HT&E ramps up focus on audio as it preps to take on Spotify

Here, There and Everywhere (HT&E) is determined to reposition itself as a market-leading audio company rather than a broad holding group, following the sale of outdoor furniture business Adshel last year, and the closure of esports operation Gfinity at the end of 2019.

CEO Ciaran Davis told Mumbrella following the group’s financial results that the company is uniquely positioned to capitalise on the booming audio landscape – more so than competitors Southern Cross Austereo (SCA) and Nova Entertainment – and it could eventually battle the streaming giants, rather than just other radio businesses.

HT&E CEO Davis (left) speaking at Mumbrella’s Audioland earlier this uear

“Obviously [after] the sale of Adshel last year, we spent a bit of time refocusing in terms of ‘Where to next for us’. We sold the business at a very good time, realised a lot of shareholder value that we knew was within the business. Previous to that, we were looking at other areas like esports and expanding out, but I think we also felt like we had such a cracking business in ARN, and that audio is in a renaissance period,” he said, noting the proliferation of audio options including podcasting and streaming was actually complimenting, rather than cannibalising, radio.

“And the basis of what we’re doing is using the strength of our broadcast assets to build out a much more complete audio offering for listeners and for advertisers. And the extension of iHeartRadio was a key thing for us, because we believe that’s our competitive advantage. We believe that we’re the only audio company in Australia who can deliver that piece of integrated content, where we can push and pull listeners based on their choices and interests into radio, into podcasting, into streaming, into artists’ radio.”

He said the benefits for advertisers are unparalleled, and would eventually leave the organisation in a position to battle Spotify for market dominance.

“That’s not going to happen today or tomorrow, that’s going to take us a bit of time to build up the audience, but we are investing in the capability, the infrastructure, to build out a more complete audio offering, and certainly we have spent a lot of time over the past six months putting that together,” he said.

“Looking at what’s there in the market today, we’ve got our commercial strategy to grow our radio share, but also to look to become much more competitive with the digital operators.”

This belief in ARN’s potential to take on Spotify in a market where so many traditional media companies are under pressure is underpinned by Davis’ faith in the iHeartRadio platform, and the resources that come with it.

iHeartRadio sets ARN apart, according to Davis

“It’s because of iHeartRadio, absolutely. Our understanding of our audience, our ability to put content in that platform that’s live radio, that’s artists’ radio, that’s streaming, podcasting, nobody else can do that. So it’s absolutely iHeartRadio,” he said.

“Part of the agreement is that we’re on the same roadmap as the guys in the States. They’ve got 250, 300 odd developers over there who are looking at the next step of audio, looking at things like AI recommendation tools for podcasting, so we have a lot of learnings that benefit us as a result of the relationship that we couldn’t afford if we were trying to do it ourselves from scratch. And that’s quite exciting… There’s new developments in the pipeline for iHeart that are coming down the road in the next 12 months.”

HT&E, however, carries significantly higher talent costs than that of the streaming giants, something a legacy radio company would struggle to get rid of. Indeed, its recent 2019 financial year results flagged that talent costs are set to increase across the network, and one-off savings from previous years couldn’t be replicated in the coming months.

So how do you keep costs down, but also stick to the ARN mission of attracting and retaining the best commercial radio talent in the country?

Davis said part of the looming talent cost increases would be Melbourne’s breakfast host Christian O’Connell on Gold 104.3, who came on board in July last year. Plus, he said, he’d actually like to pay more bonuses to talent who, as yet, have not achieved the ratings the network was hoping for.

“We obviously want to pay those, because ratings success drives commercial success. So that’s the increased cost of talent that we’re talking about,” he said.

ARN would be happy to pay more bonuses to on-air talent, Davis says

“Fundamentally, I’ve always said that recruiting and retaining the best talent is one of the key tasks of any radio network, and it’s no different for us.

“We believe we’ve got a stable of very, very good talent. We talk and contract negotiations are ongoing all the time. We don’t do stop/ start in terms of our contract negotiations.

“And cost of talent is something that we look at, but equally, it’s a core part of the business, so if there is an increased cost in talent, it’s just the nature of the market.”

And speaking of ballooning costs, Davis says the market is right to be concerned about shrinking margins, declining commercial radio ad revenue and global economic events – but the audio industry needs to be careful not to talk itself into a depression.

“I think the wider economy will decide [how long the contraction in radio spending lasts]. You look at what happened in the US this week in terms of fears of recession… [but] I think we’ve got to be careful not to talk ourselves into it, because a lot of the fundamentals of the economy here are still extremely strong,” he said.

“I don’t believe this [dip] is a structural thing of radio, I think it’s just we’re in a bit of a media hole at the moment – but radio is still extremely strong, and its relevancy in a slower, softer market is increasingly important to highlight in terms of its cost efficiency, in terms of its ability to drive ROI, in terms of its ability to drive retail sales, its relative low cost of production, its flexibility in terms of the number of ads you can place, when you can get them on air, how often you can change it.

“So all those things, as an industry, we’re highlighting very, very strongly with clients and agencies and brands to show the power of the medium. Because it’s an immediacy medium that actually works well in an environment like this.”


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