'Cash crunch': Disrupt Radio pauses live shows as staff await overdue pay
'Cash crunch': Disrupt Radio pauses live shows as staff await overdue pay
Welcome to a midweek update from Unmade. Today, things take a turn for the worse at Disrupt Radio as staff go unpaid. And the Unmade Index hits a brand new low as audio stocks take a hammering.
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Disrupt Radio promises staff they will be paid when new investor comes through
Startup digital station Disrupt Radio has started filling its airtime with old episodes after staff downed tools because they have not been paid.
Unmade has seen a series of memos to staff from the management of Disrupt Radio saying that their July salaries were late because an anticipated new round of investment is yet to arrive.
Among those missing from live programming is Enterprise Breakfast host Libbi Gorr. The only show that has gone to air live in recent days is the afternoon program Entrepreneur Her featuring former AFL player and Australian Survivor contestant Moana Hope.
Disrupt Radio launched in June last year, with content focused on small businesses and startups.
Unmade understands that most Disrupt Radio staff are paid in arrears as freelancers, via a monthly fee, with their super paid separately. But their July pay, due a fortnight ago, has not arrived.
Most staff have now stopped going into Disrupt Radio’s office, which is based out of Sports Entertainment Network’s Melbourne studios.
In July, Unmade revealed that Disrupt Radio had lost $4.6m in its first year on air, and was burning $400,000 per month. It had only brought in $308,000 in advertising revenue.
A fund raising initiative on the crowd funding platform Birchal which closed on July 1 raised just $24,500 of Disrupt’s $1m target.
At the time, Disrupt Radio’s founder and CEO Benjamin Roberts told Unmade that a $5m capital raising was underway led by EMT Partners.
Earlier this month, Disrupt Radio’s chief financial officer Tom Cockle sent an all staff email saying:
Hi Disrupt Team,
We are making progress on the capital raising front and expect the incoming funds are not too far away now. As soon as the funds arrive, you will be paid.
Please bear with us. We do appreciate how difficult this situation is for you all. We are working night and day on this matter and are confident of a speedy resolution. The incoming new investors are really impressed with our radio station and standard of programming.
For those of you who have reached out and offered your support, we are truly grateful.
We will send out another update very soon.
Roberts then followed up, telling staff that their non payment was “an operation issue”.
As the money still failed to materialise Roberts sent an additional note to staff telling them: “You’re a great bunch of people and we are very lucky to have you. Our management team is doing everything in our power to ensure this cash crunch doesn’t happen again.”
Yesterday’s radio ratings also contained more bad news for Disrupt Radio which sank to an official weekday reach of just 4,000 people across Sydney, Melbourne and Brisbane.
In both Brisbane and Melbourne, Disrupt Radio’s cumulative audience was too low to measure - meaning it received an asterix in the survey in both cities, signifying that the number of people who tuned in at some point from Monday to Friday was less than 1,000 in each city.
In Sydney, Disrupt scored a cume of just 4,000.
The ratings cover both people listening via DAB+ and via streaming.
This total cume of 4,000 across the three cities where Disrupt Radio has a DAB+ licence is well below the 250,000 to 300,000 promised to advertisers by Disrupt Radio’s sales boss Rob Shwetz in an interview with Unmade just over a year ago.
Staff - some of whom are part of a WhatsApp group called Dis Fucked Radio where they have been discussing their missing pay - have told Unmade they are considering taking their concerns to the Fair Work Ombudsman.
In the obligatory disclosures within the Birchal document, Disrupt Radio had flagged an “insolvency risk”, saying: “The Company is not yet profitable. The Company is seeking to obtain further funding to achieve its ultimate sales, marketing and technology objectives. There is no guarantee that funding will be available on favourable terms or that the Company will receive any level of funding at all.”
Financial regulator the Australian Securities & Investments Commission states: “A company is insolvent when it cannot pay its debts when they are due. There are serious penalties for allowing your company to trade while insolvent.”
Company directors who allow insolvent trading can face civil proceedings including financial penalties, or being disqualified from being a director.
Yesterday Unmade invited Roberts to comment, specifically to address whether staff pay was overdue; to confirm whether this was the reason live shows are not going to air, and whether an inability to pay staff reflected on the company’s solvency. He replied:
“We’re a startup and a constant work in progress, and like everyone else, we’ll continue to raise until we don’t need to. A depressed advertising and capital market doesn’t help, but we’re lucky to have a tight and supportive team, management and board, many of whom have equity in the company and understand the challenges and opportunities of working in a startup environment.
“We have some presenters on scheduled leave and it’s our usual policy to replace live programs with recorded highlights. We’re a new station and there is a vast library of fantastic 'back content' that most people haven’t had an opportunity to listen to. We look forward to your ongoing support as we continue to build the company, albeit a bit slower than anticipated.”
Along with Roberts and Cockle, the third director of Disrupt Radio is Michelle Guthrie, who was sacked as ABC managing director in 2018. Guthrie is also Disrupt Radio’s chair. She is reportedly Disrupt Radio’s second largest shareholder after Roberts.
Guthrie said yesterday that she was unable to comment in detail because she was in bed with Covid but in a brief email she stated: “It is a serious allegation that disrupt is trading insolvently. And absolutely untrue.”
Unmade does not suggest that Disrupt is unable to pay staff what they are owed, only that it had not done so at the time of writing. We do not allege that Disrupt Radio is trading insolvently.
'The critics are saying they're going to give us six months': Trying to make sense of Disrupt Radio
Angst in audioland
All three listed audio stocks had a rotten day on the ASX yesterday.
Southern Cross Austereo and ARN Media both slipped to the lowest valuation in their histories. SCA slipped by 2.75% to land on a market capitalisation of $127m. ARN’s value slipped to $182m. SCA’s end of year financial update will be released tomorrow morning.
Meanwhile, Sports Entertainment Group, owner of radio minnow Sports Entertainment Network, took a 23.3% hit on its valuation, slipping to $64m,
It was also a tricky day for the out of home sector with Ooh Media slipping 1.89% to fall back below a $700m valuation and Motio losing 14.3%.
The Unmade Index hit a new record low of 456.6 points
Time to leave you to your Wednesday.
By the time you get this, I should be somewhere in transit to Sydney, wild winds permitting. This afternoon, I’m moderating a discussion about where technology is taking us in publishing for both media companies and brands. Maybe I’ll see you there.
We’ll be back tomorrow with an audio-led edition in which I chat to demographer Bernard Salt. As you’ll hear, it was a fascinating conversation.
Have a great day
Toodlepip…
Tim Burrowes
Publisher - Unmade
tim@unmade.media
Being paid on time is not the only issue at Disrupt, Look at the workplace culture and what current and past employees have had to deal with, it all starts with management