business in the world to work in, but we can’t escape the fact that it’s a business. If you work in the commercial world, you’re more than aware of the tough trading conditions that we all currently face in markets all over the world. The last couple of weeks have reinforced to me the challenges of the business side of the profession I love.

The story takes place in Denmark, and although it’s quite a few miles from Elsinore, there’s a little of the ‘Shakespearian tragedy’ about the whole affair.

The owner of Radio 100FM, Denmark’s largest commercial station was John De Mol, the Dutch media tycoon, who’s company is probably most famous for bring Big Brother to our screens. He decided that he no longer wanted to be in radio, and having sold his Dutch radio business some time ago, wanted to dispose of his Danish station. However, rather than wait for a buyer to come along in a ‘down market’... he withdrew his funding, therefore forcing the station into administration and bankruptcy rather quickly. The station did not have large cash reserves to keep it afloat.

Danish commercial radio on a national scale has a history of financial problems with the ill fated Sky Radio, TV2 Radio and now Radio 100FM. Without going into too much detail, the financial structure that has been imposed on stations is more than burdensome (both from government and from rights holders), however Danish commercial radio is looking forward to a new era of the government understanding the issues more acutely, and encouraging growth of the sector as opposed to setting insurmountable financial barriers.

The downside of the bankruptcy was that a whole load of good radio people were made redundant and that’s not a pleasant process, regardless of which side of the desk you’re sitting on.

The good news is that the Managing Director, Jim Receveur (good name for radio!) has bought the assets of the old company (the name, the studios, a few of the staff) and the station is still on the air! The brand is such a strong radio brand in Denmark with around 1.3 Million weekly listeners (12+) and a loyal base built up over 6 years, so it’s just too good a proposition to let it go to the wall.

So, the station is currently being run on a skeleton staff. But this week there were some part time roles advertised in a bid to ensure that there are enough people to maintain the level of quality and service to both listeners and advertisers.

This is a positive move and although the future shape and level of staffing of the station is yet to be fully formed, it’s a move in the right direction to build the business back up again.

If there’s ever a time for radio programmers, producers, talent, journalists etc to appreciate the “business” of radio... it’s now. Keeping costs at an acceptable level and placing resource where it gives the best return is essential. Being creative and flexible with clients is vital. But more importantly, addressing the whole business model of radio actually the opportunity that this recession really presents.

The media landscape is changing so fast that radio needs to rapidly adapt its revenue models to survive in future. We can’t continue the over-reliance on the ‘spot ad’, reinforced with a dollop of S&P revenue along the way. If we ignore what is happening to media and the patterns of consumers as we approach a new decade, we do so at our own peril.

(Without trying to sound too much like Gordon Brown)... the setback is the challenge and the opportunity to learn.

And I’m certainly looking forward to the challenge ahead with this particular client.

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