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Volume 22, Issue 126, Jim Carnegie, Editor & Publisher

Tuesday Morning June 28th, 2005

Radio News®

RBR observation: No, Mel isn't stupid
Lots of rumors float around this business, but by far the silliest one we've heard lately is the idea that Sirius Satellite Radio would buy ABC Radio to give it a terrestrial outlet in major markets for some of its content - - like a PG-rated version of Howard Stern, while the R-rated version runs only on satellite. Whoever concocted this scenario seems to have forgotten that money will have to change hands. Suppose Sirius CEO Mel Karmazin decided to ante up two billion bucks to buy ABC Radio from Disney. He'd have to borrow all of the money, because Sirius still needs every cent it has on hand to cover operating expenses until it hits cash flow break-even and to fund various stages of building and launching replacement satellites. (Unlike terrestrial radio, the "towers" for satellite radio fall at regular intervals.) But if Sirius were to announce a deal to buy a terrestrial radio group, many of its stockholders - - who are convinced that terrestrial radio is in its death throes - - would bail. A conservative estimate would have Sirius' stock price dropping 20%+ immediately after any such announcement. That's nearly two billion in equity flushed down the toilet. So, from the get-go, it would cost Mel four billion to make a two billion acquisition. But that's just the beginning. A drop of 20% would put Sirius' stock price below five bucks, into penny stock territory, and set off a downward cascade - - likely shaving another 25-50% off its stock price. So it could end up costing Mel and Sirius 5-7 billion to buy ABC Radio, while Disney would only receive a payment of two billion. Not ever gonna happen!

Emmis on deck this morning
Don't look for any surprises from Jeff Smulyan and crew today as they report financial results for the company's fiscal Q1, which ended May 31st. According to Thomson/First Call, analysts are expecting revenues to be right in line with the company's guidance of 160 million, off 1% from a year ago. Emmis has said to expect domestic radio revenues to be 70.3 million, which is up 5% on a pro forma basis. TV revenues are expected to decline a couple of million to 66.4 million, no doubt due to the lack of political advertising this year.

RBR observation: Of course, what everyone really wants to know is how things are going with Emmis' efforts to sell off its TV group. But we doubt that Smulyan will reveal anything about the potential buyers, pricing or the progress of negotiations. Nevertheless, all ears will be listening intently for the slightest hint of what's going on with the TV auction.

Brand X/Ninth Circuit upturned by SCOTUS
The FCC put one in the win column yesterday as the Supreme Court voted 6-3 to call cable-provided Internet access an "information service" rather than a "telecommunications service." The upshot is that it the cable industry is not subject to the same requirement present in the phone business - - to share its wires and household access with competitors. One of those services, Brand X, was among the losers in what has commonly been called the Brand X case. The FCC and Bush administration made the ruling in order to encourage investment in broadband. The Ninth Circuit overruled the FCC, saying "telecommunications service" was the applicable term, but SCOTUS disagreed. FCC Chairman Kevin Martin said, "I am pleased that the U.S. Supreme Court has affirmed the FCC's ruling. This decision provides much-needed regulatory clarity and a framework for broadband that can be applied to all providers. We can now move forward quickly to finalize regulations that will spur the deployment of broadband services for all Americans." Goldman Sachs issued a commentary on the likely effect on cable stocks. It said that while the ruling was excellent news for the cable industry, all of this impact is on future prospects, heading off the entry of new competition. Current impact is nil, since cable companies are at present under no obligation to open their wires to the competition.

SCOTUS: File-swapping
companies can be sued
The Supreme Court ruled yesterday that file-swapping software companies may be sued if the software is used for illegal purposes and the companies intend for users to do so. The unanimous ruling sided with Metro-Goldwyn-Mayer Studios and remanded the case back to the lower court for further proceeding, reversing its ruling that the companies could not be sued for copyright violations by users. MGM (now owned by Sony) and other big-name movie and music companies sued Internet file-sharing network Grokster and StreamCast Networks (parent of file-sharer Morpheus), arguing the primary use of these networks is for the illegal distribution of copyrighted materials. Music and film companies said they lose as much as several billion dollars a year to piracy. They were opposed at the Supreme Court by computer and telecommunications companies that warned the case might put technology businesses at greater legal risk and stifle innovation.

RBR observation: We would hope this ruling would divert the attention of groups like the RIAA away from suing grandmothers and five-year olds over alleged copyright infringement. If they've got to sue, it seems more fitting to sue the providers of the services. At .99-cents a download for most services now, it seems pretty fair to the general public for music purchases. Case closed. | More... |

More SCOTUS: Reporters flamed in Plame blame game
Reporters facing jail time for refusing to reveal confidential sources in the outing of CIA agent Valerie Plame case failed to win a hearing from the Supreme Court - - despite the intervention of 34 state AGs and numerous news gathering organizations. The reporters are Judith Miller of the New York Times and Matthew Cooper of Time magazine. According to reports, the attempt to overturn a lower court ruling was based on First Amendment grounds. Time magazine is considering a new appeal at a lower level on other grounds. Rick Dunham, President of the National Press Club, commented, "It is a sad day when American journalists face jail for doing their jobs. To fulfill our First Amendment role as watchdogs on government, journalists must be able to promise confidentiality to sources who might lose their jobs or even their lives if their names were revealed. To retain its independence, the press must not be viewed as an agent of government, willing to turn over sources and research to law enforcement officials. This case is a particularly egregious abuse of prosecutorial discretion because it has not yet been alleged that a crime has been committed, and, in one case, the reporter did not even write a story. In light of the serious First Amendment implications of the case, the National Press Club urges prosecutors to reconsider sanctions against Judith Miller and Matthew Cooper."

Adbiz©

ABC Daytime Direction Network wins RADAR 85
For the umpteenth time, ABC's Daytime Direction Network has taken the top crown, scoring the highest rating P12+. RADAR 85 (4/1/04-3/30/05) shows once again that network radio delivers consistent audiences. Total network radio experienced a change in gross impression of less than 1%. The top 10 networks for Adults 25-54 and Adults 18-49 are still the top 10 networks. For P12+, the other top five nets after ABC Daytime Direction were Westwood's CBS News Primetime, Premiere Morning Drive, ABC Morning News and Jones MediaAmerica TWC (Weather Channel). Half of the networks had audience changes that were less than two percentage points. Except for Westwood, there were no double-digit changes. Westwood One's NBC Lite FM Max experienced impressive audience gains of 50%, NBC Lite FM surged up 38%, and CBS News Primetime and CBS Mix Weekend, experienced audience gains of 13% and 9% respectively among their core demo of Adults 25-54. Westwood's large audience swings at both ends of the spectrum resulted in no real overall gross impression changes for them (-0.1%)-which is not a bump in the road. Of the 15 Westwood networks reported in RADAR 85, only four experienced increases in total audience (i.e., P12+) and 11 had decreases. (For Adults 25-54, it was 6 up, 9 down; for Adults 18-49, 5 out of 15 were up). ABC Radio Networks has ordered RADAR 85 Special Tabulations to reflect an adjustment in its adult networks and increased affiliation activity in its young adult networks. Despite that, the number one network for both P12+ and Adults 25-54 was its ABC Daytime Direction, which increased its audiences another +5%, after increasing +7% in RADAR 84. ABC Prime Reach had another great RADAR with an increase of +6%, after increasing +5% in RADAR 84. AURN is down 20% from a year ago. This time, all three AURN nets decreased between -3% to -7%.

RBR observation: As mentioned, Westwood One's big shifts came with some major affiliate shifts. Westwood is likely speaking with agencies about guarantees on the audiences they bought-typical for networks that encounter major changes as such. It's also a good bet that the networks that lost audiences were cannibalized to move affiliates to grow the networks that increased in audiences. Bottom line is that it was like shuffling a deck of cards. Still 52 cards (i.e., no change in gross impressions), just redistributed. Nothing really changed.

MEC launches Mediaedge:cia Puerto Rico
Group M's Mediaedge:cia (MEC) has launched Mediaedge:cia Puerto Rico, based in San Juan, and named José Antonio Martinez as the group's vice president and general manager. Martinez, formerly VP / Media Services for Y&R Puerto Rico, will lead a staff of 15 employees. He will report to MEC's Regional HQ for Latin America, based in Miami and Mexico City.

WPP revenues up 20%
WPP Group said on Monday that like-for-like revenues rose by more than 6% in the first five months of the year and reported revenues were up by more than 20%, boosted by its buy of Grey Global. The company said its operating margin through May was ahead of budget. WPP had forecast a full-year margin of 14.3%, including Grey. WPP said growth in Europe was divided, with Eastern Europe and Russia better off, and western Europe, including Germany and France, remaining difficult. All regions showed double-digit revenue growth, with the US up more than 22%, the UK 14%, continental Europe more than 21% and the regions Asia Pacific, Latin America, Africa and the Middle East up almost 25%.

Media Business Report

CC Outdoor ordered to pay 65.1 million
The father of a 12-year-old boy electrocuted inside a Miami bus shelter seven years ago has been awarded 65.1 million by a jury. Eller Media Corporation, since renamed Clear Channel Outdoor, had been acquitted of manslaughter charges five years ago, but was found liable for the death in the just-completed civil trial. The jury foreman told the Miami Herald that jurors didn't believe the company's contention that the boy's death was due to lightening, not shoddy electrical wiring in the bus shelter. CC Outdoor still holds the contract for public bus shelters in Miami, on which it sells advertising, but they are no longer wired for electricity. Rather, they now have roof-mounted solar panels for power.

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Media Markets & MoneyTM

Palestine combo headed to new owners
KNET-AM and KYKK-FM are going from Hightower Radio to Tomlinson-Leis Communications for LP, according to Bill Whitley of Media Services Group, who brokered the deal for Hightower. The stations are licensed to Palestine TX, a town an unrated portion of east Texas south of the Tyler and east of Waco. The buyer, headed by Edward B. Tomlinson II, will part with 1.2M for the combo.

K-Love's latest Opus is a spin-off
Educational Media Foundation seems to prefer running its noncommercial K-Love Contemporary Christian Network on the FM side of the radio divide. So it comes as not surprise when broker John Pierce tells us that it has sold another of the AMs which has come under its control. This time the station if in Alexandria LA - - KWDF-AM at 840 kHz. The buyer Opus Media Partners, headed by Richard Linhard and Jim Shea, who are spending 150K to get the station.

WorldSpace closer to IPO
If you missed out on the IPOs of Sirius and XM, there's another satellite radio stock sale in the offing. WorldSpace is actually older than either of those, having launched its first satellite in 1998. But it doesn't serve the US market. Rather it targets the developing world with its AfriStar (Africa and the Middle East) and AsiaStar (Asia) satellites. WorldSpace, which is based in Washington, DC, is now trying to raise up to 183 million from a public stock sale. It plans to sell 8.8 million shares in a range of 16-18 bucks each. It plans to use the proceeds to launch its service in India and prepare for future service in China and Western Europe. To date, WorldSpace has racked up 2.1 billion bucks in losses. For 2004, it had 8.6 million in revenues and 198.9 million in expenses.

Washington Beat

Hinchey amendment to
protect CPB shot down
Maurice Hinchey (D-NY) got 187 votes for his amendment to an appropriations bill which would have barred political influence over the management of the Corporation for Public Broadcasting. However, 218 representatives, including most Republicans, voted against the measure. "While I am disappointed that this amendment to ensure public broadcasting's independence from political influence was rejected by the Republican-controlled house, our fight to ensure the integrity of public television and radio must and will go on," said Hinchey. Hinchey's measure was about enforcing that which is already on the books - - he said it "sought to reinforce the existing statutory prohibition against [CPB chair Kenneth] Tomlinson...from exercising any direction, supervision, or control over the content or distribution of public broadcasting."

Transactions

1.1M WKGQ-AM Milledgeville GA/WMGZ-FM Eatonton GA from Middle Georgia Communications Inc. (Tom Ptak) to Southern Stone Broadcasting Inc. (Paul C. Stone). 50K escrow, balance in cash at closing. Duopoly with WDDK-FM Greensboro GA. [File date 5/24/05.]

100K KPYN-AM Texarkana AR-TX (Atlanta TX) from Family Worship Center Church Inc. (Jimmy Swaggart) to Freed AM Corp. (Robert A. DelGiorno Jr.). 1K deposit, 9K cash at closing, 90K note. [File date 5/19/05.]

Stock Talk

More oil worries
Stocks were mostly lower, but only slightly so, as oil prices pushed above 60 bucks a barrel. The Dow Industrials were off seven points to 10,291.

Radio stocks were mixed. The Radio Index managed to push up 0.258, or 0.1%, to 202.822. Regent was up the most, 2.5%, while Beasley was down the most, 2.3%.

Radio Stocks

**Here's how stocks fared on Monday**
Company	Symbol	Close		Change	Company	Symbol	Close		Change
Arbitron	ARB		42.05	-0.23	Jeff-Pilot	JP		50.70	+0.35
Beasley	BBGI		14.60	-0.34	Journal Comm.	JRN		16.56	-0.28
Citadel	CDL		12.01	+0.01	Radio One, Cl. A	ROIA		13.07	-0.15
Clear Channel	CCU		31.18	+0.07	Radio One, Cl. D	ROIAK		13.08	-0.16
Cox Radio	CXR		15.37	-0.07	Regent	RGCI		5.91	+0.15
Cumulus	CMLS		11.95	+0.10	Saga Commun.	SGA		14.15	+0.15
Disney	DIS		25.63	-0.41	Salem Comm.	SALM		20.04	+0.10
Emmis	EMMS		17.72	-0.17	Sirius Sat. Radio	SIRI		5.99	+0.03
Entercom	ETM		32.37	+0.32	Spanish Bcg.	SBSA		9.64	-0.04
Entravision	EVC		7.84	+0.10	Univision	UVN		27.82	-0.18
Fisher	FSCI		47.53	-0.09	Viacom, Cl. A	VIA		32.47	-0.37
Gaylord	GET		44.97	+0.17	Viacom, Cl. B	VIAb		32.22	-0.42
Hearst-Argyle	HTV		24.69	-0.03	Westwood One	WON		19.93	+0.03
Interep	IREP		0.42	-0.04	XM Sat. Radio	XMSR		33.61	-0.31
International Bcg.	IBCS		0.01	unch	-	-	-	-	-

Bounceback

Send Us Your Opinions We want to
hear from you.
This is your column, so send your comments to [email protected]

I am fascinated by all the chatter about hourly Unit Counts in Radio, especially when Wall Street is involved. Wall Street's interpretation of data and recommendations affect thousands of investors and of course stock prices daily. I reviewed the Media Chart listing the average hourly UNIT COUNTS of Radio Broadcasters (6/2/05 RBR #108). I would like to point out that listing Units is at best deceiving. Entercom has the lowest Units Per Hour, 10.3, and the average FM is calculated at 12 Units per hour, but... If a station is selling just 1/3 of its inventory as :30 second units, they are airing only 10 minutes of commercial TIME per hour; 8X :60s and 4X :30s. Stations mixing in :15 second units are affected more dramatically. Howard University, WHUR-FM in DC, is listed as airing the most Units per Hour, 16.7. If half of those spots are :60 second units, perhaps 25% :30s and the rest are :15s, that adds up to 8X :60s + 4X :30s + 5X :15s, or 11 minutes and 15 seconds of hourly spots. They could be airing Less Commercial Time per Hour than average FM stations running 12X :60s. The big questions become, "What's more important to the listener? Is it the amount of units per hour or the amount of minutes per hour?" Australian Radio airs primarily :30 second units with limits of 10 to 12 Minutes per Hour. The average station runs 20 to 24 Units per Hour. Statistics can be deceiving. That's why they are generally referred to as estimates. When evaluating numbers, you really must understand what they represent.

Allan Ginsburg
Economist, Technologist, Broadcaster

Arbitrends

Stations for Sale

Rocky Mountain
Rated Market
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(303)758-6900
[email protected]

More News Headlines

MTV in games deal with Midway

BCFM election results

XM channel may be employed
for military use

International

Aussies buy
BBC Broadcast
The sale of BBC Broadcast, the commercial branch of the venerable British radio and TV giant that handles such things as promotion and distribution, brought even more than the expected 150 million pounds (4/14/05 TVBR #74) in the just-completed auction. Creative Broadcast Services, primarily owned by Australia's Macquarie Capital Alliance Group and parent Macquarie Bank, is paying 166 million (about 303 US greenbacks) to acquire the operation. The new owner has pledged no layoffs for the first year, which could placate the BBC's unions, who had opposed any sale.

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RBR Radar 2005

Radio News you won't read any where else. RBR--First, Accurate, and Independently Owned.

Gannett-Emmis Big deal
rumor examined
Gannett has never stopped buying media properties and is always willing to look at any decent newspaper or TV property that comes on the market. RBR observation: Before getting too excited about the potential for Gannett buying the Emmis TV stations, we decided to check into whether Gannett CAN buy the Emmis group, since the FCC's crossownership rule remains in effect. What we found was that there would have to be so many spin-offs that the deal wouldn't be worth doing. Of course, if Emmis TV is sold off piece-meal, Gannett could be a buyer. But the only way it could buy the whole thing would be to head into a drawn-out court battle alongside Tribune and Media General to try to get the crossownership rule tossed out - - with a real financial risk if federal judges don't see things its way. Due to its newspaper holdings, Gannett (so long as the crossownership rule stands) can't own the Emmis stations in Charleston-Huntington, WV, Mobile, AL-Pensacola, FL, Ft. Myers-Naples, FL, Green Bay-Appleton, WI, Honolulu, HI or Tucson, AZ ! - - and Portland, OR is iffy, although it looks like a detailed engineering study would OK the overlap with Gannett's Salem, OR paper. So, it seems unlikely that Gannett would bid to buy all of Emmis TV if it then has to spin-off eight of the 16 stations.
06/27/05 RBR #125

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