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Volume 24, Issue 153, Jim Carnegie, Editor & Publisher

Tuesday Morning August 7th, 2007

Radio News ®

Is credit tightening threatening radio dealmaking?
The Federal Reserve's policy makers announce their latest move - or lack of movement - on rates this afternoon. Despite the recent roiling of the credit markets, the Wall Street consensus is that Chairman Ben Bernanke and his fellow Fed members won't change rates today. And, unless there are more drastic changes in the economy, they are viewed as likely to stay the course for many, many months to come. But while tightening credit has pulled Nexstar off the auction block - and possibly LIN Television as well - it appears there is still financing available for most radio and TV deals...at least for now. Those two TV groups are mega-size deals in the broadcasting transaction world - both over a billion bucks and LIN perhaps over two. Deals of that sort require major financing commitments and the lenders who do those big deals (and who typically work with the very large private equity funds) are the ones now moving first to tighten terms or pull back on lending commitments. "Maybe the money center banks are indeed tightening up, but we haven't seen it yet," broker Larry Patrick of Patrick Communications told RBR/TVBR. He said there are still a lot of lenders wanting to finance radio and television deals and he hasn't seen any dramatic change in terms. The big issue, said broker Brian Pryor of Media Venture Partners, is that lenders have to syndicate those loans of hundreds of millions or billions of bucks and the institutional investors who generally supply the cash have pulled away, so liquidity has dried up. But he said for the more normal transaction, the bank itself will hold a loan of up to 20 or 30 million. But while the credit tightening hasn't trickled down just yet, "you certainly hear about it from lenders and buyers - they're going to use whatever negotiating leverage they can - but we haven't really seen it run through pricing for certain smaller and medium deals," Pryor said. "That's not to say that banks won't get more cautious," he noted, but in his view it is too early to say whether a general credit tightening is underway.

RBR observation: Clear Channel must be nervous about getting to the closing table on the biggest deals from its radio divestitures, since only a few of the smaller deals have actually closed thus far. American Security Capital Partners not only switched radio operators, but also bankers for the 452 million bucks purchase of 187 stations by what's now called Frequency License LLC. When last we heard, the new financing was still being put together for what is far and away the biggest buy from the Clear Channel portfolio thinning. Not today, maybe not next month, but if credit gets tighter and threatens to slow down the economy, Bernanke and the Fed will need to lower rates and keep economic growth from flat-lining. If he stays too focused on inflation, to the exclusion of all other economic factors, he runs the very real risk of repeating the foolish policies of his predecessor who ran the US into an unnecessary recession back at the start of this decade.

Dorgan blasts XM/Sirius merger
Byron Dorgan (D-ND) expressed his misgivings about the merger of XM and Sirius back in April. After attending hearings, receiving written answers from the companies to some of his questions and following developments in the news, he wrote the DOJ and the FCC to state that his opposition to the merger remains as strong as ever. Addressing Assistant AG Thomas Barnett and FCC Chairman Kevin Martin, Dorgan noted that the licenses were granted "...under the strict condition that there must be at least two companies in the market." He continued, "Little has changed since their initial licensing in 1997. While other forms of audio have sprouted up around the country, such as terrestrial radio, webcasting or mp3 players, the companies have not proven beyond a doubt that these forms amount to competition...There can be no price check similar to that of two companies with national platforms competing against one another." Dorgan noted that the companies were beneficiaries of a limited pool of competitors to begin with. Only four companies were even allowed to bid on the satellite audio licenses. "There may have been other bidders who could have performed this service, but who were shut out of the bidding. The two companies who prevailed now have to honor the responsibility that comes with a national media platform." He concluded, "I cannot believe that this merger will result in lower prices or increase diversity. And I cannot believe the public will be better served by this merger."

RBR observation: Many broadcasters operating on the AM and/or FM band have objected to the use of the phrase "terrestrial radio." We think they, like us, will be even more surprised to see the medium on a list of audio services which have "sprouted up" since 1997. Perhaps the Senator was referring to HD radio. But the bottom line is that Dorgan is one of the most attentive legislators to communications matters on Capitol Hill, and we can chalk him up as one more legislator standing against the creation of a government-sanctioned monopoly.

Rite of passage?
The presidential campaign season seems to have expanded to fill all of the time between Election Day completed and Election Day on the horizon. Prospective candidates waste no time positioning and posturing. Increasingly, a way station along the road is the late-night talk show circuit. As part of that phenomenon, four current candidates are headed to Comedy Central this month. The destination is, of course, "The Daily Show," where two Democrats and two Republicans will chew the fat with Jon Stewart. According to the Associated Press, the quartet will be led off by Joe Biden (D-DE) on 8/8/07, followed by John McCain (R-AZ) on 8/16/07, Tommy Thompson (R-WI) on 8/20/07, and then Barack Obama (D-IL) on 8/22/07. Comedy Central EVP/GM Michele Ganeless told AP that Stewart both makes the candidates feel comfortable, and provides them access to the often difficult to reach young male demo.

SoundExchange role in royalty debate questioned
Eliot Van Buskirk has written a commentary available at wired.com which links royalty disbursing organization SoundExchange to the Music First Coalition, which is lobbying to extend performance royalties from the internet and satellite audio services to AM and FM radio. While it's not surprising that the organization would like to find another source of cash to collect and disburse, Van Buskirk says the lobbying appears to be in conflict with the organization's charter. He says "...the Copyright Act explicitly limits how the nonprofit can spend the money it collects," and lobbying activities are not on the short list of approved expenditures. It's not that Van Buskirk has taken sides in this dispute - he says that in his opinion musicians and recording labels deserve compensation for over-the-air spins. But SoundExchange's lobbying creates at the very least the appearance of a conflict of interest. "In keeping with the spirit of the law," he concluded, "SoundExchange should immediately sever its ties to musicFirst and any other lobbying group it funds or assists, and fulfill its role as a neutral administrator of fees."

Royster leaving Radio One
After 11 years as CFO of Radio One, dating back to before its IPO, Scott Royster has announced that he is leaving the company by the end of this year. He will stay on for a few months to assist with the transition to a successor, yet to be named. Royster had no comment when asked by RBR about his future plans. "Scott has been an integral and important part of our company's growth and development. When he joined the company we owned seven stations in two markets and had yet to tap into the public market. With his assistance we have grown to 70 stations in 22 markets and successfully executed numerous public offerings of equity and debt. I am grateful for his contributions to the success and development of the company. However, I understand that there comes a time for change and new challenges in a person's career," said CEO Al Liggins. "Partnering with Alfred and helping to execute his vision over the past 11 years has been a rewarding experience and I am proud of what we have accomplished. As CFO I have been closely involved in the company's strategy to acquire assets, diversify its portfolio and raise capital. While I look forward to the next phase of my career where I can build upon the knowledge acquired and relationships developed, I am happy to assist the company over the next few months to ensure a smooth transition," Royster said in the statement announcing his departure. Prior to Radio One, Royster was a principal at TSG Capital Group, a private equity firm that had been an early investor in Radio One.

GreenStone Media may shutter soon
Female-targeted Talk programmer GreenStone Media is preparing to discontinue operations effective 8/17, sans new funding. GreenStone has gone through its initial round of 5 million in funding. Its original CEO Edie Hilliard [former president of Jones BP] left recently and was succeeded by Nancy Vaeth-DuBroff, who also left weeks ago. Without new funding, programs like The Radio Ritas, Lisa Birnbach, Rolonda, Women Aloud and The World According to Giles & Moriarty will be looking for new homes.

Ad Business Report TM

Chrysler debuts new
campaign, radio included
As a new chapter begins in its 82 year history, The New Chrysler launched a national corporate ad campaign yesterday with the theme, "The New Chrysler: Get Ready for the Next Hundred Years." The ad was announced at a press conference signifying the first day of the new company, under the majority ownership of Cerberus Capital Management. The campaign consists of print, internet and radio ads that introduce The New Chrysler company name to the public and reflect back on the company's product, innovation and technology leadership of the past as well as what can be expected in the future - the next hundred years. The Pentastar logo -- which adorns the company HQ and was the corporate symbol of the Company for more than 40 years -- has returned as part of The New Chrysler company logo. The campaign's overall message conveys the pride, passion and commitment The New Chrysler has for building great vehicles, and creates excitement for what the future holds - new industry-leading cars and trucks with cutting-edge technology, high quality and increased fuel economy. The New Chrysler corporate advertising campaign is scheduled to run in the US through the end of August. Elements of the campaign will be used in Canada, Mexico and Puerto Rico.
| about the ads |

Cerberus picks Robert Nardelli to run Chrysler
Cerberus Capital Management has named former Home Depot CEO Robert Nardelli to lead its newly acquired Chrysler unit. Nardelli, who left Home Depot earlier this year, will become chairman and CEO of Chrysler, making him the second outsider recently named to lead one of Detroit's struggling Big Three. He follows former top Boeing exec Alan Mulally, who was tapped last fall to take over Ford. Nardelli's appointment puts him above Chrysler President Thomas LaSorda, an industry vet who had been CEO and will remain president. "The arrival of two CEOs who aren't part of or beholden to the U.S. auto industry's culture and traditions is as potent a symbol of the change buffeting the U.S. auto sector as the news last week that the Big Three's combined share of the U.S. market fell below 50% for the first time," reported The Wall Street Journal. "Both will play key roles in what are expected to be tough negotiations over a new national labor agreement with the United Auto Workers union, in which the auto makers want big concessions to narrow a 30-an-hour labor-cost gap with the U.S. operations of Japanese auto power Toyota Motor Corp." Nardelli's pay will be tied to Chrysler's performance and based on the equity value of the auto maker, the story added. In addition, COO Eric Ridenour has elected to leave the new company to pursue other opportunities. The COO position will not be filled going forward.

Media Markets & Money TM

New encounter for Birach
Would you believe Sima Birach is buying Cole Porter? How about KOLE Port? OK, how about KOLE-AM in Port Arthur TX? That's what's happening down in the Beaumont-Port Arthur market. The niche AM specialist is getting the station from Ralph McBride's Citywide Media Inc. John Pierce of John Pierce & Co. represented Birach Broadcasting Corporation, and Media Services Group's Jody McCoy represented the seller in the 450K transaction.

Close encounter for Birach
Davidson Media Group has completed its spin-off of a pair of AM stations to Birach Broadcasting, according to broker John Pierce. Birach now has the keys to KXLQ-AM Indianola IA, serving the Des Moines market, and WXCN-AM Hickory NC, serving the Charlotte market. The price was 800K.

Washington Media Business Report TM

FCC holds August Open Meeting
Today. After holding meetings the past few months at just about the last possible minute, Chairman Kevin Martin is getting the monthly chore out of the way early this time around. The lonely, one-and-only topic is a title under the jurisdiction of the Wireless Telecommunications Bureau: "Reexamination of Roaming Obligations of Commercial Mobile Radio Service Providers." This means that broadcasters have no particular reason to tune in, except for frequently-roaming group executives and consultants who may be interested in this topic for personal reasons.

RBR observation: August is get-out-of-town month in Washington. Congress is already gone, and this move by the FCC falls right in with inside-the-Beltway tradition. A statute on this isn't written down anywhere that we know of, but if there was one, it would read "August business, if business there must be, shall be short, sweet and over."

Entertainment Media Business Report TM

National Geographic launches music and radio division
National Geographic Ventures (NGV) CEO Tim Kelly announced the creation of National Geographic Music and Radio (NGMR) to reach people and inspire them to care about the planet through music and the power of radio. Kelly also announced the appointment of industry vet David Beal as president to oversee the music labels, publishing and radio operations. Mark Bauman, currently a VP of Nat Geo's Mission Programs, will serve as EVP and spearhead radio and video production. NGMR launches with several distribution partners, including Clear Channel, Salem Communications and NPR. It will distribute and promote its music offerings throughout all of National Geographic's media platforms, including the National Geographic Channels, Films, Giant Screen Films and Kids Entertainment, as well as its magazines and digital media divisions. NGMR will also oversee the production of projects from today's hottest artists who are actively involved in environmental and cultural issues. The Music and Radio group is focused on seven areas: Music Supervision Services - supervising music services for all National Geographic divisions, including feature films, giant-screen films and kids' programming. Live Events - featuring some of the world's greatest performers. WorldMusic.NationalGeographic.com - critically acclaimed consumer music site offering 99-cent MP3s, media-rich features, breaking music news and celebrity DJ playlists Radio - launching syndicated radio shows and HD/Internet channels Record Label - investing in new projects with three imprints: artist releases, soundtracks and kids Music Publishing - managing the music publishing assets of the Society, representing over 12,000 copyrights Music TV - overseeing music programming for the National Geographic Channel

ABCRN signs Big Boy
to syndie deal
ABC Radio Networks announced a multi-year deal with Los Angeles' hottest morning drive personality, Big Boy, to syndicate "Big Boy's Neighborhood." Big Boy is currently heard on flagship station KPWR (Power 106). Known for his traffic-stopping billboards in L.A. and his appeal to young influencers, Big Boy will launch nationally on 8/20. The show will air live, Monday- Friday, 6am-10am in all time zones. Also included in the deal is the weekend show which currently airs on 25 affiliates as "Big Boy's Hip Hop Spot." The weekend show features the hottest headlines in Hip Hop, A-list artist interviews and hit music. After 8/25, the show will take on the same name as the weekday morning show Big Boy's Neighborhood (Weekend Show). In 2007, Big Boy is nominated for his third Marconi, having received the Personality of the Year by the NAB in both 2002 and 2004.

Engineering Business Report TM

Opposition voiced
to NY radio tower
Proposed construction of a new FM radio tower has some Beekmantown, NY residents upset, according to a Press Republican story there. Independent Tower and Wireless Corp., a Delaware company represented by applicant Ed Flanagan of Montpelier, VT, has applied for special-use and conditional-use permits in a Residential-2 area. The permits would allow the corporation to build a 110-foot guy-wired lattice tower on the 99-acre Bear Town Ski Area. The tower would at 102.7 MHz and provide service for the Emergency Alert System and the Amber Alert System for New York and Vermont. Members of the West Beekmantown Neighborhood Association opposed the application at the recent Town Council meeting. An association took issue with the application calling the tower an "essential service." However, the radio tower is not controlled by the zoning law but by telecommunications law, regulated by local law No. 1 of 2002, which states the towers can be built in R-2 zones under the law and have been before. The law lists 10 possible sites for telecommunications, giving the R-2 area as a lower priority choice, however. "Significant effort was invested to identify a site for the proposed FM radio tower in the Beekmantown area," according to the visual-impact assessment conducted by engineering firm DuBois and King. "Other sites were considered. "The proposed Beartown Ski Area was selected because it met the broadcast technical requirement and because the site is the less visually intrusive. The site is located more than 900 feet from the nearest publicly traveled roadway, Beartown Road," the story quoted.

Transactions

400K WNST-AM Baltimore MD (Towson MD). 51% of Nasty 1570 Sports LLC from Jimandi LLC (John E. Baum, sec) to Nestor Aparicio (36% to 72.36%), Bruce Sherr (5% to 10.05%), R. Scott Panian (5% to 10.05%) and Thomas C. Kapp (3.75% to 7.54%). 25K escrow, balance in cash at closing. [File date 7/12/07.]

N/A KTLC-FM Canon City CO from Make a Difference Foundation Inc. (Patricia Johnson, sec) to Educational Communications of Colorado Springs Inc. (Ronald A. Johnson et al). Donation. [File date 7/11/07.]

Stock Talk

Broad market up; tough day for radio stocks
Wall Street recovered from Friday's sell-off, with the Dow Industrials surging 287 points, or 2.2%, on Monday to 13,469. There was, however, little news, so it was apparently some bargain hunting after last week's wild market ride.

Radio stocks, however, were hit hard again. The Radio Index fell 2.773, or 2.1%, to 128.647 - its lowest level since January 2, 2001. Radio One, which had fallen into penny stock territory on Friday, was slammed again, with its Class D falling 16.7% and Class A 15.6% after CFO Scott Royster announced plans to exit. Emmis plunged 15.7% and is also approaching penny stock territory.

Radio Stocks

**Here's how stocks fared on Monday**
Company	Symbol	Close		Change	Company	Symbol	Close		Change
Arbitron	ARB		52.00	+0.65	Google	GOOG		510.00	+7.00
Beasley	BBGI		8.47	-0.01	Hearst-Argyle	HTV		20.73	+0.33
CBS CI. B	CBS		32.05	+0.48	Journal Comm.	JRN		9.92	-0.21
CBS CI. A	CBSa		32.07	+0.56	Lincoln Natl.	LNC		59.97	+2.67
Citadel	CDL		4.56	-0.12	Radio One, Cl. A	ROIA		4.10	-0.76
Clear Channel	CCU		36.78	+0.03	Radio One, Cl. D	ROIAK		4.05	-0.81
Cox Radio	CXR		13.22	+0.22	Regent	RGCI		3.68	-0.05
Cumulus	CMLS		10.07	-0.17	Saga Commun.	SGA		6.87	-0.10
Debut Bcg.	DBTB		1.30	unch	Salem Comm.	SALM		8.24	+0.51
Disney	DIS		34.30	+0.40	Sirius Sat. Radio	SIRI		2.91	+0.01
Emmis	EMMS		5.49	-1.02	Spanish Bcg.	SBSA		2.96	+0.04
Entercom	ETM		21.21	+1.06	SWMX	SMWX		0.10	-0.01
Entravision	EVC		8.81	-0.30	Westwood One	WON		5.01	-0.10
Fisher	FSCI		48.51	+2.75	XM Sat. Radio	XMSR		10.92	-0.02

Bounceback

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Below the Fold

Media Markets & Money
New encounter for Birach
Would you believe Sima Birach is buying Cole Porter?...

Washington Media Business Report
FCC Open Meeting
It is August, meeting early as Martin is getting the chore out of the way early...

Engineering Business Report
Opposition voiced to NY radio tower
Proposed construction of a new FM radio tower has some residents upset...

Stations for Sale

Colorado
FM CP, Class C3
Transmitter, Antenna,
Tower Lease included
Gordon Rice Associates
(843) 884-3590 or
E-mail Gordon Rice Here

MCH Enterprises, Inc.
CA Coast FM: $1.5M
NV Boomtown: $895K
www.mchentinc.com
805.680.2265 (cell)

Market your Stations For Sale
in our daily epapers.

Contact
June Barnes
[email protected]

Radio Media Moves

Upped at Salem
Salem Communications announced William Long Jr., director of research and technology for Salem Web Network, has been named to the additional post of chief information security officer (CISO). In this new role, Long will analyze Salem's company-wide information security practices and will provide oversight to ensure that Salem's digital assets are properly protected. Long joined Salem Web Network in 2000 as chief technology officer. In 2005, he was promoted to director of technology and research.

More News Headlines

Big Fizz, Big Apple radio spots examined
Media Monitors took a look at carbonated beverages, NYC and their use of spot radio. VERIZON, the mammoth communications firm was the #1 on the SPOT TEN last week running 953 units. FORD LINCOLN MERCURY was #2 with 928 spots, while GEICO was #3 with 896 announcements. HONDA was #4 with 469 spots and the HD DIGITAL RADIO ALLIANCE was #5 airing 467 spots. MCDONALD'S was #6 with 441 spots. THE BOURNE ULTIMATUM was #7, making this blockbuster, its own brand running 417 commercials in the New York market alone. OFFICE DEPOT was #8 with 407 spots, while QUICKEN LOANS came in #9 airing 381 spots. BANK OF AMERICA was #10 with 334 spots. MOUNTAIN DEW was #1 last week on American radio running 1294 spots. DIET MOUNTAIN DEW was #2, with 1114 spots. They were certainly doing the Dew on the radio. PEPSI was #3 with 836 spots, while DR. PEPPER was #4 running 815 spots. COCA-COLA was #5 with 784 spots. Coming in #6 was SIERRA MIST with 658 announcements, while NOVAMEX's group of products known as REFRESCOS DE MEXICO ran 284 announcements. Coming in #9 was COCA-COLA VAULT with 198 spots and #10 was DIET PEPSI with 181 announcements. On the NATIONAL SPOT TEN last week, the HD DIGITAL RADIO ALLIANCE was the #1 advertiser last week in America with 29,720 spots, while FORD LINCOLN MERCURY was #2 running 28,956 spots. VERIZON was #3 nationwide airing 25,907 ads and GEICO was #4 with 21,777 spots with MCDONALD'S in at #5 with 19,182.

SmartMedia Magazine

Coming in September
FALL NAB ISSUE
SPECIAL DISTRIBUTION:
NAB RADIO SHOW

Radio Roundtable:
Radio execs find solutions.

Media Markets and Money:
What's attractive to equity capital these days?

Ad Biz:
Gennele Niblack, Katz Political President

Sales:
Dial Global's Eileen Decker on radio ad sales

News/Talk:
Using your website to get, keep and grow your audiences

HD Radio:
Monetizing Conditional Access

New Media:
Gary Arlen: YouTube, Joost and the emerging Fox-NBC website are just the start of big bandwidth video via the Internet.

Streaming:
The impact of CRB Royalty rates on webcasters and streaming ads.

For advertising
information, contact:
June Barnes
[email protected] 803-731-5951;
Jim Carnegie
[email protected] 813-909-2916 or
Carl Marcucci
[email protected] 703-492-8191.

RBR Radar 2007

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

Not Bull No Longer Bear
Slew of upgrades from BofA analyst Jonathan Jacoby isn't a bull, but at least he's no longer a bear when it comes to radio stocks. Stock prices have fallen to what Jacoby says reflects his slow growth long-term view, so he's upgraded Citadel, Cox Radio and Entercom from "sell" to "neutral." Jacoby had downgraded the trio to sell back in November, when the Wall Street consensus was that 2007 radio revenue growth would be in the 2-3% range. "We argued that persistent audience erosion would cap average top-line growth at approximately 1% over next five years and at less than 2% over the next ten years. Seven months into '07, it is evident that radio's best hope is for flat revenue this year. And investors seem to have responded to the continued malaise by revaluing the sector, which now reflects our tempered long-term view," Jacoby said in his update to clients.
08/06/07 RBR #152

Nexstar no longer in sales talks
Citing "difficult conditions in the financing markets" Nexstar announced that it has decided to suspend discussions with potential buyers of the company. CEO Perry Sook tells TVBR that a "hiatus" is an accurate description and it is likely that sale talks will resume when the markets improve.

TVBR observation: The rumblings in the financing markets have become louder in recent weeks. Tribune allayed fears when it declared that all of the financing is committed for its buyout. And KKR drew headlines in the financial press for holding its bankers feet to the fire for financing commitments they'd made to its deal to buy Dollar General. But for deals not yet done, terms are tightening and financing is becoming harder to get.
08/06/07 TVBR #152

Arbitron defends
PPM training for agencies
Responding to the blistering attack from Cox Radio CEO Bob Neil (8/2/07 RBR #150), Arbitron notes that is has provided training on Portable People Meter (PPM) ratings to hundreds and hundreds of agency buyers, planners and managers. By the numbers, Arbitron says it conducted about 200 training session in 2006 (stations and agencies combined), about 240 station training sessions and nearly 200 agency training sessions in the first six months of 2007, with most in Houston and Philadelphia, the first two markets to go live with PPM. Thus far, some 234 planner buyers, 284 media planners, 701 media buyers and 451 agency managers have attended Arbitron PPM training sessions. "All those facts aside: Training the agencies does not preclude them from testing radio t! o see if they can get lower prices. How radio responds to this pressure will be important to the outcome," said Arbitron Sr. VP of Press and Investor Relations Thom Mocarsky.
08/03/07 RBR #151

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