Royal prank will cost Austereo “hundreds of thousands” amidst global outrage

The royal prank call that went tragically wrong has sparked a worldwide social media storm and radio network Austereo has suspended all advertising on 2Day FM in a move likely to cost it hundreds of thousands of dollars.

Austereo suspended advertising on the station on Saturday in response to an advertiser boycott after the suspected suicide of British nurse Jacintha Saldanha, 46, who was taken in by the prank call about Kate Middleton.

Southern Cross Austereo chief executive Rhys Holleran issued a video statement expressing the network’s deep sadness at “a tragic event” that “we could have never reasonably foreseen”.

“Our presenters we have spoken to and we have agreed at this point in time the radio show will not go on in the future and will be reviewed,” Holleran said in the video.

“Southern Cross Austereo remains committed to any investigation and we will help authorities who may want to investigate this matter further.”

The advertising suspension puts further pressure on Austereo as advertising sales revenue was already under pressure, dropping 10% in the three months to the end of September.

The advertising suspension puts further pressure on Austereo as advertising sales revenue was already under pressure, dropping 10% in the three months to the end of September.

Steve Allen, chief executive of media consultants Fusion Strategy, told SmartCompany suspending all advertising “really was smart” because of the social media backlash the network faced.

“The social space is flexing its muscles, whether it is right or wrong they are setting out to prove their power and they will take on any of these issues,” he says.

“The executives at Austereo said we are not going to stand here naked swinging in the breeze; we will protect our advertisers as long as we can.”

Allen says the growing power of social media is an issue all businesses need to be aware of and has increased in importance during the last year.

“We would not have been having this conversation six months ago, this time last year they would not have taken any of this action,” he says.

“It is a very recent phenomenon and people like Rhys Holleran just have to take these things into account now. There will be a group of very vocal people out there who are prepared to stir up sentiment partly to get their 15 minutes of starlight.”

Allen says he would be surprised if the advertising suspension went past this week as the circumstances surrounding the prank can be distinguished from those that resulted in previous boycotts of radio shows.

“Whilst this is tragic, this is quite a different circumstance to Kyle Sandilands or Alan Jones, they were domestic issues of appallingly bad taste; this is a tragedy that nobody could have predicted. You honestly have to say something must have been terribly wrong with this poor woman to take this drastic action,” he says.

Nevertheless, Allen says the advertising suspension will hit 2Day FM’s hip pocket.

“They take in as much revenue as 2GB but the real revenue house for most radio is breakfast, if you have to pull ads from breakfast that is real damage,” he says.

“These personalities are not connected with breakfast, this is nowhere near as serious in revenue terms as Kyle Sandilands or Alan Jones but nevertheless it is worth hundreds or thousands.”

This story first appeared on SmartCompany.