RBR's Daily Morning Epaper

Volume 22, Issue 19, Jim Carnegie, Editor & Publisher

Thursday Morning January 27th, 2005

Radio News®

Mel says "Satellite radio is red hot!"
Super salesman that he is, Mel Karmazin was making lots of promises to shareholders in his first quarterly conference call as CEO of Sirius Satellite Radio. Declaring that "Satellite radio is red hot!" he predicted that penetration could someday equal the current 90 million households total of cable and satellite TV combined, that Sirius' churn rate will be "very low," and he confirmed that Howard Stern's show will carry advertising on Sirius. But he threw cold water on rumors of a merger with XM.

RBR observation: Want to bet on that low churn rate, Mel? We see no reason why satellite radio's churn rate won't double or triple from current levels over the next few years as people trade in cars, one-year packages built into auto purchases expire and some people just decide they're not using the service enough to justify the monthly payment. You're going to need those ad revenues to keep your business model from falling apart. | More... |

Emmis strengthens reaction to tsunami flap
Deciding the on-air and on-website apologies from Miss Jones of WQHT-FM were not enough (1/26/05 RBR #18), Emmis Communications has suspended her and the rest of her morning team indefinitely. A bit on the program made fun of tsunami victims, drawing widespread criticism. "What happened is morally and socially indefensible," said Emmis Radio President Rick Cummings. "All involved, myself included, are ashamed and deeply sorry. I know the members of the morning show are truly contrite. They know their actions here are inexcusable."

Indecency back on the Hill agenda
As RBR has been reporting for months now, Sen. Sam Brownback (R-KS) and Rep. Fred Upton (R-MI) are both set to get ball rolling on their respective bills to jack up the penalties for incidents of broadcast indecency. Although widely supported in 2004, for a number of reasons, Congress failed to get it done. It's no surprise they'll try again in 2005. | More... |

HHS hired columnist to plug program
In a muted echo of the Armstrong Williams case, syndicated columnist Maggie Gallagher reportedly accepted 21.5K from the Department of Health and Human Services (HHS) for which she agreed to plug President Bush's 300M plan to encourage marriage as means of strengthening families. As in the Williams case, the financial inducement to push the program went undisclosed. According to the Washington Post, Gallagher wrote at least one article on National Review Online, and also helped HHS with brochures and a draft for a magazine article. She said she did not consciously avoid mentioning the deal with HHS; rather, she simply didn't think it was anything worth mentioning. According to the Associated Press, President Bush has ordered an immediate halt to any such deals going forward. Bush said that there needs to be an "independent relationship" between the administration and the press.

RBR observation: This incident doesn't approach the 240K paid to Williams, but it will add fuel to the fill up the gas tank for those seeking to cast a big net over the government in an attempt to ferret out other similar arrangements.

Focus on Family cries foul over outing stories
James Dobson's Focus on the Family has no particular objection to Spongebob Squarepants and is saying that Dobson's remarks on the topic of the porous yellow square's participation in a We Are Family Foundation video have been widely taken out of context. "This issue is not about any objections to any specific cartoon characters," said FotF in a statement. "Instead, Dr. Dobson is concerned that these popular animated personalities are being exploited by an organization that's determined to promote the acceptance of homosexuality among our nation's youth." The group continued, "We applaud the ideal of championing to children the value and dignity of every human life as well as respect for our differences. What we vehemently object to is using these well-known characters to help advance an agenda that's beyond the comprehension of 6- and 7-year-old children, not to mention morally offensive to millions of moms and dads."

Eddie Fritts: The year ahead, Part 4
Indecency has been a hot topic for several years now, with broadcasters frustrated by an FCC that won't spell out its guidelines, but hands out big fines nonetheless. In a series of questions for NAB President & CEO Eddie Fritts, we asked how he's dealing with the problem. This article appears in its entirety in the January debut issue of Radio and Television Business Report - The Real Business Magazine. If you would like a copy please send a request via email to [email protected].

Does NAB have a position on indecency, or is the industry too divided on the subject?
NAB's position on indecency is that voluntary industry initiatives are far preferable to government regulation when dealing with programming issues. We also believe most Americans would acknowledge that broadcast programming is considerably less explicit in terms of violence and sexual content than that which is routinely found on cable and satellite channels.

Conference Calls Q4 2004

Sirius revenues up 409%
Wall Street's focus is still on subscriber growth at both satellite radio companies, but it's still interesting to look at the financial numbers. By the way, Sirius Satellite Radio added 480,969 net subscribers in Q4, beating its previous guidance and putting its year-end total at 1,143,258. On the financial front, Q4 revenues jumped 409% to 25.2 million, mainly because its subscriber base had grown 338% from Q4 of 2003. The company's loss from operations grew by 63.6 million to 155.2 million. Although he's now heading a start-up that's been burning through cash to grow, new CEO Mel Karmazin isn't one for uncontrolled spending. He assured analysts and investors that all expenditures are now being carefully scrutinized. (Editor's note: Yep, that's the Mel we all know!)

Adbiz©

"Follow The Money! Ad Strategies In The Digital World"
Agency heavyweights explored the confluence of content and technology in a humor-packed session at NATPE in Las Vegas. What models going forward will offer the best opportunities and value for their clients? What are their biggest concerns? What trends are hitting their radar screens? Panelists included Peggy Green, President, Broadcast, Zenith Media; Jon Mandel, Chairman, MediaCom U.S.; Debbie Myers, Vice President, Media Services, Taco Bell; Charlie Rutman, President, Carat USA; and Rino Scanzoni, CIO, Mediaedge: CIA. At NATPE, Radio got some attention. In comparing radio to other media, Mandel said, "Radio does a higher average rating on just about any target audience than any cable network does in primetime on households...it has more reach in the average home...why is everybody buying cable, considered the reach medium, and radio is considered the frequency medium?" Adds Rutman: "I'll tell you what I think the challenge is to radio. We've been measuring radio pretty much the same way for 100 years." | More... |

Diageo signs for relationship marketing
database management
Euro RSCG 4D Discovery announced that it has been selected by Diageo North America, to oversee relationship marketing database duties in the region for the adult beverage giant. Euro RSCG 4D Discovery will provide Diageo North America with data strategy development and multi-brand database management. It will undertake the construction of the database that will serve as the foundation for Diageo North America's relationship marketing programs. The assignment was awarded after a competition against three other database companies. The incumbent agency on the business was Experian. Diageo North America's brands include Smirnoff, Baileys, Captain Morgan, Crown Royal, Jose Cuervo, Johnnie Walker, J&B, Tanqueray, Guinness, Beaulieu Vineyard, and Sterling Vineyards.

Ads toned down for Super Bowl
Don't look for any flatulent horses or crotch-biting dogs in ads airing during next month's Super Bowl. After the public outcry over Janet Jackson's "wardrobe malfunction" during half time last year and, more recently, a suggestive promo for ABC's "Desperate Housewives" at the start of Monday Night Football, advertisers are being careful not to run the risk of being tagged as offensive. Anheuser-Busch has even decided not to air a very clever spot which poked fun at last year's scandal - - intimating that a backstage worker damaged the costume by using it to open a Bud Light. According to the Detroit News, there will, however, be a topless ad. A Ford ad based on the movie "Fargo" will feature a Mustang convertible with its top down in freezing, snowy weather as a police officer investigates why the driver hasn't moved after a traffic light turns green.

Meredith targets Hispanic women with new mag
TV/magazine group Meredith Corporation is planning to extend its woman's magazine franchise keystoned by "Better Homes and Gardens" and "Ladies' Home Journal" with a periodical aimed at the rapidly expanding Hispanic market. "Siempre Mujer! The bi-monthly offering is slated for a fall kick-off with a base circulation of 350K. Meredith makes no bones about its ultimate target - - Hispanic dollars. The company says the demographic represents 600B in spending power already, and is expected to kick it up to 1T by decade's end.

You deserve a clot today?
Eat too much McDonald's food and you are likely to get fat. But can you hold their advertising responsible and sue the company? The Second Circuit says yes, overturning a lower court ruling that said no, according to the Associated Press. The new ruling says that the plaintiff need only show that advertising was deceptive and therefore caused injury - - in the case of McDonald's, ads were said to cause a variety of maladies to be suffered by children. McDonald's believes it will eventually prevail in what it believes to be a meritless case.

March Radio & Television Business Report

2005 Technology Odyssey..
The Changing Landscape
Ipods, DTV, FCC, Technology, People Meters. If you are in Business to Do Business in today's New Environment, Position your Company, Technology, Programming and what you do that Radio and Television executives need to know as budgets are being put into action. The Landscape is Changing Fast - March 2005 report is ahead of the curve as first quarter is closing fast.

Advertising/Marketing Placement - Contact
Jim Carnegie - 813 909 2916
June Barnes - 803 731 5951

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Media Markets & MoneyTM

Max goes shopping in its own back yard
HQ staffers at radio/TV group Max Media group will finally be able to listen to their own stations directly off the air, once they close on an 80M deal for an intact superduopoly in Virginia's Tidewater market. Barnstable's one-AM, four FM Norfolk group is the target of the acquisition. Virginia Beach and Newport News are the other named-municipalities in Arbitron's #40 market, the former being the address of record for Max. According to Kalil & Co., which handled brokerage chores on the the deal, this will add the eighth, and easily the largest radio market for Max, which also owns 11 television stations in nine different markets. Barnstable will be left with radio stations on Long Island and in the Greenville-Spartanburg SC market. The stations are Sports WGH-AM, Country WGH-FM, Rock WXMM-FM, Oldies WFOG-FM and Contemporary Religion WXEZ-FM.

RBR observation: This represents a return to radio ownership in the market for Max, which is led by Gene Loving and John Trinder. It sold five stations in Norfolk back at the end of 1997, mostly to Sinclair. Sinclair eventually broke up its local radio group with stations headed out in several directions, including Barnstable. The upshot is that one of the stations, WFOG-FM, is now coming full circle back to Max.

BE gets The Radio Experience
Broadcast Electronics announced that it has acquired the assets of The Radio Experience. The latter is a radio datacasting company operated by Allen Hartle, who is credited with driving the resurgence of the Radio Broadcast Data system (RBDS) in the US. Hartle will join BE as Director of Development, Broadcast.

Washington Beat

McSlarrow takes NCTA helm
The Washington rumor mill was right again (1/25/05 TVBR #17)! Days after stepping down as Deputy Secretary of Energy in the Bush Administration, Kyle McSlarrow has signed on as President and CEO of the National Cable & Telecommunications Association (NCTA). "The cable industry is providing great benefit to consumers through its quality programming, dynamic new services, and superior technology. By providing jobs for more than a million Americans, it's also a major staple of the US economy and a great contributor to the life of our communities. I'm honored to represent the many fine people and companies that comprise the industry, and I'm eager to lead the effort to tell cable's story in Washington," said McSlarrow. The new NCTA chief once ran (unsuccessfully) for the US House and, in addition to the Department of Energy, had previously worked for Senators Bob Dole, Trent Lott and Paul Coverdell (Republicans all).

RBR observation: First Billy Tauzin and now another Washington heavyweight is signed to head a trade association without NAB even getting into the bidding. Eddie Fritts' retirement is only a year away and we're hearing that he'll accelerate that timetable when the NAB Executive Board meets next week. Time is a wasting!

Powell reaction Part 4
Here's a selection of reactions to the announced departure of Michael Powell from the chairmanship of the FCC, including his fellow Commissioner Jonathan Adelstein, who released his own statement too late for our 8th Floor edition. | More... |

NAB weighs in with Supremes on P2P
NAB friends on the Supreme Court have by now received its friend of the court brief concerning MGM v. Grokster. NAB wants Grokster and companies like it to be held liable for aiding and abetting copyright infringement by enabling peer-to-peer (P2P) sharing of audio and video content. The Ninth Circuit Court protected Grokster, effectively legalizing P2P operations since, as NAB put it, "...it is virtually impossible to identify and sue individuals infringing through P2P networks." NAB stressed a number of points in the filing. It noted broadcasters' dependence on copyrighted material, as well as the need to maintain geographic exclusivity, the underpinning of national policy promoting localism. Finally, NAB argued that the Ninth Circuit "...actually encourages software developers to engage in willful blindness about the way their product is being used."

Transactions

KTGE-AM/KRAY-FM/KEBV-FM, KHDV-FM & KMJV-FM Monterey-Salinas-Santa Cruz CA (Salinas, King City, Soledad) from Wolfhouse Radio Group Inc. to Latin Entertainment Network Inc.

WPBC-AM Atlanta (Decatur GA) from Pacific Star Broadcasting Inc. to Chang Soo Kim.

| More... |

Stock Talk

Bright skies over Wall Street
Generally good earnings reports had Wall Street traders in a buying mood on Wednesday. The Dow Industrials rose 37 points, or 0.4%, to 10,499.

Ditto for radio stocks. The Radio Index gained 1.182, or 0.6%, to 217.651. Arbitron had another good day following this week's strong earnings report. It gained 2.1% on Wednesday. Univision was up 2.2%.

Radio Stocks

**Here's how stocks fared on Wednesday**
Company	Symbol	Close		Change	Company	Symbol	Close		Change
Arbitron	ARB		41.21	+0.85	Jeff-Pilot	JP		50.33	+0.30
Beasley	BBGI		16.04	+0.23	Journal Comm.	JRN		17.06	+0.05
Citadel	CDL		14.05	+0.05	Radio One, Cl. A	ROIA		16.29	+0.30
Clear Channel	CCU		32.29	-0.03	Radio One, Cl. D	ROIAK		16.20	+0.22
Cox Radio	CXR		16.02	+0.17	Regent	RGCI		5.29	-0.01
Cumulus	CMLS		13.80	+0.04	Saga Commun.	SGA		16.61	+0.15
Disney	DIS		28.58	-0.22	Salem Comm.	SALM		22.45	+0.28
Emmis	EMMS		18.02	+0.23	Sirius Sat. Radio	SIRI		6.18	-0.06
Entercom	ETM		31.41	-0.25	Spanish Bcg.	SBSA		10.42	+0.04
Entravision	EVC		7.56	-0.06	Univision	UVN		27.50	+0.60
Fisher	FSCI		49.92	+0.52	Viacom, Cl. A	VIA		37.86	-0.20
Gaylord	GET		39.85	+0.55	Viacom, Cl. B	VIAb		37.38	-0.22
Hearst-Argyle	HTV		25.43	-0.09	Westwood One	WON		24.73	-0.24
Interep	IREP		0.66	-0.04	XM Sat. Radio	XMSR		33.14	+0.45
International Bcg.	IBCS		0.02	unch	-	-	-	-	-

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Bounceback

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Arbitrends

Upped & Tapped

Down in the valley...
Doug MacLeod has been named Director of Marketing and Non-Traditional Revenue for the 12 stations of Clear Channel Radio of the Hudson Valley - - the region heading north from New York City through Poughkeepsie.

Stations For Sale

Top 100 SE Market
Powerhouse 50 KW AM and Class A LPTV with Full market coverage. Great opportunity for an aggressive, innovative operator!
Cliff at Clifton Gardiner & Co (303)758-6900
[email protected]

Competing Media

Emmis jumps into LA Hispanic media battle
Emmis Communications announced plans to launch Tu Ciudad Los Angeles, an English-language magazine catering to upwardly-mobile Latinos in LA, the city with the nation's largest Hispanic population. The bi-monthly magazine, targeting three and a half million affluent Latinos, will debut on newsstands and reach subscribers in May 2005. According to Emmis, "The publication of Tu Ciudad heralds a tectonic shift away from the notion of Latino identity built around language, and toward the new reality of culturally identified and geographically dispersed US-born Latinos who are a growing percentage of high-income individuals in metro areas across the U.S. This hot market, with a buying power of 78 million in Los Angeles alone, is just beginning to be noticed."

RBR observation: So, if the magazine is going to be in English, why isn't it called Your City Los Angeles?

TVBR - TV News

TV not as strong as Gannett expected
Gannett CEO Doug McCorkindale says new business development at the company's TV stations is humming along - - it's the old business that's the problem. "Looking ahead, our latest pacings for the first quarter overall are down compared to last year's first quarter - - down in the low to middle single digits, with January down in the low single digits and February down in the mid single digit range," said McCorkindale in his quarterly conference call, adding that local is currently a bit stronger than national. He said that some traditional advertisers, particularly the auto category, have been holding back on ad expenditures. In answer to questions from analysts, the Gannett CEO said the company is feeling some impact from declining ratings for NBC. "Not a big deal. They're still doing well in many, many categories," he noted.

RBR Radar 2005

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

Eddie Fritts: The year ahead, Part 3
Q: What happened to the Congressional support for broadcast deregulation in the 1996 Telecom Act? A: Media consolidation is a controversial issue - - When the FCC announced its intention to deregulate media ownership rules, I don't think anyone could have foreseen the amount of criticism that was generated. When you add to that the controversy that swirled over the Janet Jackson indecency incident at the Super Bowl, it became a rallying cry for opponents of media deregulation. Groups are energized like never before, and FCC Commissioner Copps has skillfully tapped into that. 01/26/05 RBR #18

Expect PPM station data in Q2
Looking for a decision from Nielsen Media Research by mid-year on whether it will participate in this year's Houston test. where things stand in Houston, about 1,000 PPM panelists now have the devices installed for the Houston test. The focus currently is on the quality of the panel, but look for some preliminary data this quarter and station-level audience data by the end of Q2. That means there will be some February sweeps data for TV. RBR observation: Keep your eye on Houston. Lots of TV groups are already pushing for PPM, or something like it, to replace set-top boxes - - and radio folks, Arbitron's traditional clients, are slowly warming to the idea (if not the price tag). 01/26/05 RBR #18

Ad sessions at NATPE look at
branded entertainment, strategies
The first, "Branded Entertainment: The 411 on ROI," examined new ad models using branded entertainment. How can their effectiveness be measured and how much is too much for the consumer? With the advent of DVR and the declining effectiveness of :30s, the use of branded entertainment has been increasing exponentially. Some advertisers have been able to capitalize on it; others feel branded entertainment amounts to nothing more than throwing money away with only a chance of success. Some find it most successful using other, traditional ad elements immediately following exposure.Advertisers are putting pressure on buying and planning agencies to develop the tools and processes, and evaluative techniques to do just that. Because each branded entertainment placement is unique, the opportunities can change with each show. 01/26/05 RBR #18

Excusing Private Ryan
According to reports, the FCC is prepared to clear the ABC Television airing of "Saving Private Ryan" of any indecency charges. Although a full commission vote is said to be pending, the necessary three votes against such a finding are apparently in place. TVBR observation: It is now possible to handicap the voting on the current Commission. Noteworthy is the fact that the factions are not split along party lines. If sentiment on Capitol Hill is any indication, we'd bet that Martin and Copps are the ones who will be getting the reinforcements. 01/26/05 RBR #18

January Digital
Solutions Magazine

No more political money or more Olympics advertising. In '05 you're going to have to make money the old fashioned way - earn it. Keep up on trends and figuring new ways to earn ad dollars. The need is serious for a business-oriented publication. In radio or television, many of the challenges are the same -each industry can learn from the other.
No fluff. No hype. Just business.

November Zinio Solutions Magazine
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