Global to buy GMG Radio: Competition issues.

So, it's being reported today that Global Radio is to buy GMG Radio for £50million.  It's being reported that UTV Media, Absolute Radio and Bauer Radio are expected to lodge complaints to the Competition Commission.

It's strange to watch this happen, knowing that this has happened already in two broadcasting related industries, and in both of them, they are significantly weaker now, than they were before the whole merging process began.  Instead of becoming more than the sum of the parts, in both cases, the industries have become singiificantly less than the sum of the parts that made it, and it's already been happening in radio and it seems to be getting worse.

When radio stations first started being sold in the UK, back in the early 1990s, the usual valuation for a station was around £10million each.  Accounting for inflation, which doubles every 15 years roughly, that would make each station today worth somewhere between £20-25million.  Except, that Global has just bought 10 stations for £50million.  That's £5 million per radio station.  Accounting for inflation, that valuation of radio station back in the early 1990s would be somewhere near £2million.  In other words, the value of an individual radio station has fallen 80% in the last 20 or so years.

That's some pretty massive depreciation.  It's a damning indictment of an industry that seems to be doing what both Virgin Media in cable and ITV in terrestrial broadcasting.  Merging themselves, not into oblivion, but into irrelevance.  And as this trend continues, listeners will slowly continue to desert those stations that are part of this massive conglomerate, and seek other alternatives, from overseas if necessary. 

And there is a bigger issue than merely the massive depreciation in the value of the radio industry over the last 20 years.  This is the biggest radio company in the UK, buying the third biggest, when it is already way more than double the size and reach of the second biggest.  And all this does is make Global bigger and make radio a less attractive industry for people and other business to come into.  Radio was a better industry and a stronger industry, when there were more players in constant competition.

What's often refered to as consolidation is in fact nothing more than seeking to eliminate competition.  And Charles Allen, who was the man responsible for the assimiliation of many of the ITV regional companies into Granada, and the eventual merger with Carlton to form ITV plc in 2004, knows all about that.  And with GMG willing to sell, Global basically, being the biggest, could offer the most money, and yet, they still undervalued the group by at least half, according to GMG's own valuation in it's last annual report.

Global want to basically consolidate all of commercial radio under one company, much like Charles Allen tried to do at ITV, and almost succeeded.  This deal is not designed to increase competition or preserve it, it is designed to reduce it.  For that very reason alone, the Competition Commission should refuse this deal. 

Busting Media Myths #1: 'How real people consume media'.

One thing that really makes me feel disappointed about the state of radio and broadcasting in general.  The attitude that was summed up in an article in March 2012 on the Radio Today website written by Stuart Clarkson.

"Stop and think for a second about your own radio listening habits. And then think about how a friend or family member who doesn’t work in radio (or have an unhealthy interest in the medium) consumes it."

There is so much wrong with that statement, that I couldn't deal in detail with all the various problems with it in my rebuttal to him.  But in this article, I can deal with all those problems and show why stations should not fall into the trap of believing that "real people consume media differently" from anybody else.

The first problem with that is the idea that there is a distinction between 'real people' and 'people who have an unhealthy interest'.  This idea that there is a distinction between these two groups and that the more knowledgeable group should be negatively regarded is exclusive to the media.  It does not exist in any other industry.

Imagine if I was a shop worker, and another shop worker from a different store came into my store with a complaint about a product I sold.  Which would be the correct response?

A)  "I'm sorry, but you have an unhealthy interest in retail.  I will do nothing about your complaint."

B)  "I do apologise.   Would you like a replacement or refund?"

Generally, the correct answer would be B.  If I had ever come out with anything remotely like A, I would have expected the shop manager to have hauled me over the coals in his office, and rightfully so.

So why do broadcasters regard complaints from some viewers and listeners in the same way by claiming the person has an 'unhealthy interest' in the medium?  It's not good customer service, and it leaves a bad taste in the mouth of the viewer or listener.

There's another problem with this distinction.  It shows up an attitude problem within the broadcaster.  It says that the broadcaster looks at viewers or listeners, and does not consider them to be the most important people for the station.  Probably they think their advertisers are more important than their listeners or viewers.  But this shows they have forgotten or not understood one key fact.

Advertisers follow where the viewers or listeners go, rather than the other way round.

We have seen repeated examples of stations losing lots of listeners for one reason or another, and the advertisers desert the station.  Plymouth Sound saw that in 1999 when their AM service was replaced by Classic Gold and the station lost 2/3rds of their listeners.  Advertisers started to go to Pirate FM in order to get the reach they used to get with Plymouth Sound AM.

Without listeners or viewers, advertisers do not have anybody to advertise to.

It's a simple as that.  Anytime you prioritise advertisers over viewers or listeners, you are putting the cart before the horse.  The most important people to the success of any station is your viewers or listeners.

Now after all that, let's talk about 'consuming media'.

The first question there really is do we consume media?  Well in a sense, we do, because the media is mostly a consumer product.  We buy newspapers, magazines, radios, televisions, computers, games consoles, computer and console games, DVD's and Blu-Ray's, so in a sense, media is a consumer product.  However, the idea that we really consume media implies that we do not make a conscious choice about which media we consume. 

Far too often when we go shopping for food, we aren't really making conscious choices.  We are merely picking up the same things we have always picked up, because we have got used to their texture and taste.  In that situation, exercising real choice would be to decide to buy a different product, or to decide to not buy any other product, or after thinking about it, deciding to buy it anyway. 

However, with most media, it is a conscious choice.  It is a choice whether we go to the cinema or stay at home.  It is a choice whether or not we switch on the radio or the television.  It is a conscious choice when we decide which channel we are going to watch, or which radio station we are going to listen to.  It is a conscious choice which game we play, or which movie we watch on DVD or Blu-Ray.  So I would not call it consuming media.  We interact with it, consciously making choices.  Those who refer to it as consuming media are again basically forgetting that the viewer or listener is the most important person to that station.  Without them, the station cannot survive.

If your radio station needs more audience to attract more advertisers and make more money, then does it make sense to keep doing the same thing you've always done?  No, you have to make changes.  By hiring me as a consultant, I can guide you how to improve your product, and maximise your reach by precise use of new and old media techniques.  Email me to find out more.

What's wrong with the media #1: Lazy continuity.

I've been watching Challenge most of the day, watching a Takeshi's Castle marathon.  I love the show, it's wonderfully silly.  But in doing so, I've spotted a horrible example of what's wrong today with the media. 

Broadcasters today seem to have forgotten that not only are they part of the Entertainment industry, but that it is also a Service industry.  There seems to be very little in the way of service and the continuity announcements on Challenge today have been no exception.  Most announcements over closing credits have been simply voiced promos for regular programmes, no mention of what's coming up next.  The announcements into a programme have been nothing more than station promotion liners, no mention of what programme was actually about to air.

Quite frankly, if you're going to have some pre-recorded continuity, then at least make it about the shows you are showing now and next, rather than general promotion of other shows.  For all the good that those announcements would actually do, they may as well not have had them airing in the first place.  They were neither entertaining nor providing much of a service.