2HD and New FM hit rock bottom

I promised the folk over at MediaSpy I’d publish a better quality version of the Rock Bottom article found in today’s Newcastle Herald H2 supplement. Click the links below to view the two articles in question.

ROCK BOTTOM

The demise of the once mighty NEW FM has created a troublesome competitive gap in Newcastle commercial radio for listeners and advertisers alike, writes Neil Jameson.

The figures were damning. In a city regarded as one of the pioneers of Australian commercial radio, there had never been a more ignominious slide.

According to the first set of ratings figures for 2008, NEW FM, the station built on rock, had hit rock bottom. NEW was old hat, the one-time rocker well and truly rolled by not just NXFM and KO-FM, but almost everybody else including 1233 ABC and Triple J.

NEW FM nosedived in every timeslot with a meagre 5.6 per cent of the overall audience share placing the station at the bottom of the commercial pile. Only the ABC’s national trio of Radio National (2.5), News Radio (0.8) and Classic FM (2.5) were propping it up.

What a contrast it was to the heady days of 1990 when, less than a year after the station’s launch, Newcastle’s first FM broadcaster went within half a point of the magical ratings figure of 30.

The latest figures for 2008 were absorbed with much more temperance. Up on the hill at the Charlestown headquarters of Austereo stablemates NXFM and KO-FM, the popping of champagne corks was noticeably muted.

NX had smashed the ratings with 23.5 overall audience share with KO next on 18.8. But nobody was getting too excited about beating up on a bloke on crutches.

NX-KO staffers, many of them refugees from NEW FM, were acutely aware of the crippled state of their one-time rival.

Plagued by a succession of sackings, a savagely depleted executive structure, inexperienced staff and low morale, the once powerful NEW offered nil resistance.

Nobody was surprised, least of all the few still working at the former market leader.

“It took a big hit but to be honest, it wasn’t totally unexpected,” Guy Ashford, the station’s recently appointed sales and operations manager, told H2 before conceding that NEW FM needed a new identity.

Garth Russell, now with 1233 ABC, did two turns at NEW FM and was there at the very beginning in 1989.

“The excitement of being among the pioneers for the launch of FM radio in Newcastle was fantastic,” he recalled. “Now it’s just sad to see where it is today.”

Other observers were more alarmed by the results that delivered grim tidings for not just NEW FM but its Super Radio Network stablemate 2HD. The once powerful AM station continued to slide in the wake of the retirement of John Laws.

As Craig Wilson, managing director pf Newcastle agency Sticky Advertising, observed, the troubles at the Super Radio Network’s Sandgate bunker posed problems for more than just the listeners.

“My primary concern is as an ad agency owner,” he told H2. “We are witnessing a significant change in the intended media dynamic in this town.

“There is a commercial radio duopoly controlling four stations,” Wilson said.

The disparity between the respective fortunes of the Austereo pair and the Super Radio Network’s local duo is of concern for potential advertisers.

“The result is a bad deal for listeners and advertisers,” Wilson expanded. “It’s a worry for radio in general.”

Advertising clients in search of an audience have little choice but to go to NX and KO and pay the premium the top rating stations are entitled to ask.

How did it come to this?

For the answer we track back to 1999-2001 when a relative newcomer made a $40 million play for a major stake in the game. Sydney-based fruiterer, liquor trader and real estate speculator Bill Caralis, who already owned a modest string of country stations, paid $8 million for Sydney’s 2SM and $12 million for 2HD and NEW FM. Then, at a cost of $20 million, he built new headquarters for what he would call the 2SM Super Radio Network on land he had bought cheaply at Pyrmont.

That splurge laid the cornerstone of what is now a 35-station empire that stretches from Sydney, west to Broken Hill and north to the Sunshine Coast

As a broadcasting footprint it has made Caralis a major player in the radio game. But it is what he is doing with this growing empire that continues to perplex all and sundry, not least of all his own employees.

His appearance in Newcastle in 1999 certainly scared the pigeons. At the time the Sandgate-based 2HD and NEW were rating one and three respectively.

As had happened elsewhere, most on-air announcers were either fired or fled. Garth Russell and Steve Graham left NEW FM for NX and the top-rating team of David Collins and Tanya Wilks quit 2HD.

By 2001, Garth and Steve had pinched HD’s mantle in the all-important breakfast shift. Ultimately, the Wilks-Collins combo would wind up at KO where they’re currently holding down second spot in breakfast.

HD’s slide in breakfast was a preview of a pattern that would continue to haunt both stations. The Sydney decision to ditch Richard King’s late-night and local show for a relayed program from 2SM was unpopular with listeners, many of whom switched. The move directly impacted on the popularity of HD’s breakfast hosted by Luke Grant.

Used to fighting hard for audience share, the Sandgate team, under general manager George Liolio, worked to stop the rot. They still held a strong hand with Gary Harley anchoring HD’s league coverage and staking out its reputation as “the Knights’ station”, Cameron Williams doing breakfast, Aaron Kearney on drive while the seemingly bullet-proof Laws maintained his grip on mornings.

Liolio: “My early memories of radio had been visiting stations like HD and KO when they had guys like Pat Barton and Warwick Teece on air. They were great talents, but they were well backed. If you want to win a competition you must have the best support staff.”

The general manager hired a new group sales manager in Craig Wilson and gave program director Greg Clark the green light to get the FM format back on track

Piloting a course between NX’s young teens and KO’s more conservative clan, the station set its sights on the 18-39 males market.

The formula was simple. No fluff, no boy bands, no rap -just classic, stripped-back rock with a liberal dose of laughs and blue-collar irreverence. The giveaways included Harley-Davidson bikes.

Wilson: “The station definitely had troubles in 2001 but George gave the staff enough rope to go out and run it properly. There was always cutbacks and more being asked of employees, but it was doing well. We were on the way back”

With emerging on-air stars like the Fat Boys, NEW clawed from 6.5 to a 13 per cent audience share which included top slot in the important 25-39 age group. Once they had consolidated that audience, the Sandgate crew started chipping away at the opposition by expanding the playlist to broaden the appeal.

But the pressure of building an audience while trying to run the business on the whiff of an oily rag took its toll.

“You can go broke saving money,” George Liolio said this week

In 2004, he quit to become chief executive of the Newcastle Jets football team. Sales manager Craig Wilson left the station a few months later.

By 2004, NEW FM was operating without a general manager, program director and sales manager. In retrospect, station hands would recognise that Liolio had served as a buffer between staff and the business owner.

In 2006, Gary Harley and rugby league moved to KO-FM. In 2007 Laws pulled the plug. HD was in free fall.

The nadir for one NEW FM employee came when Caralis rang in the wake of yet another ratings dusting that placed NXFM well on top.

“What is NX playing right now, ‘ the angry boss is alleged to have asked.

“Britney Spears.”

“Well, play that.”

Many a journalist has tried to get a handle on the Caralis logic. He doesn’t return their calls.

H2 tried to contact the Super Radio Network chief this week only to be told not to hold our breath. Rare public sightings of the eccentric Caralis include an appearance at an Industrial Court hearing dressed in trackie daks.

Is he disappointed with events given that he paid almost twice the price for the NEW-HD business as Austereo forked out for the KO-NX pair just four years earlier? At present, the estimate is that better than 80 per cent of radio advertising revenue is winding up at the two dominant Austereo stations, largely at the expense of their crosstown competition. For a preview of this impending disaster Newcastle radio employees could have looked to the 2SM experience. The fallen giant, which once held a majestic 24.9 share of the metropolitan audience, has long since withdrawn from the Sydney ratings survey after a succession of disastrous figures.

With HD’s aged demographic branding the station as “God’s little waiting room” and NX cornering the teen market, listeners who have abandoned commercial radio may wonder just how much all this matters.

Since the advent of the iPod, audiophiles have been running their own programming - without the commercials.

Next year, listeners will be able to buy internet radios which will allow them to listen to 13,000 online radio stations. In a world spoilt for choice, you can only speculate just where that will leave Australia’s current commercial broadcasters.

New hope springs from the Sandgate bunker

GUY Ashford was hired from 2GO-Sea FM’s Central Coast operation a month ago with the assignment to pull NEW FM back from the brink.

The sales and operations manager of both 2HD and NEW FM is currently putting the finishing touches to a quiet relaunch as part of the early planning to recast the FM station’s fortunes.

“Even before the recent survey results came out, we were already putting the changes in place,” he said.

“Come June 2, we will have a new on-air line-up, new format, new sound and better direction.”

After 28 years in the business, much of it spent living and working in Newcastle, Ashford is convinced commercial radio fortunes are cyclic.

“Years ago, NX was in a similar position to what we’re in today,” he said. “NEW FM’s turn will come again.”

He confirmed what the advertising industry has been saying - that agencies are demanding a more competitive radio market in Newcastle.

“We’ve got agencies screaming at us to spend money, so we have to come to the party. That means improving both our product and our revenue.”

On the question of support from the group’s owner, Ashford said that Bill Caralis had signed off on all the proposed changes including the digital fit-out of a $3 million refurbishment of the Sandgate site, making it ready for the advent of digital radio in 2009.

“Bill will be one of the first to go digital. The new building here will be state-of-the-art.”

Ashford holds the view that the media has misinterpreted Caralis’s commitment to the industry.

“Here’s a Greek immigrant who was pushing barrows around the Sydney fruit markets when he was 14. From there, he has built himself a fortune. And he’s done it on his own. He’s certainly got his heart in the business and he’s here to stay.”

There will be little fanfare about the June 2 relaunch.

Ashford: “We’re not making any great claims at this stage. We just want to freshen it up and level the playing field.”

The challenge for his new on-air team will be to make the audience linger a little longer on 105.3 on the FM band.

“More people were actually listening this time than a year ago,” Ashford explained. “But the difference is that a year ago they were listening longer. At the moment they’re just sampling us and moving on. So, we have to be good enough to make them stick.”

A legion of ex-NEW staff will testify that accepting a position at the station is radio’s kiss of death.

But Ashford is unfazed.

“I’ve heard those stories, but I’m very happy to be here. It’s like I’ve bought the worst house in the best street. I promise you, we will turn this girl around.”

by Neil Jameson, Newcastle Herald.