So the news finally broke that GCap is going to network something, somewhere in daytime across their One Network of radio stations. Which, I imagine, isn’t particularly good news if you’re a daytime jock.
Indeed I hear the information flow wasn’t exactly as smooth as at Global, where their ‘under threat’ DJs all got a personal briefing/help finding a new job before it was announced publicly.
Now I actually don’t have anything, per se, against networking (you can take the boy out of GWR, but… etc etc), but the recent spate of daytime networking changes creates an interesting quandary, specifically around sales and making money.
You see, if you’re a Finance Director you have a little spreadsheet which shows your costs in lots of different categories and then you have another spreadsheet that lists all your income. The problem lies in the inter-relationship between these two spreadsheets and the fact it’s hard to show the real-world connections between the two.
Taking a top-down approach you add up the cost savings of networking a show and you’ll probably come up with a saving at the One Network of £800k to £1m a year. That’s a big number. Then, when you ask the question “Will it materially reduce audience by networking it?” I think it’s hard to say that it will.
What hasn’t been picked up is that it won’t be all the One Network stations taking this networked show, well at least from day one. I imagine the ‘big 8′ are unlikely to initially take part. Why’s that? Well, according to recent financial statements GCap say they account for around 50% of the hours and money made by the network. Therefore should the worst happen and they see a five percent reduction in the hours of those stations there could be quite a material affect on the business, whereas 5% off of Lantern probably won’t make such a difference to GCap’s bottom line. Indeed you can look at the cost saving and work our how much audience you would be ‘happy’ to lose before you start making less money.
However, assuming that an hours reduction is the only threat to enhanced profitability would be a naive thing to do. To me, the most interesting thing about the networked show is what else you lose locally. With my business hat on, to me the biggest potential threat is the loss of local S&P or indeed any money that having a local programme specifically generates. The simple calculation to make is whether statement 2 would outweigh 1.
1. Money generated locally for show – cost of making local show = show profitability
2. (Money generated because of national show – cost of network show) / number of stations taking the show = station’s allocated profit.
There’s lots of talk about network shows being able to bring in national sponsorship opportunities, which is undoubtedly true. However, will the total revenue from this new national opportunity outweigh what was previously able to be generated locally? If it doesn’t the £1m saving will start to shrink. Very quickly.
To underestimate local sales is very dangerous, especially as spot for spot, local can generate more than three times the national equivalent. Already many sales teams across the UK have suffered when their sales houses oversell airtime (or have to provide more spots because available impacts have gone down since the ads were sold). This result is less inventory available for local sales teams and often that’s when you hear everything on the station suddenly has a local sponsor. Those local sales teams need to hit their targets after all.
The other type of sales that a station loses is the ability for local jocks to sell what’s coming up on the station (as well as ther station’s other S&P activity). Now, whilst some of this can be replaced by a DCS command and a split break, there is not the same emotional sell that a jock can do. Being excited about the breakfast show or other activity on the station helps drive hours and keep the stations performing well. In commercial radio the presenter’s role does not stop at segueing a song well or delivering a funny ‘bit’, they’re there to re-enforce all aspects of the individual radio station to drive hours and, ultimately, profit.
The easy post to write about networking is how it’s all ‘hell in a hand cart’ and the end of civilisation as we know it. Well, to be honest, I can’t guess how the One Network’s audience is likely to react. I imagine some stations will be up and some will be down and it’s going to take a good 18 months to see what the real result of this policy change is.
What is a shame is that 100+ presenters, suddenly having found out about their future on DigitalSpy and RadioToday are going to be concentrating on getting a demo together and finding a ‘safe’ shift rather than delivering compelling audio and serving their current audiences.