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“Over to my lawyers.” Those words, proffered by Australian radio’s most divisive figure, Kyle Sandilands, have been enough to push down ARN Media (ASX:A1N) shares around -1.5% through to Wednesday arvo.
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That is, if you accept that intraday turnover of $1,115 as of 12.40 pm AEDT is evidence of price action at all and not just a rounding error.
As I wrote earlier this week, the stock is off-puttingly illiquid.
Still, it’s a fresh debacle for the troubled Australian media company, and it ties into why nobody trades it in the first place.
Sandilands has long had a radio show with his female counterpart, “Jackie-O,” who by this point quite famously now had an on-air spat a few weeks back that saw the show fall apart – for which both presenters were to make $100M over ten years. That $200M contract is the most expensive for any known media gig ever.
Such a large contract, in fact, that it hurt ARN’s share price when it was inked, and according to reports elsewhere, a contract so large that ARN, six months in, secretly asked its own lawyers how it could maybe get out of it.
It appears ARN has taken “carpe diem” to heart and has seized the opportunity to drive a stake through the vampire’s heart for good on Wednesday, only days after the Aussie media regulator issued a half-decade licence order on ARN’s KIIS station brand, basically outright banning sex jokes.
Such was the nature of the beast that was the ‘Kyle and Jackie-O’ program; however, sex jokes were basically the be-all and end-all of the program’s real offering to the cultural media landscape.
(As well as standing out for being a deliberately irreverent program that had such a large audience, they could get politicians on.)
While the ACMA order basically guaranteed that any zombie revival of the radio show would come back castrated, ARN has gone one step further on Wednesday and notified it’s straight up ditched its ten-year contract with Sandilands – worth $100 million – only one year into the deal.
That’s nine years of overhang, and it’s exactly what Sandilands is focusing on. The man himself threw a press conference in his own driveway this morning – why not – and after the kind of reaction you’d expect, warned his lawyers would be knocking on ARN’s door. Or these days, emailing their inbox, you get the idea.
And that has been enough to scare off at least one shareholder, who has presumably taken $1,000 out of the stock, which may underline why this is such a big deal for the company. Because if Sandilands does eventually satisfy a judge he’s owed the money in the contract, or at least a good chunk of it, that could basically represent a terminal diagnosis for ARN.
It’s got a market cap of $130M. Any payout would likely be in the tens of millions, and even assuming a settlement to avoid a protracted case, in the face of climbing inflation, that number could easily grow over the time it takes to resolve any potential dispute.
ARN was widely deemed insane for offering the $200M contract to both hosts in the first place, despite the fact that they were incredibly popular. The critics, once again, are vindicated by this latest development.
A1N last traded at 33.5cps mid-lunchtime today.
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