Ever since Kyle Sandilands and Jackie ‘O’ Henderson left 2Day FM a decade ago, rumours of Southern Cross Austereo (SCA) putting aside big bucks to win back the pair seemed to have become a semi-regular occurrence in media news.
The network reportedly tried to poach the duo with $12 million back in 2015, just 19 months after Sandilands and Henderson defected to the ARN-owned KIIS FM. A little more than six months later, that figure ballooned to $20 million.
Tension and speculation are now growing once again as Sandilands and Henderson’s contract is due to expire soon.
The Australian Financial Review yesterday reported the pair are on the market and quoted sources saying that SCA has been “pretty aggressive” in pursuing them.
Networks will no doubt keep a close eye on what the pair decides, as the new deal will decide Sydney radio’s power dynamic in the next few years – but advertisers have some concerns of their own.
Steve Allen, director of strategy and research at Pearman Media, said the move now feels like a campaign from Sandilands and Henderson to drive up their asking price, and advertisers, more than anyone else, will eventually pay for it.
Allen observed that the audience share for FM stations is at an all-time high and the number will be hard to increase from here. Taking KIIS FM as an example, the station scored the highest overall share ever in Sydney in the latest GfK Radio 360 survey.
“On the AM band, you can demonstrate that sometimes there’s a 20% share or something like that – I’ve never seen that on the FM band,” he told Mumbrella.
On the Kyle & Jackie O show specifically, he said the duo had been around long enough that the fans will always stick with them, and the haters will never come. If they were to change the show’s formula, there would be the risk of “losing the audience that’s already welded on”.
“We work for clients on the best possible commercial deal, and if they have to pay more without any audience increase, the CPMs are going to skyrocket.”
Lorraine Woods, head of trading at Atomic 212, said Sandilands and Henderson’s departure from SCA resulted in an estimated $15 million to $20 million loss in annual revenue, while ARN’s coffers saw immediate growth.
Woods believes the same situation would probably play out again if the duo were to end up returning to SCA.
The reports yesterday of Sandilands and Henderson potentially being up for grabs comes at an interesting time, hot on the heels of ARN buying a 14.7% interest in SCA – a deal struck after-market at a 42.1% premium price to the last close at a cost of $38.3 million.
“As you’ve probably seen, we can’t work out why ARN has done it,” Allen said. However, with the huge cost that ARN forked out for the acquisition, he said the stake is likely to be a defensive play.
“If Kyle and Jackie O were to go with SCA to the 2Day FM, they [ARN] can probably recoup their money sometime afterwards.
“It’s a shoot-out between the two [ARN and SCA] now.”
When approached for comment, Ciaran Davis, ARN Media CEO and managing director said: “We don’t see contract negotiations as being an on-off exercise. Since Kyle and Jackie O have been with us, we have been working very hard to make sure they feel part of a bigger network, and that everybody contributes to that.
“I don’t think that it’s a surprise to us that they have had the highest listenership they have ever had.”
An SCA spokesperson said the network doesn’t “comment on speculation”.
Article originally published on Mumbrella.