Job losses ‘inevitable’, admits MRN boss, as network prepares to put 2CH on the market

Russell TateMacquarie Radio Network (MRN) chief executive Russell Tate has admitted there will be job losses as a result of its merger with Fairfax Radio Network (FRN) as he hinted that a sale of Sydney station 2CH is unlikely to take place before the FRN deal is completed.

He told Mumbrella it was too early to estimate the extent of the cuts but said it was “inevitable” some staff would go.

“It’s premature to comment on operational issues,” he said. “But in any merger like this where you have very similar operations operating in the same sort geographies, of course there is going to be duplication and that inevitably will lead to some redundancies but it’s far too early to comment on the number or the people involved.”

The comments follow those of FRN managing director Adam Lang who told staff the merger will see “some cost synergies and efficiencies to be achieved in some functions and duplicated roles”.

Tate also declined to be drawn on the prospect of Sydney stations 2GB and 2UE operating from the same studios – 2GB is based in Pyrmont and 2UE in St Leonards – although he conceded such a move may “make sense”.

The deal between Fairfax and Macquarie will see MRN offload its Sydney-based 2CH station to comply with regulations which limit a network to two stations in any one city. Tate said it has yet to seek formal expressions of interest but will do “in due course”.

Tate said talks have started with the Australian Communications and Media Authority (ACMA) over a timeframe by which the new entity will have to sell 2CN. It could be possible for ACMA to give them six months, 12 months or even two years’ grace after completion of the Fairfax merger before the station needs to be divested.

“We have to get permission from the authority before completing in order to continue operating the three stations for a period of time,” he said.

Selling the station “will clearly take time” and is unlikely to happen before completion of the FRN and MRN deal, Tate added.

“In the meantime it is business as usual,” the MRN boss said.

Asked if the NSW Council of Churches, which held the license for 2CH until it sold to John Singleton in 1994, may be among potential bidders, Tate said: “I have got no idea if they are interested at this stage. We have not sought expressions of interest from anyone. We’ll have a look in due course, but it will be a while yet.”

When it sold 2CH the Church put a covenant on the station which requires religious programming on Sunday on the station and prevents certain advertising, including alcohol and gambling.

The ACMA said in a statement it is “actively monitoring” the proposed transaction between MRN and Fairfax and reiterated its commitment to enforcing compliance with the “control and diversity” rules in the Broadcasting Act 1992.

These include the “two-to-a-market rule” which limits control to two commercial radio licences in a licence area, and the directorship limits which prohibit a person from being a director of more than two commercial radio licences.

“In addition, the media diversity rules relevantly prohibit any transaction which will reduce the number of independently controlled media operations in a radio licence area to less than five in metropolitan licence areas and four in regional areas, giving rise to an unacceptable media diversity situation,” the ACMA said.

The body confirmed it has the power to give MRN two years to offload 2CH.

“The ACMA can consider applications for prior approval of temporary breaches of the media control rules and transactions that result in unacceptable media diversity situations,” said. “Any such approval is temporary because a condition of the approval is that the applicant must divest assets to remedy all its breaches within a set timeframe (up to 2 years).”

Meanwhile, under the terms of the Fairfax agreement, Tate will be executive chairman of the merged entity for an interim 12 months, but he refused to rule out remaining with the network.

“Who knows”,” he said. “Twelve months is a long time.”

He also described the spat between MRN and Fairfax management earlier this year, when a merger of the two parties collapsed in acrimony, as “history”.

“Let’s get on with it,” he said. “Both parties have recognised the value, now we have to sit down and work out the operational details.”

Steve Jones


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