TORONTO – It should come as little surprise Bell Media’s recent $3.4 billion bid for Astral Media was top-of-mind for radio industry executives at last week’s Radio Interactive conference, held as part of Slacker Canadian Music Week in Toronto.
Radio presidents from Bell Media Radio, Corus Radio and Rogers Radio took part in a super session moderated by Ross Davies, director of member engagement for the radio group at BBM Canada. Also represented on the panel were U.K. broadcaster Absolute Radio and U.S. radio station operator Cumulus Media.
Corus Radio president Chris Pandoff said the BCE-Astral Media deal helps to reaffirm how good the radio business is, despite the industry downturn in 2009. “The transaction sends a very good message… to not only our investors but our customers who invest in us every day for advertising needs,” Pandoff said.
Offering a Brit’s point of view, Clive Dickens, chief operating officer of Absolute Radio, said he was impressed by the breadth of assets that Canadian radio broadcasters have within their parent companies. “It’s very encouraging that we’ve seen some M&A (merger and acquisition) activity,” Dickens said. “Continuing M&A activity is good for everybody. It reminds us of what a great business we’re in.”
Lew Dickey, chairman and CEO of Atlanta-headquartered Cumulus Media (which runs 572 radio stations), said there are always integration issues with any merger, and success hinges on being able to bring together disparate corporate cultures and systems. Ultimately, successful organizations are those that are able to achieve “a homogeneous operating culture”, Dickey said.
Prior to BCE’s bid for Astral Media, the radio president super session was supposed to include Charles Benoit, executive vice-president of Astral Media. However, as moderator Davies explained, Benoit asked to have Bell Media Radio president Chris Gordon speak in his place. Gordon said BCE and Bell Media over the last 18 months have spent more than $6 billion to acquire media assets, with more than $1 billion invested specifically to acquire radio assets.
“Those numbers are pretty incredible when you look at the health of the industry, and when you look at the way the video business and the media business in general are going,” Gordon said.
He added that Bell Media views the acquisition of Astral Media’s assets as complementary, with very little overlap between the two companies. “When you take a company like Astral with all of their multiplatform offerings, 98% of what Astral does, Bell Media doesn’t do. So outside of less than a dozen radio stations, the transaction is additive to Bell Media,” he explained.
To meet the CRTC’s broadcast industry regulations that limit ownership of radio stations to two FM and two AM stations in any market, Bell Media will be required to sell off a number of either its or Astral Media’s stations, barring any policy change.
Rogers Radio CEO Paul Ski said this is the aspect of the deal that he finds most interesting. According to his calculation, Bell Media will need to sell nine radio stations across the country. “So who’s out there to buy those stations? Is it an opportunity for someone else to create a group? It would appear to be difficult for any one broadcaster existing now to buy all of those radio stations,” Ski said (due to those regulations). “It could be a hodgepodge of people buying these various stations, or upgrading if they possibly can. Or it’s an opportunity for an equity group of some type to maybe be involved in the radio business.”
Both Ski and Bell Media Radio’s Gordon said they are encouraged by the radio industry’s continued resilience, despite frequent predictions over the last couple of years that radio was heading into a decline. “We always hear about the doom and gloom in the radio business, but our stations and our operation have been very resilient. We’re doing extremely well in the first quarter,” Gordon said.
Ski added that although the radio industry is not seeing the kind of revenue gains it enjoyed a few years ago, it is still maintaining year-over-year growth in the range of mid-3% to 5%.
Looking to the industry’s future, the radio presidents all agreed that the digital evolution of the industry is where the biggest opportunities lie. “Going forward, the opportunities of marrying technology and the radio business are the things we just have to fully exploit in the next 12 months,” Gordon said.
Ski added: “Nobody does local media better than radio does. So we are in a prime position to take advantage of digital opportunities that are there, and leverage the great brands that we have.”
Session moderator Ross Davies turned the conversation toward the issue of hiring new radio staff, by asking if the panel had concerns about the industry’s ability to attract top talent, especially among youth. “I agree with the premise… we will have increasingly in the future a very large problem unless we attract more talent,” said Pandoff. “It strikes me, with all of these technological opportunities available to listeners, it’s really the content that’s going to keep us relevant to them.”
Ski noted he participated recently in the Ontario Association of Broadcasters’ Career Day, which enables broadcast college students to meet professionals from the radio and television industries and this year, the OAB’s Career Day had a record turnout. “I think we do have some challenges, no question,” he said. “But I’m encouraged by that turnout.”
One strategy Rogers is considering for developing on-air talent is to bring back the all-night show, as a kind of “talent lab”, he explained. The idea would be to give young broadcasters the real-life experience of doing a late-night show, and Rogers programming staff could then provide feedback by critiquing their performance.
When asked to comment about the new digital music streaming services launched recently by CBC Music and Astral Radio, Ski said Rogers tries to be careful of “random acts of digital”, adding that his company’s approach is “to keep one foot in today and one foot in tomorrow, but be careful of just staring at our shoes.”
