Media Report

'On the record' with David Butorac, the Managing Director of WIN. The corporation owns Australia's fourth largest commercial TV network and it has plans for expansion.

Transcript

This transcript was typed from a recording of the program. The ABC cannot guarantee its complete accuracy because of the possibility of mishearing and occasional difficulty in identifying speakers.

Antony Funnell: David Butorac from WIN-TV is our latest 'On the Record' guest.

And a little later in the program we'll find out why many Canadian online users are up in arms and accusing their government of selling out to US interests.

But let's start with WIN; and the corporation is a bit of a dark horse in the Australian media industry. It doesn't get that much attention but over the years it's grown to become Australia's fourth largest commercial television network.

Now by way of introduction, David Butorac has only occupied the Managing Director's chair since February this year, but in that time he's already embarked on a significant shake-up of the company's management team.

He was formerly a senior executive with News Corporation's Pay-TV ventures in Britain and Hong Kong. He now has his headquarters in Wollongong and he joined me yesterday from our studios there.

David Butorac, welcome to the program.

David Butorac: Antony, thanks very much.

Antony Funnell: Broking and investment firms have this week been talking down media stocks, predicting a continuation of falling advertising revenues. Now you're the Managing Director of Australia's fourth-largest commercial TV network; how is that affecting you, are you concerned about that?

David Butorac: Oh look, one always needs to be concerned; the economy always impacts our industry as consumer confidence hits across the board. We've always got to be concerned about where it goes, because we are a consumer-driven industry. But that said, these industries go through cycles and we see whilst there are some difficult periods ahead with changes in landscape and changes in where the dollar may come from, from an advertising perspective, there's also strength, particularly in our local markets, and we on one front, can see pressure on the national sales, and on the other front we see actually stronger opportunity in our local sales. So you have to ride these cycles out. But certainly we're not in the doom and gloom merchant category of where the markets are likely to go in the next couple of years.

Antony Funnell: And have you had a drop in your advertising revenue at WIN?

David Butorac: The advertising revenues ebb and flow, and certainly this year, with the fact we haven't had a national election that has impacted in terms of the dollars that have driven since last November, but when we see softening in one market, like we've seen with our national markets and indeed as we roll towards an Olympic Games that by and large we don't have access to content on, we are seeing strength in our local markets. Our local markets are actually holding up quite nicely in the face of changes in the national market.

Antony Funnell: Now WIN used to be simply a regional broadcaster, but last year, it added both the Channel Nine affiliate stations in Perth and Adelaide to the stable. Do you have ambitions? I mean you were brought into this role to grow the business, to expand it. Do you have ambitions to acquire more metro stations?

David Butorac: WIN as a corporation is a rather large cross-media company. It's true to say that the strength of the business has been generated by the growth in our regional TV businesses since Bruce Gordon and his family purchased WIN-4 here in Wollongong in 1979. What has been achieved in the intervening years is a fantastic growth of a business that hasn't just been concentrated on television broadcasting. If you actually look at the fantastic portfolio of companies that we have within our group, we have radio businesses, we have a fairly significant property business, we have a very strong and significant infrastructure business that fuels a number of broadcasters with facilities throughout pretty much the eastern seaboard of Australia. We also recently acquired a multi-channel television business, which albeit it, it's in its infant stage and going through its investment cycle, we see a strong necessity in expanding our operations to go beyond just the traditional regional broadcasting. The acquisitions of NWS in Adelaide and STW-9 in Perth are very strategic acquisitions for us, and we're very pleased that we were able to close those deals.

Antony Funnell: So you are looking for further acquisitions outside of the regional TV market, but I take it you're also focused on acquiring things that will give you a synergy within the operation overall, is that correct? You're not doing say, what James Packer's doing, you're not looking to get out of one whole section of media and try something else completely different?

David Butorac: No, absolutely not. We're not looking to get out of anything. The joy and the beauty of our company is that we are ideally placed to continue to expand on many fronts. I think in the modern digital era, that is, we're now embarking on as an industry, brings with it fantastic risks but also brings with it fantastic opportunities. And we certainly see the opportunities rather than the risks. We're entering a phase of broadcasting where probably the technologists and the consumers are way out ahead of the programmers and the regulators, and what we aim to do is to try and capitalize on those diverse opportunities. We could see that as a competitive threat, and it could be a competitive threat, but we prefer to see it as a collaborative opportunity, to expand our portfolio so that we can expand our brand experience and expand the way that we interface with our customers through a myriad of ways that go beyond the linear broadcast.

Antony Funnell: OK, look I take what you say there. Looking though at the Nine Perth and Nine Adelaide stations, since WIN took them over, they have been on the up both in terms of revenue and also audience as I understand. Still a very long way to go though, isn't there, before you recoup the amount of money, the millions that you actually spent on trying to purchase them.

David Butorac: Well the objective is not just to recoup the millions, because the value of the station is inherently there as you grow out. Certainly we've seen some successes in both Adelaide and Perth in the intervening period since we purchased them. Markets like Perth and Adelaide, and indeed most of our local markets throughout Australia that have been us the bedrock of strength behind where WIN as a group has come from, rest on the fact that we have a local identity, and a local community involvement. Markets like Perth and Adelaide are the same as markets like Wollongong and the Sunshine Coast and all the other areas that we operate in, in that we need to heavily invest in local community, we need to heavily invest in local news, because local matters to all of our consumers, and we need to heavily invest in the marketing support that reinforces that, and that's what we've set out to do in both Perth and Adelaide in the intervening period since we purchased the stations. And yes, we're very heartened to see that the fruits of our labour are being generated in expanding audiences.

Antony Funnell: Just on that point of local content, you have announced that you will be making your own local versions of the 'A Current Affair' program on both of those stations in Perth and in Adelaide. You also do a local morning program that is produced by WIN-TV, and of course there's local news. You'd be aware though, that there has been criticism of WIN and other broadcasters, radio and TV, in regional areas in Australia over the last 10 or so years, that they've moved out of producing local news in a real sense, and that they're producing it, but they're also then sending it out, producing it from hubs and sending it out to areas around the country that really have nothing in common. Is your commitment to strengthening local news strengthening it in the areas where it needs to be strengthened? You know, getting it out across more and more communities?

David Butorac: Absolutely. And the criticism that has been levied of broadcasters, thankfully we have been uniquely immune to, simply because we have not cut back in our news gathering capacity throughout the country. In fact we see the opportunity to expand that, as one of our core strengths.

Antony Funnell: You have centralised it though, haven't you, in certain areas?

David Butorac: No, we have news gathering capacity in over 28 locations around Australia, we produce local bulletins for many of our markets that are uniquely local, and no other broadcast competitor does the same. What we do is we have a strong regional presence in our news gathering and we will continue to expand that. It's the core strength of our business, and we're very proud of the links that we have with the community. We are producing dedicated television news bulletins for most of our major local markets. We haven't centralised into national bulletins, because local matters, and we see that in the huge success that we have with our local share of audience. If you compare with by and large the same entertainment content the capital cities share, versus our regional share, we are traditionally 2 to 3 percentage points better in our regional markets because of our regional association. We're proud of our links with the communities; we're proud of the investments that we make in local news, and we will continue to expand those.

Antony Funnell: Now expanding online, I know that's a focus for you as well. Is there a difficulty for WIN in expanding digitally and online, given the problems with broadband infrastructure in many regional areas?

David Butorac: There's no question that WIN Corporation has not been at the forefront in terms of digital media as we need to be. And we're aiming to remedy that with some structural changes in the company and indeed we've just recently appointed a Head of Digital Media to focus and grow out that business. Digital media is not just a matter of looking at online, it's looking at the opportunities that mobile delivers, and indeed, multi-channel free-to-air broadcasting delivers, which is a very exciting platform for all of us as broadcasters, both radio and television. I've worked in digital broadcasting now for many, many years, predominantly on the multi-channel side of the fence. And ultimately, what digital brings is nothing to do with technology; digital actually brings choice. And what we are all able to do is offer the consumer greater choice. The digital technology is simply the enabler. Now I think the consumer is ready for that choice in all walks of life, in every aspect of the way a person lives their life they are increasingly availed of choice in the way they make their decisions. And broadcasting is no different. It certainly will lead to fragmented markets, fragmented audiences, but the sum total of those fragmented audiences if we are able to execute our models correctly, will be greater than the parts as we stand. Currently our consumers, who love tuning in to the WIN local news throughout our markets, and indeed the national news, can only really interface with us as a broadcaster once they get home, or with some rare exceptions, where they may be in establishments that have broadcast output. If we can expand the WIN experience so the consumer can interface with us in different ways, be it online, be it mobile, be it on their commute in different ways, that leads us back towards strengthening our broadcast, then will be a successful proposition.

Antony Funnell: Now earlier in the year, just after you took over, you said that when you looked at WIN's operations, you thought that it was still acting at that stage, like a medium-sized business, when in fact it was a very large operation. People would be surprised, I guess, that it is so large. Do you think it's often under-estimated, not just by the audience but also by the other players in the media industry?

David Butorac: Unquestionably I think that's the case. I think there is a perception about regional-based broadcasting, that it is rural broadcasting. The fact of the matter is, that the vast majority of people who live in regional Australia are living in major urban areas, and are deriving their income and their lifestyle in a fairly similar way to the capital cities. I think most people fail to understand that for instance, 42% of Australians who are watching Channel Nine content are actually watching it on a WIN television screen, be that either our regional service or our Nine stations in Perth and Adelaide. We are rapidly becoming a major force in broadcasting and I do believe that some of our competitors in both television and indeed in other media, haven't quite recognised the strength of that. Regional broadcasting is rapidly growing in line with the population shift and we're very proudly growing with that.

Antony Funnell: So look, in that sense, has there been also an underestimation of the value of regional audiences for media?

David Butorac: I think there is. If you look at the way that regional broadcasting is sold, even with the advertising agency world, you usually have a hotshot high-flyer who's selling the five cap cities, and then somebody else within the agency that's selling regional. Regional is a far more complex buy and requires a large understanding of the complexities of the market. But that said, there are very, very strong national brand advertisers that are rapidly coming to terms with the fact that regional broadcasting actually delivers them an equal, if not greater impact in terms of their advertising dollar. And we have great successes with some very premium national brands who recognise that as the population grows in regional areas, their advertising dollar needs to follow it. And the core thing that is evident in all the research is that people who live in regional Australia, many of whom are making lifestyle decisions, don't want to be treated any differently to people who live in capital cities, and we have to encourage our advertisers to recognise the fact that when they're talking to people through their advertising media in regional Australia, they need to be saying exactly the same things that they're saying to the capital city markets. It's not just that the markets are changing because people are retiring and going to regional Australia, it's because the markets are changing and a number of people are making lifestyle decisions to take their families into regional Australia because of the quality of life. And it's an expanding market for us, and certainly it's an expanding opportunity for advertisers.

Antony Funnell: And is there a frustration with the way government also use media in regional Australia, that it very often seems to be a second-class citizen when it comes to things like policy, to broadband rollout, all of those sorts of things, digital radio, digital TV?

David Butorac: Actually I'd have to say to the contrary. We have a very good access to government decision-makers, and we believe that the policymakers are probably more attuned to where the shift is happening. They are also very attuned to the complexities of the rollout of, say, digital services. When you look at the current push, which is to transition quite rightly from an analogue service to a digital service so we can expand our service offerings, I think the policymakers are very aware of the complexities that regional broadcasting brings. If you look at our business for instance, and again, here we are on a par with the ABC, and the two of us share ground way ahead of anybody else in Australia, we have over 200 transmitter sites and translator sites, which all have to have capital infrastructure investment in them to make the transition. We are way ahead of the game than most of our commercial rivals in making those investments because we do see the strength of that is going to deliver us into the future. And I think the policymakers both at a State and Federal level, are attuned to that. So we certainly don't see any disability in accessing the decision makers at a policy level, simply because they are very aware of the complexities of the task ahead of us.

Antony Funnell: Well David Butorac, Managing Director of WIN Corporation, thanks for joining us On the Record.

David Butorac: My pleasure, thank you.

Guests

David Butorac
Managing Director, WIN Corporation

Presenter

Antony Funnell

Producer

Andrew Davies

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