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Volume 23, Issue 138, Jim Carnegie, Editor & Publisher

Tuesday Morning July 18th, 2006

Radio News ®

Diaries get PPM shuffle
Arbitron announced changes to its start dates for the Winter 2007 and Spring 2007 ratings survey periods. The move is designed to harmonize the quarterly periods for diary measurement with its planned launch of Portable People Meter ratings in some markets next year. Going forward, Arbitron says it will no longer place a one-week break between the Spring and Summer surveys. In the 97 continuously measured markets, the quarterly survey periods for the Arbitron diary-based radio ratings services will now consist of four contiguous 12-week surveys, beginning with the Winter Survey which starts in January and concluding with the Fall Survey which ends in December. Starting in 2007, in markets measured by the Portable People Meter, there will be an additional four weeks of measurement covering the "holiday period" between the last week of the Fall Survey and the first week of the Winter survey. This means that in PPM markets, Arbitron will annually release 13 individual four-week rating reports. 12 will correspond to the individual survey phases typically used in the Arbitrends service. The 13th four-week report in the annual cycle will occur between the last week of the Fall Survey and the first week of the Winter survey. In two-survey-per-year markets, Arbitron will continue to conduct only the Spring and Fall surveys.
| View the Chart |

Citadel fires back

After being sued by bondholders who claim that its deal to acquire ABC Radio from Disney constitutes a "fundamental change" requiring immediate repayment of its bonds (2/28/06 RBR #41), Citadel Broadcasting has fired back by filing a countersuit in a New York state court. According to an SEC filing by Citadel, its lawsuit seeks a judgment declaring that neither the merger nor a related agreement constitutes a fundamental change under terms of the bonds. Citadel said it had engaged in talks with attorneys for the bondholders to try to resolved the matter. It didn't say whether the talks are still going on, but the filing of the countersuit indicates that they didn't succeed in coming to terms. The bondholders who sued Citadel say they hold more than 109 million of Citadel's 330 million outstanding in 1.875% convertible subordinated notes due 2011.

PAC attack holds firm
The Federal Election Commission's latest census of political action committees (PACs), whose major function, as far as we're concerned, is to pump money into the bank accounts of broadcast outlets, is holding firm. Since the beginning of the year, seven more are registered, up to 4,217 total. The current breakdown by type is as follows: There are 1,621 tied to corporations; Corporate PACs remain the largest category, with 1,621 committees, independent PACs total 1,233; there are 935 associated with trade, membership or health organizations; 283 connected to labor unions; corporations without stock are running 105; and cooperatives have 40 in operation. The number of PACs this election is up from the last presidential election, when only 4,040 were registered, and represents an even bigger increase over the last midterm, during which 3,865 were active. However, the number of PACs has been reasonably consistent for quite some time. At this point in the campaign season ten years ago (1996), there were 4,033 PACs in operation. There were even more, 4,092 to be exact, back in 1986.

RBR observation: So there are basically the same number of PACs now as has been the case for 20 years or more. There are also the same number of seats in Congress. What has changed, then, is that the PACs and the candidates all have more money to spend.

CBS Evening News adding radio simulcast
When the CBS Evening News with Katie Couric debuts 9/5, the viewers will be able to watch and listen, as well as a get related programming on television, radio, Internet and wireless platforms, it was announced by Sean McManus, President, CBS News and Sports. Among the offerings:
| Read More... |

RBR observation: Surprising CBS Corp. CEO Les Moonves is not using more CBS O&Os to air Katie. Needless to say, expect a ton of promotional radio spots running on the CBS Radio News network. Whether we'll hear them on the music stations remains to be seen. On the interactive and wireless side, all of this will be ad-supported. None will be subscription-based. Ad packages are currently being put together. We'll have more on that.

Marconi finalists announced
Two Minneapolis-St. Paul stations are in the running to be named "Legendary Station" at this year's NAB Marconi Radio Awards - KQRS-FM and KSTP-FM. But is either more legendary than the western entries, KSL-AM Salt Lake City or KLOS-FM Los Angeles. And what about WBEB-FM Philadelphia in the east? The winner of that and other categories will be announced September 21st in the NAB Marconi Radio Awards Dinner & Show during the NAB Radio Show in Dallas. Here are all of the finalists.
| Read More... |

Warshaw has no limits
for new Connoisseur
The new Connoisseur Media is now in eight markets, with 15 stations on the air or their purchase pending and three still unbuilt CPs, out of the 10 that launched the company. We asked CEO Jeff Warshaw, what are you looking for in acquisitions? "Obviously, where we think we can add value," Warshaw answered. He said his company has the resources to do the research and promotion that some competitors don't. "We see opportunities in areas like yield management that we were really renowned for. We think that's a really important discipline. That's a core discipline for our company. We feel one of the things that we were really well known for was our rigorous training and developing people." Unlike most radio companies, Connoisseur isn't targeting a particular market size range. "I've looked at deals from the largest markets to unrated markets. I think we feel comfortable operating anywhere. We feel that our dedication to quality broadcasting works regardless of the size of the market," he said. Do you have an idea of how large the company is going to be and how soon? "No idea. I would bet that it will be larger than it is today. Our biggest constraint will be bringing in the kind of people that we need to build the kind of company that we want to build. It's certainly not capital and we have the experience - we're looking to continue to bring in the best people to make it happen," Warsaw said. That's what makes him bullish on radio at a time when it is out of favor on Wall Street.

Ad Business Report TM

US ad spend rose 5.6% through Q1,
per Nielsen Monitor-Plus
Nielsen Monitor-Plus, the advertising intelligence service of Nielsen Media Research, reports that advertising spending through the first quarter of 2006 rose 5.6% over the same period last year, due to gains across major media. Advertising spending increased in almost all reported media, led by Internet, Spanish-Language TV and Outdoor. The 2006 Winter Olympics in the first quarter contributed to the increase in Network TV spending, as nearly 1.1 billion was spent during the games. A number of media showed healthy increases, while Coupon, Local Newspaper and Network Radio experienced slight declines. B2B magazine and Cable TV growth was almost flat. Advertising through Q1 for the top 10 companies reached 4.6 billion, up 11.4% compared to the same time last year. Most advertisers experienced healthy gains, but a few cut back spending. AT&T, Verizon and General Electric had significant increases in year over year spending, up 76.5%, 46.1% and 54.4%, respectively. Most of AT&T's spending was attributed to Internet Service and General Image campaigning, while Verizon increased dollars to its V-Cast Wireless Services and Business Services. General Electric increased spending for Universal Pictures and Universal Studios, as well as GE Healthcare. Spending for the 10 largest categories reached 10.5 billion throughout the first half of 2006, 6.1% greater than the same period last year. Almost all product categories have experienced healthy gains in spending, with the exception of Local Automotive Dealerships and Direct Response products, which are slightly down. The Restaurant industry continues to be the fastest growing in terms of percent increase over last year, followed by Credit Card Services, with an increase of 22.7% and 22%, respectively. Spending within the restaurant category was up overall, while increased spending by Visa, American Express and JP Morgan Chase drove the increase in the credit card category.

Private Label Radio's "Subway Radio"
now in 30 markets
Private Label Radio (PLR), a division of DMI Music & Media Solutions, launched "Subway Radio," an exclusive in-store radio network featuring customized music and messaging for Subway restaurants. The program is currently installed in 30 states nationwide. Subway Radio comprises a unique blend of targeted branding, music and messaging. The music is punctuated by commercials from Subway restaurants' national ad campaigns and messaging that highlights current in-store promotions, regional events, upsell items and store services such as catering. Content is distributed via the Internet and downloaded automatically in each store location.

Media Markets & Money TM

Davidson strikes again
Peter Davidson's ever-expanding radio group will be entering the Birmingham AL market with a pair of AM stations, coming from the Willis Broadcast Group stable. The transactions went to the FCC as two separate deals totally 1.45M. According to broker John Pierce, this marks the second 2006 transaction between the two groups, following the earlier 1.2M sale of WSRC-AM in the Raleigh-Durham market. In the present deal, Davidson will pay a total of 950K for WAYE-AM Birmingham and 500K for WLPH-AM, licensed to Irondale AL.

Duopoly comes knocking in Knoxville
Progressive Media, headed by Barry Culberson, is getting a second AM in the Knoxville area to go with its Christian-formatted WIFA-AM. It's picking up WLIL-AM Lenoir City TN from Zollie Cantrell's BP Broadcasters. According to broker John Pierce, the pricetag is 500K. Cantrell retains WKZX-FM.

RBR Close Up

Sports stations and streaming -- Technology today and the value of using the internet for your ROI.
Sports stations: With streaming becoming ever increasingly important in your business how have you integrated the technology with your station? Yesterday, we heard from Chuck Bortnick, VP/GM of WFAN-AM New York (7/17/06 RBR #137)

Says Paul Agase, VP/GM, WSCR-AM Chicago:
When it comes to streaming, local sports radio stations have an advantage. Unlike some of the issues that music stations face (i.e. rights clearances), all of this new technology becomes a weapon of on-demand distribution for us. Streaming, podcasting, and cell phone delivery are all important tools for the station to push our unique content out to the listeners. Here at the SCORE, one reason streaming is so important is because a great many of our listeners aren't able to tune in to the AM dial in their office buildings. We also count on it for alternative programming such as special news reports or long form pre and post-game shows for example. The station has also hosted NFL roundtables and playoff preview programs all items that sponsors really like. At the Score we have in excess of 125 streaming only clients. Streaming and our entire web platform is more a part of the DNA of the station than ever before. Beyond just running on air promos driving traffic to the site, it's just part of what we do and how our listeners interact with us.

Tomorrow: Marc Rayfield, VP/GM, WIP-AM Philadelphia:

Entertainment Media Business Report TM

O&A adds 10 Citadel stations
CBS Radio/XM Satellite Radio's Opie and Anthony Show has added 10 Citadel stations, including WSKO-AM Providence, WMOS-FM New London, CT, WKLQ-FM Grand Rapids, WILZ-FM Saginaw, MI, WBSX-FM Wilkes Barre, KBZU Albuquerque, WCYY/WCYI Portland/Lewiston, ME, WEDG-FM Buffalo and KRDJ Baton Rouge.

Red Zebra launches "Triple X ESPN Radio"
DC's Red Zebra Broadcasting announced the launch today of "Triple X ESPN Radio," the new all-sports radio destination on its metro trimulcast 94.3 FM/WWXT, 92.7 FM/WWXX and 730 AM/WXTR. Triple X ESPN Radio will be the official broadcast home of the Washington Redskins and the exclusive carrier of ESPN Radio in DC area. NFL Hall of Fame running back John Riggins will host his own new afternoon drive-time show, which will kick off the new sports line up today.

Ratings & Research

CBS Radio's "Free FM" numbers up in NYC
CBS Radio delivered up some positive numbers in NYC for its new Free FM, WFNY-FM, along with some dramatic increases for Opie and Anthony, since they've debuted on the station in a deal with XM Satellite Radio. Overall, CBS Radio says the three Talk dayparts of WFNY all ranked Top 10 in their target of Men 25-54. Free FM is the "talk station of choice" for P(Persons)25-54 and P18-49 in NYC, placing ahead of WABC-AM. Radio Chick also ranked ahead of Hannity in PM Drive P25-54.
| See the numbers here |

Internet Media Business Report TM

Point-counterpoint on new media
Last week, Advertising Age gave some online space to Dave Morgan of Tacoda, who believes that the Internet has permanently changed advertising and media. Morgan was responding to someone else's point that the current Internet disruption is not really all that different than when television burst onto the advertising scene. It took share (a lot of share, the lion's share, when you get right down to it). But the other media forms which were in existence at that time were able to continue in the business of providing advertising venues to their clients. He disagrees, writing, "The world of advertising is in for a much bigger storm than most can even imagine. And almost certainly some of the media we know today will not continue forward." Part of the change, he says, is the fact that traditional media, including television, radio, newspaper and outdoor, are all going digital and building a web presence. As a matter of crediting a venue, does an ad sold by an online version of traditional media count as online advertising or not? The biggest problem, however, is that marketing is becoming more of a one-on-one relationship between seller and buyer, evading the mass-blast philosophy of mass media. Dallas Maverick owner and Internet pioneer Mark Cuban thinks this is nonsense, according to an article from Creative Voices in Media. He says that traditional broadcasting should still be able to take advantage of its stronghold on a unique form of communication. The problem with the Internet is that is will be home to thousands upon thousands of options, few of which will go to the trouble to break through the din so strongly that they can compete with the broadcast megaphone.

RBR observation: At some point, for a product or service to become ubiquitous, it has to figure out a way to make itself famous. Broadcasters need to make sure they are delivering quality programming to their audiences so that they have a quality audience to deliver to their clients. At any rate, it seems the conventional wisdom is that the Internet is eventually going to prevail, so it is nice to hear someone with experience like Cuban take the opposite position. But broadcasters will have to work hard to defend their turf.

Transactions

2.15M WKLP-AM/WQZK-FM Keyser WV. 100% of Starcast Systems Inc. from Jack I. Mullen II to John R. Raese, David A. Raese (each 50%). 100K escrow, 100K holdback escrow, balance in cash at closing. Seller will pay off debts of appoximately 181K and 159K at closing. Prior to this transaction, Mullen is consolidating all outstanding shares of the company under his name. Duopoly overlap between FM and WDYK-FM Ridgeley WV, which buyer runs in LMA with Radioactive LLC (Randy Michaels). [File date 6/23/06.]

N/A KXGF-AM/KQDI AM & FM/KINX-FM & KIKF-FM Great Falls MY (Great Falls, Cascade MT) from CCR-Great Falls IV LLC, a subsidiary of Cherry Creek Radio LLC (Joseph Schwartz) to Richard C. Parrish Associates LLC (Richard C. Parrish, Carolyn S. Parrish). Transferring stations to trustee to remain under local ownership caps due to Fisher acquisition. All of these stations are coming from Fisher. Will acquire KAAK-FM Great Falls from Fisher and retains KMON AM & FM/KLFM-FM Great Falls and KVVR-FM Dutton MT. [File date 6/22/06.]

Stock Talk

A gain, but not much of one
Worries about violent clashes in the Middle East are keeping a lid on stock trading, but Wall Street posted modest gains on Monday for most stocks, although the Nasdaq Composite was down slightly for the day, while the Dow Industrials and S&P 500 were up a bit. The Dow rose eight points to 10,747.

Radio stocks were also slightly higher. The Radio Index moved up 0.495, or 0.4%, to 142.765. Citadel led the way, rising 2.7%. Entercom was right behind with a 2.6% gain.

Radio Stocks

**Here's how stocks fared on Monday**
Company	Symbol	Close		Change	Company	Symbol	Close		Change
Arbitron	ARB		36.37	+0.10	Hearst-Argyle	HTV		20.82	+0.17
Beasley	BBGI		6.88	-0.02	Journal Comm.	JRN		10.50	-0.07
CBS CI. B	CBS		26.63	+0.11	Lincoln Natl.	LNC		54.46	-0.54
CBS CI. A	CBSa		26.63	+0.10	Radio One, Cl. A	ROIA		6.92	+0.08
Citadel	CDL		8.70	+0.23	Radio One, Cl. D	ROIAK		6.91	+0.01
Clear Channel	CCU		29.64	+0.47	Regent	RGCI		4.00	-0.10
Cox Radio	CXR		14.44	+0.28	Saga Commun.	SGA		8.02	unch
Cumulus	CMLS		10.04	+0.03	Salem Comm.	SALM		11.33	-0.28
Disney	DIS		28.60	+0.11	Sirius Sat. Radio	SIRI		4.17	+0.14
Emmis	EMMS		14.29	-0.02	Spanish Bcg.	SBSA		4.66	-0.23
Entercom	ETM		25.33	+0.63	Univision	UVN		33.34	+0.13
Entravision	EVC		7.97	+0.03	Westwood One	WON		7.76	+0.11
Fisher	FSCI		39.36	-0.04	XM Sat. Radio	XMSR		13.00	+0.11
Gaylord	GET		38.78	+0.57	-	-	-	-	-

Bounceback

Send Us Your Opinions We want to
hear from you.
This is your column, so send your comments and
a photo to radionews@rbr.com

Below the Fold

Ad Business Report
US ad spend rose 5.6%
Through Q1, per led by Internet, Spanish-Language TV & Outdoor...

RBR Close Up: Streaming
Paul Agase, VP/GM,
WSCR-AM Chicago
One reason streaming is so important is tune in factor...

Media Markets & Money
Davidson strikes again
Entering the Birmingham market with a pair of AM stations...

Internet Media Business Report
Point-counterpoint on new media
At some point, for a product or service to become ubiquitous first hast to...

Stations for Sale

Seller Financing of
2 New C-3 FMs
Serving the beautiful resort area of Mountain Home, AR.
Turnkey package.
Lease to Own to a qualified buyer.
Complete information at www.mountainhomeradio.com

Radio Media Moves

Conrad riding
Main Line
Former Bahakel Communications CFO Ed Conrad has joined Main Line Broadcasting as Executive Vice President and CFO. Main Line, headed by President and CEO Dan Savadove, owns nine radio stations in two markets after launching just last year.

It's Muzak to his ears
Stephen Villa has been named CEO of Muzak LLC after serving as interim CEO of the business-oriented audio service since last month.

RBR Radar 2006

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

Media companies
taking some elbows
Tribune Company started the disappointing earnings report, which resulted in a downgrade from "Buy" to "Hold" from Standard & Poor's. The downgrade followed the company's report of a 62.9% decline in net income for Q2. Then, Ta-Dum, Walt Disney was punished and downgraded by CIBC. Strap in, folks, Chapter Two of the 2006 conference call season is just beginning.

RBR observation: This is where the gloves come off and it is hard knuckles time. Conference call excuses and pointing the blame has run out of air over the past four years and punishment is to follow. Do some deserve to get punished? Yes but our recommendation is to start with the biggest and work your way down the list and view each group separately. Bottom line: CEO's can no longer point and pass the blame. It is time for those on conference calls to be stand up and be held accountable.

RBR note: After they report then RBR reports with our analysis and yes Observations.
07/17/06 RBR #137

Stations and Streaming
With streaming becoming ever increasingly important in your business how have you integrated the technology with your station? Says Chuck Bortnick, VP/GM of WFAN-AM New York: has been streaming for just over 60 days. However, in this short period of time, the station has become one of CBS Radio's most popular online destinations. In addition, the promotion of the stream on-air and online has increased click-throughs across the entire website opening up a host of additional advertising opportunities for our clients. WFAN's stream is an audio broadcast simulcast. There is more, if you missed it see
07/17/06 RBR #137

Is Citadel getting a
floundering mouse?
Victor Miller of Bear Stearns is noting some very poor performances from the Walt Disney/ABC radio stations that are headed for the Citadel portfolio, and says that the problems seem to be occurring despite the type of challenges facing some of its competitors. It hasn't lost Howard Stern, nor is it as reliant on the top two markets as is Emmis. Bear Stearns was looking for gains in 2006 EBITDA of 5.8% for both companies at one time. It's knocked its Citadel projection down by 2%, but expects the ABC shortfall could be as much as 20%, and notes that the 2.7B pricetag has dropped 240M to 2.46B. It says Citadel's stock price may already have been a casualty with other potential wounds awaiting. Stay tuned...

RBR observation: Once this transaction is complete if you thought the 100 at CBS radio was a black day just wait.
07/14/06 RBR #136

CBS Radio CEO Joel Hollander
makes cuts across CBS Radio
A company-wide memo went out on Wednesday, 06/12/06, that includes job cuts-a small percentage of people across the entire company. About 100, especially in sales, management, programming and on-air. It's in line with the company's announcement it will sell stations in 10 markets and managing costs moving forward. Cuts are across all 179 stations. Some stations had one, some had two, some had no cuts. Joel said it was a necessity move to ensure competition in the changing climate of radio.

RBR observation: Surprised? The real surprise was the mass of flashing bulletins about a completely unsurprising business move. So what is the real issue to all of yesterday's flashing bulletins when it should be no surprised at all but business. Remember CBS Radio CFO Walter Berger just stated the plan during the Interep/Bear Stearns event not long ago and was resolute in outlining a sound four-point, long-term strategy for accelerating annual revenue increases at CBS: 1. Further portfolio "rationalization" 2. Operating Expense Rationalization (not necessarily reduction) 3. Recognizing the value of "content" production and 4. Monetize that value by "re-purposing" content for additional alternate distribution platforms. So while nobody likes getting pink slipped, when you're talking approximately 100 positions that range from management, sales and programming, it is not the Armageddon that some may try to paint. The next real key factor to pay attention to is what will be the final tally of CBS stations sold? And what will be done with those mega dollars to monetize, rationalize and re-purpose those funds for CBS radio growth? It is business and RBR follows the business so stay with us we will follow the money trail. To read the Hollander Memo see
07/13/06 RBR #135

What if this is the
top of the mountain?
Here's a chilling thought from Lee Westerfield and Dan Salmon at BMO Capital Markets. What if the less than exciting advertising revenue results we're seeing now represent the apex of a growth period following the ad recession that BMO says ended in Q2 2002? They discount the idea that we're in a "muted ad cycle," instead positing that "...a secular shift owing to new media technologies is leveling the US advertising cycle, and that we are now at or very near the advertising peak." BMO sees a combination of factors supporting this hypothesis. One is weakness from certain advertiser categories.
07/13/06 RBR #135

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