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Welcome to RBR's Daily Epaper
Volume 23, Issue 225, Jim Carnegie, Editor & Publisher
Friday Morning November 17th, 2006

Radio News ®

448 stations up for sale;
More to come

Christmas came early for media brokers as Clear Channel put 448 smaller market radio stations (Boise is the largest market) and all 42 of its TV stations up for sale. The move was announced as the winning buyout bid was declared, with a consortium of Thomas H. Lee Partners, Bain Capital and the Mays family agreeing to buy out public shareholders for 37.60 per share, valuing the company at 26.7 billion (RBR/TVBR Alert 10/16/06). A few questions, though, remain to be answered. There was no word on how the new company will be structured. Both Thomas H. Lee Partners and Bain Capital hold 25% voting interests in Cumulus Media Partners (CMP), the entity that acquired the former Susquehanna Radio. Clear Channel Radio competes in eight of the ten CMP markets. Will Lee and Bain make their Clear Channel investments non-voting to avoid attribution at the FCC? Who will hold voting shares of the new Clear Channel? We know that company co-founder Lowry Mays and his two sons, CEO Mark Mays and President/CFO Randall Mays, will be investors in the new owner and that Mark and Randall will stay on to run the company. Regardless of who holds the votes, Clear Channel is going to have to divest even more stations beyond the 448 in 90 markets announced yesterday. Since the new ownership will constitute a change of control, clusters which exceed the new FCC local ownership limits will no longer be grandfathered and some stations will have to be divested. Folks at Clear Channel are now studying which markets will be affected. RBR also asked what will happen to the public bonds of Clear Channel, which has about 8.1 billion of debt outstanding. If the bonds remain in place, Clear Channel will still have to file quarterly financial reports with the SEC, even though it will no longer have public stock. What about Clear Channel Outdoor? JC Decaux is hot to do a deal to merge the world's two largest billboard companies, but for now things will stay as they are. Clear Channel Communications, as a private company, will continue to own 90% of Clear Channel Outdoor, with the remaining 10% owned by public stock holders.

RBR observation: Is 37.60 a good deal? We would have been surprised to see the bidding go to 40, which was the rumored target. Bear Stearns analyst Victor Miller had calculated a take-out value of 39-41 and wondered yesterday whether the scale of the deal held down pricing a bit. "One could argue that the implied price for CCU does not adequately reflect radio's value," Miller said. Bank of America analyst Jonathan Jacoby said in a note yesterday that the purchase price for the CCU radio assets works out to about 10% below the market value of its radio peers on an EBITDA basis. He noted that Clear Channel reserved the right to solicit other offers through December 7th. Even so, we at RBR think it unlikely that a higher bid will be forthcoming.


What's for sale?
Clear Channel Radio CEO John Hogan sent two emails out yesterday to two different sets of radio group employees. One said that the employee worked in a market that was not going to be sold and the other informed the employee that their market was, indeed, one of the ones to be divested. "The decision to sell the stations in your market was not made quickly or easily nor is it a reflection on the efforts and performance of you and your team. It is a business decision that we believe will result in a better operating opportunity for your stations and is in keeping with the strategic direction of Clear Channel Radio," Hogan wrote, attaching a complete list of the 90 markets to be sold. "The details on the process for selling this group of stations will be forthcoming. I know you will have many questions and we will answer them as the process develops. In the interim, the best direction I can provide is to continue to focus on the job at hand and perform at the highest level possible. Please know that the time, energy, and effort that you and your team give and continue to give on behalf of your stations is greatly appreciated," Hogan concluded. The largest market on the list is Boise, ID and not all markets above the 100 rank are included. Clear Channel plans to keep the 100+ markets where it sees strong growth potential. The list includes 60 Arbitron-rated markets and 30 unrated markets. Here is the complete list of Clear Channel Radio markets up for sale.
| View the List |

Radio magnate eyes White House
Well, it's not just any old radio honcho who is contemplating a run for the Republican 2008 presidential nomination. In fact, as far as the radio business goes, he's pretty much a Tommy-come-lately. But Armada's Tommy Thompson is seriously flexing his wrists in preparation for possibly throwing his hat into the ring. Thompson's political resume is much longer than is his broadcast resume. He's served as Governor of Wisconsin and as Secretary of Health and Human Services during the first term of George W. Bush. In fact, fixing the national health care system will be one of his top priorities, according to the Associated Press. On the broadcast side, the Armada group has been investing in small market radio clusters, most recently picking up a small group with stations in McCook NE and nearby portions of Kansas and Colorado. Thompson serves as chairman of an executive lineup which includes a number of highly experienced and qualified broadcasters.


Journal radio revenues up; Tough times at the Times
Journal Communications reports that its radio revenues were up 3.4% in October to 7.1 million. The gain was credited to improvement in the national, political and developmental ad categories. Journal said its radio group booked 230,000 in political revenues in October. Political was a much bigger factor for TV, where election-related ad revenues were 3.7 million, including one million at newly acquired stations. That political windfall helped boost TV revenues 114.1% to 14.2 million, which was still a 43.3% gain if you take out those new stations. Newspaper ad revenues were down 6.4% to 19.1 million, with national up and retail and classified down. Meanwhile, New York Times Company reported another tough month. Radio, a very small part of the company, is included in its News Media Group, also encompassing newspapers and their related Internet web sites. News Media Group ad revenues were down 5.8% to 209.3 million, with declines in national, retail and classified, even though Internet ad revenues rose 29.8%. About.com, which is reported separately, saw ad revenues rise 26.3% to 7.4 million. The Times TV group, which is for sale, saw October revenues shoot up 44% to 20.2 million.

NAB: Americans happy with broadcast election coverage
In fact, according to APCO Insight, a firm which conducted a poll of just over 1K citizens a few days ahead of Election Day, exactly one half of the population thinks broadcasters provide too much coverage. 37% think the coverage is just about right and 10% think it's not enough. The same survey found that 30% believed broadcasters, including both radio and television, would provide the most help in determining whom to vote for, leading a pack that included newspaper (21%), cable news (14%), a candidate-produced direct mail (7%) and paid political broadcast advertising (6%). And an overwhelming 70% were opposed to government-mandated free advertising time for candidates. NAB adds for good measure that at 10PM as election returns were coming in, 23M citizens were tuned into ABC, CBS or NBC, compared to 6.1M who were watching CNN, Fox News or MSNBC. Bill Dalbec, SVP at APCO Insight, said, "Americans continue to strongly believe that local broadcasters are doing a good job covering elections. These findings are almost unchanged from a poll conducted two years ago and have remained remarkably consistent since we begin asking these questions six years ago."


Wall Street Media Business Report TM
A radio bear on Wall Street
Bank of America analyst Jonathan Jacoby has turned really sour on radio stocks. He issued "sell" recommendations yesterday for Citadel, Cox Radio and Entercom. "We project radio industry revenue to increase at an average rate of just 1% over the next five years - '07 revenue is projected to be up 1.0%. As listening declines moderate, radio revenue growth eventually should reach 3%+ annually - but we believe it will be at least 10 years before such growth returns," Jacoby said in his research note. While Q4 is going to be the best quarter in quite a while, Jacoby says that is being driven by political advertising, not core improvement. So, he sees the risk that those three radio stocks could face price declines of as much as 30% or so. He doesn't see that downside risk to Clear Channel. Jacoby maintained his "buy" rating on Radio One, saying, "we believe the company's LA station can only show improvement and new initiatives outside of radio likely will drive growth."


Ad Business Report TM

Still no accreditation for PPM
Wednesday's meeting of the super-secretive Media Ratings Council (MRC) still left Arbitron's Portable People Meter without MRC accreditation. Arbitron says PPM still has to answer MRC concerns in two areas, but doesn't say what they are. "Arbitron is committed to having MRC accreditation of all PPM markets. We have further committed to achieving accreditation prior to commercialization of the PPM service in Houston. That commitment for Houston remains. We understand that, while accreditation was not granted at the November 15 MRC PPM audit committee meeting, the list of question areas has now been narrowed to two. We will be working with the MRC to address those issues as quickly as possible," said Arbitron CEO Steve Morris. Trying to find a silver lining to that dark cloud, Arbitron announced more detailed roll-out plans for the PPM to comply with the commitment it recently made to the Radio Advisory Council. Although Arbitron has agreed to wait for MRC accreditation before making PPM the ratings currency in Houston, it is moving ahead with other markets - accredited or not. The updated schedule calls for Arbitron to initiate electronic measurement in Philadelphia in January 2007. The Fall 2006 diary-based ratings report would be the "currency" in the market until the release of the March 2007 PPM ratings report. The January 2007 and February 2007 PPM radio ratings reports would be released as demonstration data. In New York, along with Nassau-Suffolk and Middlesex-Somerset-Union, the two year-round radio markets embedded in the New York radio metro, Arbitron would initiate electronic measurement in October 2007. The Summer 2007 diary-based ratings reports would be the "currency" in the market until the release of the December 2007 PPM radio ratings report. The October 2007 and November 2007 PPM radio ratings report would be released as demonstration data. In Los Angeles and Riverside-San Bernardino, Arbitron would initiate electronic measurement in January 2008. The Fall 2007 diary-based ratings report would be the "currency" in the market until the release of the March 2008 PPM radio ratings report. The January 2008 and February 2008 PPM radio ratings reports would be released as demonstration data. But Houston is still on hold. "Houston, which has been Arbitron's radio and television demonstration market for the Portable People Meter since mid-2005, would switch from diaries to PPM-based ratings after Arbitron obtains Media Rating Council accreditation for that market," Arbitron said yesterday as it fine-tuned its PPM deployment schedule.

Carat beefs up Multicultural
Carat Americas President Ray Warren announced the hire of Joi Tyrrell and the appointment of Alex Alonso as Co-Directors of Carat Multicultural for Carat USA. Joi will be acting as Director of Carat Multicultural, East, responsible for overseeing services for the New York, Chicago, Boston and Atlanta offices. Alex Alonso will take the role of Director of Carat Multicultural, West, responsible for overseeing services for the Los Angeles, Irvine, San Francisco and Dallas offices. "Joi and Alex share an extensive knowledge and understanding of the growing multicultural space, and will serve as tremendous assets to our organization," said Carat's Warren. "This is an exciting time to be working at Carat. I am happy to have Joi on board with us, and equally pleased to promote Alex to this new leadership role. I have every confidence in their ability to expand the Carat Multicultural unit as we continue to grow and transform our clients' businesses." Tyrrell joins Carat from SpikeDDB, where she served as Media Director for clients including PepsiCo, Johnson & Johnson Consumer Products, and State Farm Financial Service/Insurance, among others. Seasoned in both buying and planning disciplines, Alonso began his career at Starcom's Hispanic Group, Tapestry, and spent several years with Anheuser-Busch's Busch Media Group prior to joining Carat.


Media Markets & Money TM
CBS finds newbie for Fresno cluster
Peak Broadcasting is entering the radio business with a splash, picking up the two-AM, five-FM radio superduopoly put together by CBS Radio in the Fresno market. The stations lineup includes KMJ-AM, KFPT-AM, KWYE-FM, KSKS-FM, KFJK-FM, KOQO-FM & KMGV-FM. According to brokerage firm Kalil & Company, the price is a cool 90M cash. While Peak may be a new radio ownership company, the person heading it is no rookie. CEO Todd Lawley has Citadel Broadcasting on his resume, where he had been a Regional President. He'll be backed by San Francisco-based investment firm Duff, Ackerman & Goodrich. Lawley implied that Fresno will be the hub of a growing radio operating company, saying, "We are very pleased to announce Peak's first acquisition. To acquire these significant radio stations in fast growing Central California is the first step towards building a new generation of radio operations. Through technology, focus, and creativity, Peak will take advantage of every platform that these fine brands offer." An LMA is set to begin next month.

RBR observation: This may be an opportune time to kick off a new group in California. Clear Channel's big radio sell-off includes stations in Victorville, Santa Barbara and San Luis Obispo. None of those markets are right next door, but they aren't all that far away, either.

Close encounter in Boston
Robert J. Maccini of Media Services Group has checked in to let us know that BusinessTalkRadio.net Inc. has closed on another acquisition, hot on the heels of finishing its deal to acquire KNUU-AM in Las Vegas. This time the station is WBET-AM Boston. The seller is KJI Broadcasting. According to documents filed with the FCC, the price tag was 1M. In addition to the new acquisitions, the buyer, headed by Michael Metter, also owns WGCH-AM in Stamford-Norwalk CT and has an LMA/option with WLIE-AM on Long Island NY.


Washington Media Business Report TM
But I thought you were
going to handle it...

Like a lot of broadcasters, Twin Cities Public Television out of St. Paul MN is licensed to run earth stations as part of its operation. Well, it was licensed to operate them, until the licenses expired. It was waiting for its counselors to remind them to file for renewal; the counselors, meanwhile, assumed that Twin Cities knew that the licenses were expiring and would simply handle the matter on its own. This resulted in twice-doubled violations, failure to timely file and unauthorized operation without a license, for each earth station. The first lapse could have resulted in a 3K fine times two, and the second the standard piracy charge of 10K times two. The FCC noted that it doesn't treat incumbents who inadvertently continue broadcasting on a lapsed frequency the same as an interloper, resulting in a markdown to 11K total from what could have been a 26K hit. It also gave TCPT credit for admitting its own error and correcting it, bringing the total, finally, to 6.6K, a savings of 19.4K.

RBR observation: Bottom line: The FCC loves candor more than almost anything, and TCPT's honesty saved it a lot of cash. But the punitive 6.6K could have been saved if everyone was on the same page as to who was responsible to keep regulatory compliance matters on track. Do you know who's doing it at your station?


Entertainment Media Business Report TM
Greater Media names Smooth Jazz 97.5 lineup in Philly
Greater Media announced the official on-air talent line up for 97.5FM WJJZ in Philadelphia: Margo Marano...Monday-Friday 12a - 6a (Music Director), Michael Tozzi... Monday - Friday 10a - 3p (Program Director), Dave Koz...Monday- Friday 3p - 7p, Gerald Veasley...Saturday + Sunday 3p - 7p, Teri Webb...Saturday 10a - 3p + Swing. Marano has more than 20 years of radio experience and was most recently was the Assistant PD at WSNI/Philadelphia. Tozzi is back as Program Director and handles middays on WJJZ at its new address. In the 1980s, bassist Gerald Veasley developed into a versatile and reputable sideman and session player. He joined Grover Washington's band in 1986 and played on six of the sax player's recordings. Two years later, he moved on to the Zawinul Syndicate, led by fusion pioneer Joe Zawinul, co-founder of Weather Report. He would tour the world with his idol for the next seven years. Webb's radio career also included WJJZ at its old address. The morning show has not yet been finalized.

Delilah gets WLTW
As rumored, Clear Channel Radio's AC WLTW-FM New York, after recently laying off morning man Bill Buchner and evening host J.J. Kennedy has signed Delilah for 8 p.m. to 1 a.m. "Delilah's Lite at Night" debuts 11/20 on Lite FM and is a fully customized version made especially for New Yorkers complimented by the award music of WLTW.


TVBR TV News
A stocking-stuffer's view
of Clear Channel Television

There's a little something for everyone in the grab bag that is the Clear Channel Television Group, now on the market just in time for the 2006 gift-giving season. Are you interested in market size? It runs from #5 to #202 with few significant gaps. Are you looking for a specific network affiliation? There are seven allied with Fox, seven with NBC, seven with CW, six with ABC, six with CBS, four with MyNetworkTV and two with Telemundo. Do you hate networks? There are three independents. Are you looking for unique or alternative delivery platforms? Three of the stations are LMA'd, five are LPTV/Class A's, two are multicast off the digital signal and one is cable-only. There are full-power duopolies available in Salt Lake City, Memphis, Jacksonville, Little Rock, Tulsa and Mobile-Pensacola, with three more de facto duopolies via LMA in Harrisburg, Wichita and Monterey-Salinas, and many other multiple streams utilizing the alternative delivery methods. In all, we count 42 program streams in 26 markets. Maybe one or more of them would be just the thing for that tough person on your shopping list who already has everything, except perhaps a full-power NBC affiliate in Eugene OR. If there is somebody like this on your list, then
| See the shopping list here |


Stock Talk
Another day, another record
A government report showing low inflation at the consumer level cheered Wall Street. The Dow Industrials hit a third straight record close, rising 54 points, or 0.4%, to 12,306.

Radio stocks missed out. The Radio Index fell 1.178, or 0.8%, to 152.460. Sell recommendations from BofA sent Citadel down 6%, Entercom 3.8% and Cox Radio 3%. Clear Channel rose 3.6% after announcing its buyout deal.


Radio Stocks

Here's how stocks fared on Thursday

Company Symbol Close Change Company Symbol Close Change

Arbitron

ARB

44.11

-1.24

Hearst-Argyle

HTV

25.63

+0.08

Beasley

BBGI

6.95

-0.01

Journal Comm.

JRN

11.82

-0.08

CBS CI. B CBS

29.78

+0.14

Lincoln Natl.

LNC

65.62

+0.46

CBS CI. A CBSa

29.74

+0.04

Radio One, Cl. A

ROIA

7.17

+0.03

Citadel CDL
9.89 -0.63

Radio One, Cl. D

ROIAK

7.13

-0.02

Clear Channel

CCU

35.36

+1.24

Regent

RGCI

3.44

+0.03

Cox Radio

CXR

16.86

-0.53

Saga Commun.

SGA

8.79

+0.24

Cumulus

CMLS

11.25

-0.30

Salem Comm.

SALM

11.57

+0.10

Disney

DIS

33.06

+0.37

Sirius Sat. Radio

SIRI

4.11

-0.02

Emmis

EMMS

12.62

-0.15

Spanish Bcg.

SBSA

3.98

-0.03

Entercom

ETM

28.79

-1.14

Univision

UVN

35.35

+0.04

Entravision

EVC

7.43

+0.11

Westwood One

WON

6.78

+0.02

Fisher

FSCI

44.05

-0.14

XM Sat. Radio

XMSR

14.33

-0.52

Gaylord

GET

50.46

+0.11

-

-

-

-

-


Bounceback

Send Us Your OpinionsWe want to
hear from you.

This is your column, so send your comments and
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Below the Fold
Wall Street Media Business Report
A radio bear on Wall Street
One biggie has turned really sour on radio stocks...

Media Markets & Money
CBS finds newbie for Fresno cluster
Peak Broadcasting is entering the radio business with a splash...

Close encounter in Boston
BusinessTalkRadio.net Inc. has
closed on another acquisition...

Washington Media Business Report
But I thought you
Were going to handle it Namely license renewal...

Arbitrends

Arbitron
Market Results
| Boston |
| Monterey |
| San Francisco |
| San Jose |




Stations for Sale

South Georgia
AM-FM-LPTV Combo
Includes 25kw FM
Zoph Potts @ (252) 940-1680
[email protected]


Radio Media Moves

Valentine-McKinney exits
After 13 years as the Executive Director of the Puget Sound Radio Broadcasters Association (PSRBA), Cathie Valentine-McKinney is stepping down at the end of this year, citing personal matters. The PSRBA said it is undertaking a search for a new Executive Director. PSRBA membership is made up of 29 AM and FM stations in the Seattle market and associates from related industries.


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RBR Radar 2006
Radio News you won't read any where else. RBR--First, Accurate, and Independently Owned.

Is Q4 boost sustainable?
Three Wall Street analysts are out with warnings that the Q4 improvement in radio revenue growth is not likely to continue into 2007.

RBR observation: Radio CEOs sounded a lot more optimistic in their Q3 conference calls than we have heard in a long time. If Q4 gains prove to be just a fluke, 2007 is going to be another long, tough year for radio. The operators insist that advertiser demand is improving noticeably, so the proof will be in pacings for January and beyond. We wait to see if the long drought is really over.

Publisher note: Stay with RBR and we will guide you through with our 24 years of experience. It is not the first time RBR and staff have seen shaky times and we will not only report Radio News but we will develop business reports to assist in your day to day operation. These reports begin in 2007.
11/16/06 RBR #224

Time to bail on Cox stock?
Analyst Mark Wienkes has put Cox Radio on the Goldman Sachs "America's Conviction Sell List." He thinks the stock is overpriced, based on overstated expectations that Cox Enterprises will buy out the public shareholders. More importantly, while several radio groups have indicated a pickup in business for Q4, Wienkes is not impressed. (More see)
11/15/06 RBR #223

2006 political pegged at 2.1B
And that's just the total for Television. Analysts from Bear Stearns and TNS Media Intelligence said the 2.1B total amounted to a near doubling of political spending compared to the last midterm in 2002. And that's just election cash. Another 344M was dropped into issue ads.

RBR observation: The positive in all this for Radio is that intense pressure on television inventory can send spillover business to the audio-only medium. It will be incumbent on radio to make itself better known to the people who make political buys before the 2008 season kicks into gear, which this process is already begun.

Publisher note: Said it before and will say it again, hire a Political Sales Manager one who understands this process.
11/15/06 RBR #223

Bidding heats up for Tribune
It seems that once the initial bids from private equity firms came in on the soft side, other suitors decided to take a fresh look at Tribune Company. So while the company is busy soliciting bids for the pieces, new bidders are emerging for the entire thing. The latest rumor, first reported by the Wall Street Journal, has Gannett Company in line.

RBR observation: Should Gannett emerge the winner, we would not expect it to get back into the radio business. Rather, it would likely sell WGN-AM to whoever buys the Chicago Cubs. We also don't see Gannett wanting to be a sports team owner. The newspaper giant most likely is primarily interested in the Chicago Tribune, Los Angeles Times and New York/Long Island Newsday.
11/14/06 RBR #222

Sirius wants satellite radio
without satellites
Sirius Satellite Radio now wants to extend its service to Alaska and Hawaii. What is different about this is that the company has no plans to launch any satellites that would provide the service. Rather, it has applied to the FCC to extend its existing special temporary authority to operate terrestrial repeaters

RBR observation: Can you say slippery slope?
11/14/06 RBR #222

Is 40 bucks the target?
That is the rumor on The Street - that Goldman Sachs is trying to get bidders for Clear Channel Communications to 40 bucks - or more. The stock closed Friday, 11/10/06, at 34.97, but had been at 32.35 before the company announced last month that it was putting itself up for sale. It peaked at 95.50 in January 2000, but that is ancient history.

RBR observation: Look for this to move very quickly, much like the Univision auction. We won't likely hear anything official today or tomorrow, but rumors about the bids will swirl this week and a final decision should come in just a matter of days, not weeks. Another good reason is from 2000 at 95.50 to today at 34.97 time to take it and run. What does the price from 95.50 to 34.97 tell ya over the past few years? Hey, now the guys in San Antonio are just one of the players.
11/13/06 RBR #221


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