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Volume 23, Issue 143, Jim Carnegie, Editor & Publisher

Tuesday Morning July 25th, 2006

Radio News ®

Dinetz takes the helm
The Radio Division President & COO job didn't stay vacant for long at NextMedia Group. Jeff Dinetz has gotten the nod to take the post, just days after Skip Weller left the company (7/21/06 RBR #141). "Jeff has worked long and hard throughout his successful career, and we are confident he can guide our radio group to its highest potential in the future," said NextMedia President & CEO Steven Dinetz and Chairman Carl Hirsch in a joint statement. Jeff Dinetz joined NextMedia in 2000 and has been overseeing the companies operations in Saginaw, Michigan, Wilmington, Delaware, Decatur, Illinois, and the Coastal Carolinas. Prior to joining NextMedia, he served as Regional Vice President for Connoisseur Media.

FCC consumer panel issues ownership reco
The FCC's Consumer Advisory Committee (CAC) has weighed in on the upcoming second look at revamping media ownership rules. And the advice it is giving the Commission could very easily have come from the two Democratic commissioners. CAC says the focus should be on localism, competition and diversity that a full array of public hearings should be scheduled, comprehensive studies should be undertaken to justify any changes, and an NPRM should be available for study before any action is taken. CAC also wants certain questions answered. It wants to know if consumer questions on localism will be answered prior to making any changes; it wonders about the UHF 50% discount when computing compliance with national television ownership caps; it wants to know the affect of any new rules on minority and female ownership; will consumers be able to hold distant owners accountable for serving their community; will consumer choice be affected; will there be continued increases in broadcast indecency; will small local owners be further endangered; will there be increased payola; will there be an increase or decrease in independently-produced programming.

RBR observation: We keep reading here and there that FCC Chairman Kevin Martin is going to try to push through the same sort of changes that Michael Powell failed to push through last time around. Michael Powell's changes caused an uproar rarely seen in such an arcane inside-the-Beltway regulatory proceeding. It's been quiet at the FCC, but uproarious everywhere has been indicating that they are on the alert and winding up for an encore performance. Whatever else this rulemaking will be, one thing is certain: It'll be very, very loud.

XM makes executive suite addition
Telecom industry veteran Nate Davis has joined XM Satellite Radio in the newly created post of President and Chief Operating Officer. Davis was previously President and COO of XO Communications and before than held executive posts at Nextel, MCI and AT&T. Most recently he was "Executive in Residence" (how's that for a title?) at Columbia Capital, a venture capital firm. XM is hardly new to him, since Davis has been on the board of directors since 1999. "I know first hand the kind of action-oriented, business leadership that Nate will bring to his new role," said XM CEO Hugh Panero. "I am passionate about XM and the wonderful content it delivers to its subscribers. I look forward to working even more closely with Hugh and the dynamic management team that created this industry. While there are near term operational challenges to work through, the growth opportunities in front of us are tremendous," said Davis.

RBR observation: Those "near term operational challenges" that Davis referred to include the FCC blocking sales of satellite adapters for FM radio receivers which were found to violate power standards and the dog nipping at XM's heels, Sirius Satellite Radio, which is also having to deal with the FCC on the receiver issue. More importantly, from XM's perspective, Sirius is rapidly cutting into its market share lead. For Q2 Sirius added 600,460 net subscribers, compared with 398,000 for XM. Ouch!

Dems take administration to task on ad contracting
A Clinton-era executive order requires that the government aggressively reach out to minority-owned businesses, and makes particular mention of including such companies when awarding advertising contracts. A group of Democrats from both houses on Capitol Hill don't think it's happening as intended. "Our minority entrepreneurs are being left behind by the Bush Administration. We need to get to the bottom of why minority and disadvantaged small businesses aren't getting their fair share of federal advertising contracts so we can take steps to correct the problem," said John Kerry (D-MA). Kerry was joined in a letter-writing campaign by fellow senators Harry Reid (D-NV) and Robert Menendez (D-NJ), and Representatives Nydia Velazquez (D-NY), Al Wynn (D-MD), Carolyn Kilpatrick (D-MI) and Mike Honda (D-CA). The group fired off letters to the Office of Management and Budget and the Small Business Administration "...requesting details on how the federal government is complying with the executive order." Among other things, the executive order instructs government agencies, "...To achieve this diversity, special attention shall be given to ensure placement in publications and television and radio stations that reach specific ethnic and racial audiences."

RBR observation: This is a classic Catch-22 situation. Most Democrats feel that the Bush administration has been a little heavy-handed with the advertising in general, using public money to push administrative political goals. So the administration has now been taken to task both for over-using advertising, and for picking the wrong agencies while doing so. In other words, don't do it, but do it this way when you do. That said, there are many legitimate government uses for advertising, not the least of which is to prepare the public for the upcoming demise of analog television broadcasting...

Wall Street Media Business Report TM

Blood bath ahead?
Q2 reporting by radio groups gets underway in earnest next week - and if Lehman Brothers analyst Anthony DiClemente is correct in his predictions, it ain't gonna be pretty. He estimates that radio industry revenues were down 2% in Q2, while expenses rose 3-4%. In his view, the Street consensus for radio companies is still too high, with most of his fellow analysts anticipating Q2 growth of 1%. With Clear Channel benefiting from having lapped its Less is More initiative, DiClemente thinks Clear Channel Radio will outpace the industry, with revenues up 3.5% for the quarter. Even so, he thinks Clear Channel will only be able to translate that into 4% EBITDA growth for radio in Q2. although radio stocks are down 19% on average year-to-date (while the S&P 500 is up 0.9%), the Lehman Brothers analyst thinks valuations are still rich, with radio stocks trading at an average 10.7 times EBITDA and 12.6 times fully-taxed FCF based on 2006 estimates. In his view, radio stocks are still 10-15% above levels where they would become attractive for private market LBOs.

Ad Business Report TM

Coke-sponsored music lounges
host concerts on CC Radio sites
Clear Channel Radio announced that new, unique music venues sponsored by Coca-Cola, dubbed "Tab Energy Lounge" and "Full Throttle Garage" have opened their doors to Dallas radio listeners. These venues, with seats that can be won on-air on CC Radio stations, are expected to host 50 mini-concerts this year. CC Radio is also delivering the experience to fans online with streams of the performances available on the websites of all CC Radio stations in Dallas. Based on the early success of the Tab Energy Lounge/Full Throttle Garage in drawing big name acts such as Dave Navarro, Lifehouse, Los Lonely Boys and The Fray, Coca Cola is considering the expansion of the sponsorship to bring similar music venues to other major cities. Potential markets include Atlanta, Chicago, Boston, Phoenix, New York, San Diego, San Francisco and Seattle.

RBR observation: Here's a good way bring new media dollars into your group or station. Remember, with the proliferation of broadband, your station(s)' website is almost television quality. If there's an online event-local or national-that radio can be used to drive listeners to, get out there and pitch it!

Newest Bond film, "Casino Royale,"
to feature Smirnoff Vodka
The next James Bond flick, "Casino Royale," set to release 11/17, will feature Diageo's Smirnoff Vodka as Bond's vodka of choice. The renewed alliance between Smirnoff and Bond will involve a fully integrated multi-million dollar media campaign, which will be activated in the U.S. and around the globe. The campaign will include broadcast; on- and off-premise promotions and sweepstakes; a global PR campaign; and a fully interactive Casino Royale microsite. The partnership between Smirnoff and Bond began in 1962's "Dr. No," when the villain hands Sean Connery a "Martini, shaken not stirred" made with Smirnoff. JWT NY handled creative. Diageo spokesperson Scott Houston tells RBR/TVBR the broadcast ads will start running in the beginning of November and will include both network and cable. The radio component details are likely still being considered. Mediacom is Diageo's media agency. Matthew Warnecke, VP Mgr Network & Local Radio, MediaCom, says he hasn't heard yet on the radio component, if there is any: "I haven't heard anything about that. But that doesn't mean we won't get something in a month."

Sales & Marketing Business Report

Close-up: What to bring to the agencies
We've asked folks from both sides of the desk for advice on what to do before you make that sales appointment with the agency.

Can you close the deal?
by Lynne Cowlishaw, PHD's LMN (Local Media Network) Broadcast Supervisor. Yesterday Lynne talked about knowing your client (7/24/06 RBR #142). Here, she continues:

Knowing the agencies deadlines and meeting them on time might make or break a deal. All agencies are trying to prove to the client that they can get the message out quickly, effectively, and efficiently. A seller that returns calls and provide incentive opportunities will have an edge on the competition. A successful campaign or launch can be done quickly and executed within the same day. Sellers cannot afford to not react or be proactive in their strategy. Not only do sellers need to be proactive but once they get the sale, continue to be accountable and professional. Simple as it seems, it's the sellers responsibility to maintain the integrity of the original order. Buyers should be notified immediately of discrepancies and agree on an acceptable alternative. Stations that disappear or stop showing interest until the next buy is up will have a harder sell the next time. The bottom line is to be accountable for the company you represent. This really goes for both parties. Don't mislead and be upfront about problems/etc. Both the agency and the seller want to feel that they achieved the "win". Negotiating termed, "to arrange for or bring about through conference, discussion, and compromise" is an art. Selling a strategy or concept is the most important part of the sale. So at the end of the day when asked, "Are you a closer"? Not only should the seller confidently say yes, so should the buyer.

Tomorrow: What to bring to the agencies; By Tom Barnes, Founder of Mediathink

Media Markets & Money TM

Another stripe for Red Zebra
Dan Snyder's Red Zebra Broadcasting has a deal which will take it into its third market. It's getting WWHV-FM in the Norfolk/Tidewater VA market, adding new radio territory for coverage of Snyder's NFL Washington Redskins. The fledgling group will be anchored in the Washington DC area, and has announced a deal which will bring it WXGI-AM in Richmond. The seller of WWHV-FM is troubled On Top Communications, which just filed to put this and other station in debtor-in-possession status (5/19/06 RBR #99). The station is expected to take on the group's Triple X formula, built around the Redskins and ESPN Radio.

Close encounter in Houma
Tom Gammon of Americom checked in to let us know that John Borders and Don Turner of Sunburst have closed on their acquisition of the Guaranty Broadcasting cluster in Houma LA. The stations, KCIL-FM, KXOR-FM, KBZZ-FM & KTIB-AM, came in exchange for 12.5M. Gammon says this marks Sunburst's return to ownership after their $100M+ exit in 2000. It's return to grouphood will happen soon, when its deal for KKLD-FM Phoenix achieves closure.

Washington Media Business Report TM

Rehr wants Judiciary to apply the brakes
S.2644, the Platform Equality and Remedies for Rights Holders in Music Act of 2006, also known as the PERFORM Act, may be headed for consideration in the Senate Judiciary Committee. The National Association of Broadcasters has fired off a letter to the to key players in the committee, Arlen Specter (R-PA) and Patrick Leahy (D-VT) urging the exercise of some restraint, particularly while litigation pertaining to the topic is pending. At issue are fees for using recordings on streamed radio signals and related issues. NAB's David Rehr wrote, "Broadcasters are concerned with the future and viability of Internet streaming of free over-the-air radio broadcasts. Internet streaming offers listeners an innovative and convenient way of accessing radio broadcasts, and it will be a significant source of entertainment, news and information for our listeners as we move into the digital age." Current litigation revolves around "fair use" under copyright law, and Rehr suggested the results of the court case could well impact the approach of legislators. "We strongly believe that a markup of this bill would be premature at this time, given the significant impact this bill would have on the transmission and use of free radio's simulcasted streams over the Internet."

Internet Media Business Report TM

Online ads will represent 9% of total in US by 2011
JupiterResearch finds advertisers will continue to increase the share of total budget spent online between 2006 and 2011, with the market reaching 25.9 billion or almost 9% of total US advertising spending in 2011. According to a new report by JupiterResearch, "US Online Advertising Forecast, 2005 to 2011," paid search is the primary driver of growth in the online advertising market. Search advertising overtook display advertising in 2005 and will continue to be the largest online advertising component over the next five years. Current online advertising spending is outperforming previous expectations, jumping 40% in 2005 and projected to grow 21% in 2006. In addition to paid search, large spending increases for online classifieds and rich media are fueling the market, which will continue to grow at a brisk pace over the next five years. "While online display advertising spending will not be as large as search spending, several subsections of display advertising, such as rich media and video, will grow rapidly," said David Schatsky, President of JupiterKagan. "However, high growth for these forms of new online advertising will begin to cannibalize static display advertising."

Ratings & Research

Terrestrial radio still primary new music discovery destination
Good news for radio: Bridge Ratings' new study (conducted in June) of music consumers reflects continued satisfaction among a sample of 12-54 year olds for the role terrestrial radio plays in new music discovery. 45% of the 2500 persons sampled mentioned terrestrial radio as their preferred destination for discovering new music over Internet radio and peer-to-peer sharing networks. "As far as new music discovery, teens have a stronger affinity for online virtual community networks like MySpace.com and P2P trading than other demographics do," explained Bridge Ratings President Dave Van Dyke, "but a significant number of teens still discover new music through their current-based terrestrial radio stations!" Traditional retailers did not fare well among all choices for new music discovery except among those 35-54 years of age who reported that terrestrial radio was the principle source of discovery. "Internet radio did not show as well as we might have expected;" continued Van Dyke. "Overall only 13% of the sample used Internet radio in this way. Among all age groups, 18-34 year olds used Internet radio more often for new music discovery - but less than 1 in 5 do so." A year ago when this study was last conducted, Internet radio scored much better among all consumers in the study (27%), but the expanding satisfaction and use among youth with sites such as MySpace and Napster has cut significantly into the importance this age group places upon Internet radio as a source for new music discovery and filtering. "This study represents further proof that terrestrial radio's current-based radio stations should continue to be proactive with exposing and identifying new music," concluded Van Dyke.

RBR observation: What's particularly interesting is how low satellite radio showed on the roster - especially in the demo that would most likely afford it - 35-54. We wonder what the numbers would look like for those who actually have a satellite subscription. The Internet numbers, while still significantly lower than radio, are pretty powerful, and likely to increase each year when you add Internet radio and online networks together.

Transactions

400K WXCF AM & FM Clifton Forge VA from Impact Broadcasting Inc. (Gerald K. Gimmel) to WVJT LLC (Todd P. Robinson). 25K escrow, 275K cash at closing, 50K cash on one-year anniversary of closing, 50K cash on two-year anniversary of closing. [File date 7/3/06.]

259K FM CP Maui HI (Kahuloui HI) from Shirk-Mays LLC (William S. Poorman) to Hochman Hawaii-Three Inc. (George Hochman, William G. Mays, William S. Poorman). Note. Duopoly with KONI-FM Lanai City HI. CP is for C2 on 92.5 mHz with 1.7 kw @ 2,211'. [File date 7/3/06.]

Stock Talk

Hospital deal heals Wall Street
Excitement over a 33 billion bucks buyout of Hospital Corporation of America sent stocks higher on Monday. The Dow Industrials rose 183 points, or 1.7%, to 11,051.

Radio stocks joined in the advance, but not as strongly as some other sectors. The Radio Index edged up 0.920, or 0.7%, to 139.934. The bookends were Entravision, up 5.5%, and Westwood One, down 2.9%.

Radio Stocks

**Here's how stocks fared on Monday**
Company	Symbol	Close		Change	Company	Symbol	Close		Change
Arbitron	ARB		36.22	+0.33	Hearst-Argyle	HTV		20.24	-0.35
Beasley	BBGI		7.00	+0.05	Journal Comm.	JRN		10.50	+0.25
CBS CI. B	CBS		26.52	+0.29	Lincoln Natl.	LNC		56.45	+0.30
CBS CI. A	CBSa		26.48	+0.22	Radio One, Cl. A	ROIA		6.75	-0.02
Citadel	CDL		8.85	+0.15	Radio One, Cl. D	ROIAK		6.81	+0.02
Clear Channel	CCU		28.92	+0.16	Regent	RGCI		4.13	+0.03
Cox Radio	CXR		14.35	+0.15	Saga Commun.	SGA		7.45	-0.21
Cumulus	CMLS		9.20	-0.15	Salem Comm.	SALM		11.56	+0.30
Disney	DIS		29.37	+0.90	Sirius Sat. Radio	SIRI		3.94	+0.04
Emmis	EMMS		14.31	+0.31	Spanish Bcg.	SBSA		4.72	+0.02
Entercom	ETM		24.82	+0.25	Univision	UVN		33.31	+0.25
Entravision	EVC		8.10	+0.42	Westwood One	WON		6.80	-0.20
Fisher	FSCI		41.40	-0.02	XM Sat. Radio	XMSR		11.20	unch
Gaylord	GET		39.24	+0.71	-	-	-	-	-

Bounceback

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Below the Fold

Wall Street Media Business Report
Blood bath ahead?
Lehman Brothers predicts it ain't gonna be pretty...

Ad Business Report
Coke-sponsored music lounges
New, unique music venues dubbed "Tab Energy Lounge"...

Sales & Marketing Business Report
What to bring to the agencies
Can you close the deal? Knowing the agencies deadlines and meeting them... continued.

Media Markets & Money
Another stripe for Red Zebra
Will take it into its third market...

Washington Media Business Report
Judiciary to apply the brakes
That is what NAB wants on S.2644 also known as the PERFORM Act...

Stations for Sale

CD Border 25kw FM
Profitable competitive op.
Small/dual market FM with huge upside for turnaround operator.
595K 781-848-4201 or salesgroup@beld.net

Radio Media Moves

Three join Harpo
A trio of radio veterans has joined Harpo Radio as the production team for "Oprah & Friends," the lifestyle talk radio channel which will debut in September on XM Satellite Radio. Corny Koehl will serve as Senior Producer and Director of Programming Development for "Oprah & Friends" while John St. Augustine and Rita Coburn Whack will serve as Producers for the channel, all reporting directly to Laurie Cantillo, Programming Director, Harpo Radio. Koehl comes to the new venture from ABC Radio Networks, St. Augustine from being a talk host in Michigan and Coburn Whack from Chicago Public Radio.

Knight time
at Times
Former Associated Press Radio anchor Steve Knight has been names News Director of New York Times Radio and morning newscaster on WQXR-FM New York. He succeeds Sam Hall, who retired last month (6/30/06 RBR #128).

PPM promotion
Arbitron has appointed Linda Dupree to the new position of Executive VP, Portable People Meter (PPM), New Product Development. She had been Sr. VP, PPM New Product Development. Dupree will continue to direct Arbitron's contribution to the development of "Project Apollo," the joint effort with VNU to develop a new, national marketing research service based in part on the PPM. In addition, she will also oversee the development of additional new services that use the advanced capabilities of PPM technology, with emphasis on services for TV, print and emerging media.

More News Headlines

XM renews
ASCAP pact
XM Satellite Radio and ASCAP announced agreement on a new five-year music licensing agreement. The agreement will have XM pay royalties to ASCAP, as do terrestrial radio stations, for airing compositions from ASCAP's repertory of over seven million works.

Carlos Cisneros
dead at 43
Cherry Creek Radio announced late yesterday that Carlos Cisneros, General Manager of its combo in Brawley-El Centro, CA, had died after a brief illness. He was only 43. Cisneros has been with Cherry Creek since its inception in 2004 and was a long-time, very popular member of the media community in Imperial Valley of California.

RBR Radar 2006

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

Lots of wondering
which street to take
First what happened to CBS's Jack? One Wall Street analyst is predicting format flips at CBS Radio after ratings declines for its Jack stations in all three of the largest markets in the Spring 2006 Arbitron book and also wondering if Radio One might put KKBT-FM LA up for sale.

RBR observation: It appears our concerns about the Jack format are being borne out. Initially the deep playlist will have listeners enjoying songs that they hadn't heard on the radio in a long time. But after listening for a period of time, they start to notice that the station is also playing songs that they hoped never to hear again. That leads to tune-out. As for KKBT, much has changed in the LA market since Radio One scored a major coup in buying the Urban giant in 2000 as Clear Channel had to spin off stations from the AMFM merger. Yes, there have been programming missteps. But even if The Beat had been managed perfectly, the demographic changes in the market would have negatively impacted the station. It just may not make any sense anymore for Radio One to stay in LA with a standalone.
07/24/06 RBR #142

Philadelphia could be
first PPM market
Arbitron officials refuse to speculate on the sequence of events, but that was a conclusion that was pretty easy to draw from Arbitron CEO Steve Morris' comments to analysts in his quarterly conference call. Noted two hang-ups with flipping the switch to take Houston from test mode to commercial service: Arbitron's pledge not to go forward in Houston until it gets (MRC) accreditation - which is taking longer than expected and refuses to speculate on when it might come.

RBR observation: Morris had little to say about the Next-Generation Electronics Ratings Evaluation Team, except to complain that the RFP process initiated by Clear Channel had gotten "somewhat secretive" of late. Arbitron hasn't yet responded to the group's June letter calling for more information about PPM, but Arbitron's Thom Mocarsky told RBR that is because Arbitron is still waiting for clarification from the Next-Gen group on just where its previous submission was lacking. It seems to us that constitutes a communications problem. The Next-Gen group needs to stop bickering about who can and cannot be a member and get on with the work at hand. Completion of a side-by-side evaluation of the two competing systems for electronic radio audience measurement would be beneficial for everyone concerned. Otherwise, Arbitron will simply win by default. Last note deals with Trust. Do either side truly Trust one another? Just look at the time and money spent when Arbitron and Nielsen tried to work together. No Trust No Results. Nielsen early this year cut their tie with Arbitron and decided to 'Follow the Video.' Arbitron may take a lesson here with Clear Channel's Next-Generation and do a Nielsen on them.
07/21/06 RBR #141

Why are stations "abandoning"
HD-2 formats?
We're not sure about other markets, but indeed in DC it seems broadcasters are not all that psyched about HD-2 formats. In short to bring the younger listeners back to radio, we need formats like: Indie Rock, Reggae, Drum & Bass/Techno, Underground Classic Rock, Rap/Hip-Hop with no syrupy R&B mixed in, etc... And the spots need improvement - "There are secret stations in your city - go to HD Radio.com to find out more" is not going to cut it. Get the right HD-2 formats up and running 24/7; tout they are commercial-free; say how and where to tune them in and play good clips of the music in the spots.
07/21/06 RBR #141

Fraud plagues online advertising
There's a big problem when you put an ad online and pay by the click. Anybody can do the clicking, and a lot of the time, 14.1% the person doing the clicking is not an individual interested in the product or service being advertised. Scammers are said to be responsible for phantom clicks that often, a number which is on the increase. Among the motives noted are self-enrichment, as when a website operator clicks on ads it's running, or to attack the competition, as when a rival business owner clicks on a competitor's ads to drain its marketing budget.

RBR observation: This is a pitch point broadcasters may be able to use to help stem the flow of cash from broadcast to the Internet. Broadcast waste is measured in terms of wasted impressions. However, while it may not do your client much good if a senior citizen with false teeth hears a toothpaste ad, at least the waste isn't coming right out of the client's checking account.
07/20/06 RBR #140

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