The Kyle and Jackie ‘split’ has not only resulted in tumbling ratings for KIIS and a falling share price of the listed company ARN, but it also now threatens the entire board with the sack, following an historic kick-in -the-pants from shareholders.
At the core of the media operation’s problems is something all companies have to be aware of. It’s called brand safety, which was a big part of the $26 million or 10% revenue loss for the company for the year, the Annual General Meeting was told yesterday.
This was not because of the legal and media madness that Kyle and Jackie O’s break up has caused, though it could add to the revenue problems for next year.
“During the year … metro radio revenues declined by $28 million,” said CEO Michael Stephenson to shareholders on Thursday. “$6 million can be attributed to a tough advertising market, the remaining $22 million is related to clients who had chosen not to advertise with ARN because of issues relating to brand safety”.
This was an issue when 2GB had to re-evaluate the role that Alan Jones was to play at the station as he was targeted by a group called F’ing Mad Witches. In January 2016, Jennie Hill set up a Facebook page called Mad Fucking Witches to highlight the appalling sexism, misogyny, racism, homophobia, transphobia and ableism she was seeing in Australian media. The page’s name was inspired by the famous text message federal MP Peter Dutton accidentally sent to political editor Samantha Maiden, in which he described her as a ‘mad fucking witch’.
Advertisers left 2GB. The same exodus was happening to KIIS because of Kyle’s alleged ranting and raving. In turn, this became a big problem for the ARN board, which had signed off on a 10-year deal with ARN Media, reported to be worth $200 million ($100 million each) lasting until 2034.
While ratings have always been important to advertisers on radio stations, now brand safety has become a related issue, which poses a problem for shock jocks and the companies that employ them.
The impact of these problems has seen ARN’s share price fall by over 50% to 25 cents. Unsurprisingly, 90% of shareholders voted against pay rises for the stations’ executives.
In the world of public companies, a 25% vote against a remuneration proposal leads to what’s called a “strike”. If it happens two years in a row, the entire board can be shown the door.
This is an embarrassing development for ARN chairman Hamish McLennan, who has been regarded as a business guru. And while his support for the huge deal for Kyle and Jackie O is now seen as excessive and very risky, the fact that the company ignored the risks associated with a program based on shocks, rudeness and a man bagging a woman represents a hugely naïve business decision.
An era that now has F’ing Mad Witches and the internet that can ‘make or break’ a company because it failed to keep its brand safe, means boards that ignore these threats are bound to be sacked and their shareholders will cop lower share prices.
