There was an air of inevitability about KIIS-owner ARN Media firing Kyle Sandilands this morning and officially ending its association with the ratings’ juggernaut that was The Kyle and Jackie O Show.
The bombshell announcement this month that Jackie Henderson’s service agreement had been torn up – after allegedly giving notice that she “cannot continue to work with” Sandilands following an on-air blow-up – suggests ARN management had already made up their minds about what to do with her co-host. And possibly set a trap.
The move left Sandilands in an impossible position: reportedly told he had to convince Henderson to reunite with him on air to save his own contract, while her contract had already been scrapped.
The surprise would have been if everyone kissed and made up this morning rather than Sandilands joining Henderson on the unemployment queue.
Sandilands’ response early this morning sets the scene for what will inevitably be a brutal legal battle over ARN’s right to terminate the remainder of the duo’s stupendous $200 million 10-year contract, which has about nine years left to run.
“To the people who tune in every morning – you lot are the reason I’ve done this for 25 years,” Sandilands said. “You didn’t get a say in this. Neither did I. But my lawyers will. I’m not done. Not by a long way.”
The only question is whether a legal victory for Sandilands, and Henderson, would threaten ARN’s financial survival.
You can bet Sandilands’ top-notch legal team were instrumental in shaping his statement that outlines the arguments that will inevitably play out in court.
“Let me tell you what actually happened here. Jackie and I had a blue on-air. That’s it. The kind of thing we’ve done a hundred times in 25 years. And ARN took the situation and decided to try and burn the place down. They sacked Jackie. They suspended me,” he says.
That’s a reference to the rant he delivered at his co-host on February 20 because she enjoyed looking at horoscopes, reducing her to tears.
As Kyle explains, “ARN knew exactly what they were getting when they signed my deal. They’ve worked with me for over a decade … why would ARN prefer to breach a contract and pay the legal consequences rather than honour the contract and pay me to do what I do best? That’s the bit that doesn’t make sense.”
Actually Kyle, it makes perfect sense when you see how the contract – possibly the biggest gamble in Australian radio history – is working out for ARN and its chair, rugby union’s eventful former chairman Hamish “the Hammer” McLennan.
ARN’s market valuation is only just above the $100 million mark, literally half the value of Kyle and Jackie’s contracts.
The market is reflecting the decline of the radio sector’s commercial value, but also ARN’s inexplicable deal with Sandilands and Henderson that presumed the pair’s ribald banter would work in Melbourne and Adelaide just as well as it had in Sydney.
Nice one, Hammer.
The Hammer might also be ruing the decision to pay more than $300 million for regional radio group Grant Broadcasting in 2022. That is three times ARN’s current market capitalisation, but on the plus side, the regional business is actually the standout performer for the merged company.
It could have all been so different had Melbourne audiences lapped up the show’s lowlights, like the sounds of male and female staff members urinating, lewd comments about the genitals of participants, and graphic accounts of menstruation and oral sex.
ARN hoped that Melbourne listeners would jump on board and add the most lucrative radio market in the country to the duo’s Sydney success. The two markets account for more than 60 per cent of the metro commercial radio market’s value.
Even if ARN, Kyle and Jackie did get the show back on-air, they would have faced a much more constrained environment.
This week, the media watchdog, ACMA, flexed its muscle and said it finally had the power to hit ARN with fines and the loss of radio licences if any show featuring either Sandilands or Henderson continued to breach the Commercial Radio Code of Practice with the impunity they once enjoyed.
On top of this, in July this year, an update to the code comes into force. It includes the new school drop-off clause, which says that programs must give “due consideration” to the fact that children might be listening between 8am and 9am in the morning, and 3pm and 4pm in the afternoon.
That probably means oral sex is out as a topic, for starters.
It comes after the Senate estimates appearance of ACMA chair Nerida O’Loughlin in 2024, where she declined the invitation from Greens senator Sarah Hanson-Young to read out some of the more revolting comments from the show.
O’Loughlin’s comment that she “would not think they were appropriate for parliamentary language” met with an obvious point from Hanson-Young.
“Do you think they would be appropriate for broadcast radio between the hours of 6am and 10am?”
The rest of the radio sector can’t afford to sit back and chortle over ARN’s misfortune, either. Recent reports have focused on who will win Sandilands and Henderson’s audience during the lucrative breakfast time slot.
They might need to consider a different scenario: What if the Kyle and Jackie audience turn up their collective noses at the safer options on other stations, turn off their radios, and go online instead.
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Colin Kruger is a senior business reporter for the Sydney Morning Herald and The Age.Connect via email.
