Full cost of Kyle and Jackie O’s legal battle revealed

Kyle Sandilands and Jackie “O” Henderson’s months-long legal battle with their former employer ARN has cost the radio company more than $17 million so far as it battles rapidly declining revenue and profits.

ARN Media revealed the figure – largely attributed to a $12 million settlement with Sandilands and bound to increase in October when it fights Henderson’s $82 million contract claim in the Federal Court – in its half-year results on Friday. The company posted a loss of $28.3 million for the half year and revenue that declined by 14 per cent to $128 million.

Chief executive Michael Stephenson said he wanted to see audiences and advertisers return to ARN’s KIIS radio station after a two-year boycott campaign from activists over Sandilands and a revolving door of fill-in hosts hindered ARN’s ability to bounce back.

Well before Sandilands berated Henderson on air and reduced her to tears on February 20, ARN had a “long, long list of clients” that had specifically requested not to be advertised on KIIS Breakfast, Stephenson said.

“Because those clients didn’t advertise on KIIS breakfast, they often didn’t advertise with ARN at all,” Stephenson told this masthead after the earnings call.

“Now, we have zero clients on any list, so that’s the first step. But of course, it does take some time to recover the lost ground.”

The KIIS network has cycled through a number of interim hosts since Sandilands and Henderson’s departure. Permanent replacements will be announced imminently, Stephenson said, and new line-ups for both the Melbourne and Sydney breakfast shows will be revealed and on air before Christmas.

Both he and chairman Hamish McLennan have been under pressure from shareholders, evidenced by the 90 per cent protest vote against the proposed remuneration package for executives in May. ARN will suspend dividends until its outstanding legal dispute with Henderson is resolved.

Actions taken by ARN over the past 18 months have established a “stronger foundation for improved performance and long-term shareholder value”, McLennan said in a statement.

McLennan green-lit a 10-year, $200 million contract to keep The Kyle and Jackie O Show on KIIS FM in 2023 before Stephenson’s arrival. But the show blew up earlier this year following poor ratings in Melbourne, action from the media watchdog, the advertiser boycott and the deteriorating on-air relationship between Henderson and Sandilands.

Since Stephenson joined the company last year, the former Nine Entertainment executive’s challenge has been to clean up the mess caused by the deal and arrest declining revenue. He could not be drawn to confirm any of the “stars” expected to host its breakfast shows, including speculation that Dr Chris Brown, known as the “Bondi Vet”, would replace Sandilands in Sydney.

Stephenson said he was “not naive enough” to think ratings and advertisers would return overnight and said the opportunities in Sydney, where KIIS’ breakfast show had been the “absolute leader by a long way”, and Melbourne, where they were coming “dead pan last”, were very different.

“I’m very confident that we will regain the [market] share that we’ve lost,” he said. “I don’t think [rival radio companies] Southern Cross and Nova really won much from us. I think we lost it.”

The new show in Victoria will be “innovative and experimental” and “very Melbourne”, Stephenson said.

On the financials, Stephenson said ARN had made “strong progress” in stabilising its core business and strengthening its position, both by settling its matter with Sandilands and agreeing to sell its Hong Kong-based outdoor advertising business Cody.

After the on-air feud in February, Henderson walked off the show and did not return. She informed ARN she could no longer work with her co-host and her contract was terminated. She is now suing the network, alleging it failed to protect her from Sandilands and improperly tore up her contract with $82 million left owing over several years.

ARN also terminated Sandilands’ contract for allegedly bullying Henderson, which he denied.

After settling the lawsuit, Sandilands told this masthead that ARN was a “house of cards”. Hundreds of staff have been made redundant and its share price has fallen about 44 per cent over the past 12 months to 26¢.

“I don’t regret saying the comments to Jackie because it needed to be said,” Sandilands has said. “If it brought on an early exit from the show and the implosion of that show, then that’s unfortunate. But what are we supposed to do? Just pretend here for the rest of the nine years that everything’s fine?”