Kyle and Jackie O struggles put KIIS FM owner in tailspin

KIIS FM-owner ARN Media is cutting $20 million in costs and shuffling its ranks as it tries to free up cash after signing Kyle Sandilands and Jackie “O” Henderson to a landmark $200 million contract.

Between 30 and 50 staff from the content, sales and marketing divisions are being made redundant in a staged process between now and February as ARN contends with its unsuccessful takeover of rival Southern Cross Austereo, a weak ad market and the costly Kyle and Jackie O contract, four sources with knowledge of the matter, speaking on condition of anonymity, told this masthead.

Kyle Sandilands and Jackie O are having a poor launch into the Melbourne radio market.

ARN’s moves also include shifting some executives into consultancy roles, the sources said, including chief content officer Duncan Campbell, who will now solely focus on the Kyle and Jackie O Show.

“There have been no changes to ARN’s executive leadership team, and no members have been made redundant. Any claims suggesting otherwise are incorrect,” an ARN spokesperson said.

ARN’s Duncan Campbell in 2016. He has been the company’s chief content officer for almost 15 years..Credit: ARN

Campbell has been ARN’s chief programmer for almost 15 years, playing a key role in luring the star pair from 2Day FM in 2013, as well as the network’s decision to re-sign them to the most expensive deal in radio history last year, that included a national rollout for the program.

A new 10-year deal, announced at the end of 2023, begins in January 2025 and will run until the end of 2034.

Henderson’s recent memoir detailed ARN’s “over the top” efforts to secure the duo to the new deal, facing tough competition from Southern Cross, who matched ARN’s $200 million offer, she said. This included Louis Vuitton suitcases, gold pens, champagne, a skywriter with their names and a 15-minute movie with a Ron Howard-like score, conveying their achievements at the network.

Earlier this year, ARN said the cost of the contract was offset by lower production costs as a result of syndicating the show into new markets and will be limited to a net total increase of $2-3 million per year. While it’s a bold move by ARN, the launch of the Kyle and Jackie O Show in Melbourne is yet to pay off. And perhaps the biggest issue facing the company is a campaign from the activist group Mad F---ing Witches, which is putting significant pressure on brands to pull advertising spend from the show.

While Sandilands had proclaimed it would be the number one show on commercial radio by Christmas, at the last survey, it sat in eighth overall, with a 5.1 per cent share. With very few commercial breakfast radio shows working on a national scale, so far, the show’s audience is down 27 per cent on last year, or 159,000 listeners in the most recent survey.

The day KIIS CEO Ciaran Davis [left] and chair Hamish McLennan [right] offered Kyle and Jackie O their historic contract, as pictured in her memoir. Credit: Jackie Henderson

Melbourne is the most competitive breakfast market and drives the most advertising revenue of any market in Australia. Breakfast radio contributes a major share of ARN’s revenue, particularly in Sydney, where the show dominates audiences.

‘Board-level miscalculation’

Meanwhile, the pair ARN sacked to make way for Kyle and Jackie O, Melbourne-based Jase Hawkins and Lauren Phillips, have shot the lights out at Nova and were the number one FM show last month.

Despite the show’s lacklustre performance in Melbourne so far, Brisbane is the next launch market for the Kyle and Jackie O Show, with speculation it will be rolled out late next year. KIIS’s current Brisbane breakfast hosts, Robin Bailey and Kip Wightman, are already strong performers, climbing to a 12.1 per cent share in the recent survey. Former Brisbane Broncos player Corey Oates will join the show next year.

ARN Media chairman Hamish McLennan and chief executive Ciaran Davis.Credit: James Brickwood

While there is still time for the show to hit its straps, a veteran radio industry executive told this masthead that the Kyle and Jackie O deal was a “board-level miscalculation” by ARN.

The business, saddled with the $200 million outlay, is now in a position where it can’t live “with Kyle and Jackie, or without them”, the senior executive said, speaking on condition of anonymity.

ARN chair Hamish McLennan justified the investment in Kyle and Jackie O earlier this year, comparing it to the large sums other media companies invest to grab sports rights, which are a hit with audiences and commercial sponsors and offer long-term value to shareholders.

Meanwhile, ARN’s protracted bid for Southern Cross has further placed the spotlight on the company. The takeover efforts have so far cost ARN $4.3 million, it told the market in August.

Last week, Southern Cross shareholders hit the company with a strike against executive pay at its annual shareholder meeting, demanding they cut costs even further than the $40 million in savings already planned. Other media companies, including News Corp, Nine (which owns this masthead) Seven, and others have had to take significant cost-cutting actions already this year.

ARN also operates the Gold FM network, with its executives praised for luring British broadcaster Christian O’Connell to Australia in 2018, providing a rare non-Australian voice on commercial breakfast radio. O’Connell hosts a consistently top-rating breakfast show. He was also awarded a new five-year contract last year.

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