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Welcome to RBR's Daily Epaper
Volume 22, Issue 227, Jim Carnegie, Editor & Publisher
Friday Morning November 18th, 2005

Radio News®

Abernathy makes a date with the door
Republican FCC Commissioner Kathleen Abernathy has sent her resignation to President George W. Bush, effective 12/9/05. Exiting with her will be her reliable Republican vote - - she has largely supported the initiatives of both Michael Powell and Kevin Martin. The announcement brings renewed urgency for Republicans to find a replacement. Until Debi Tate is sworn in, that would give the Democrats a 2-1 advantage on the five-member Commission. The White House has already nominated Debi Tate to fill the seat vacated by former Chairman Michael Powell - - something it was rumored to have had contemplated back during the summer (8/1/05 RBR #149).
| Abernathy's full statement |

RBR observation: More recently, Senate Commerce Committee Chair Ted Stevens (R-AK) had sent out signals that he wanted to find a candidate (11/9/05 RBR #220) - - an opportunity that remains open to him with Abernathy's announcement.

Iger explains iPod thinking: Mum on radio
For months now in quarterly conference calls and Wall Street investor conferences, new Disney CEO Bob Iger and CFO Tom Staggs have been discussing their current thinking on whether or not the company would divest its ABC Radio division. Amazingly, with the final bids now being scrutinized, not a single analyst asked a question in yesterday's conference call that might elicit an indication of whether they are currently leaning toward a sale or not. There was, however, a question about whether Disney might want to sell the ABC O&O TV stations as it focuses on content, rather than delivery mechanisms. "We believe in the local television business," Iger responded. Rather than being just a delivery pipe, he said local TV news brands have real value. There was a lot of interest in the company's recent deal to distribute shows from ABC and Disney's cable channels via Apple's iPod download service. Asked to compare pricing per download to the revenue Disney gets from ad sales per viewer, Iger said he doesn't look at it that way. In his view, iPod downloads of "Desperate Housewives" or other shows are "incremental consumption." Rather than cannibalizing the broadcast audience, he says it allows fans to catch-up with shows they weren't able to see at their regular broadcast time. Iger also noted that Disney would likely want higher payments for big screen downloads than the 99 cents being charged to view shows on tiny iPod screens.


VNU scuttles IMS merger;
CEO hitting the road
VNU CEO Rob van den Bergh didn't really have any good options as he sought to get out of a proposed seven billion bucks takeover of IMS Health, which had united VNU's biggest shareholders against him (11/14/05 RBR #223). He's now made his choice, but it's also cost van den Bergh his job. VNU won't have to pay IMS the 125 million bucks breakup fee from their merger contract, but it is paying IMS 15 million for its costs related to the abandoned merger. In addition, it must pay IMS an additional 45 million if VNU is acquired within the next 12 months. On the other hand, IMS will return the 15 million if it is acquired by someone else within the next 12 months. To placate angry shareholders, in addition to his own resignation once a new CEO is recruited, van den Bergh and the VNU board have voted to return approximately one billion euros (1.17 billion US) to shareholders in addition to the company's regular dividends. Even as he announced his own pending departure, van den Bergh defended the ill-fated IMS deal. "We believe there was a compelling business rationale for combining VNU and IMS that would have resulted in a stronger company and increased shareholder value over the longer term. However, having heard the views of our shareholders, it became clear that it would not be possible for us to proceed with the proposed merger. Nonetheless, [IMS CEO] Dave Carlucci and I are committed to having our two companies work together cooperatively to develop the many joint revenue initiatives that came out of our integration planning process," he said.

RBR observation: There was not a lot of wiggle room here. Carlucci, who was to have become Deputy CEO & COO of the merged company, and van den Bergh, who would have continued as CEO, saw synergies that were not apparent to others. The connection was that both IMS Health and Nielsen Media Research were once related companies, both long ago owned by Dunn & Bradstreet. But while both are in the data/research business, outside observers didn't see any advantage in combining a media/consumer data/research business with a pharmaceutical data/research business. In the end, the botched merger just brought together VNU's big shareholders, who weren't too pleased with the company's recent performance to begin with, and put them in the driver's seat to demand changes at VNU.

What now for VNU?
Having awakened the sleeping giants who own most of its stock, VNU now has to prove to the shareholders that it can generate good returns and run its businesses well - - or sell them to someone who can. In announcing termination of its ill-fated seven billion bucks stock-swap acquisition of IMS Health, VNU said it would focus on growth of its existing businesses and explore additional steps to maximize shareholder value. It named four:

- - "Initiating, in the near future, a program to return approximately EUR 1 billion to shareholders, on top of the regular dividend now in place;
- - Expanding current cost-management initiatives to all areas of the company worldwide, possibly including some restructuring;
- - Optimizing VNU's portfolio by continuing to evaluate targeted changes that will enhance existing lines of business; and,
- - Pursuing a listing on the New York Stock Exchange, to raise the company's public profile and expand its shareholder base."

RBR observation: It's not that difficult to get listed on the NYSE, so VNU hardly needed a 7B acquisition to do so. The obvious play - - and one we've heard suggested more times than we can count - - is to buy Arbitron, already on the NYSE, which would cost only about 1.25-1.5 billion. That becomes especially attractive if Nielsen Media Research decides it does want to use Arbitron's Portable People Meter (PPM) for TV ratings. Not included in that list from VNU is anything about spin-offs - - something else that big VNU shareholders have been urging the company to consider. In a conference call with European analysts yesterday, van den Bergh insisted that VNU is not planning any divestitures. But then, he won't be involved in such decisions for much longer. Clearly, some of those big institutional investors don't think the publishing group at VNU fits with its main data collection and research businesses, so pressure is likely to continue for van den Bergh's successor to sell off the group, whose better known titles include Adweek, Billboard, Brandweek, Editor & Publisher, Mediaweek and The Hollywood Reporter. And, of course, don't rule out a sale of all of VNU to a private equity buyer, who would streamline the cumbersome VNU management structure, sell off unwanted assets like the publishing division, and pump up financial performance for an IPO or resale. Or in other words - Waiting for the other shoe to drop.


Wildcat's Kitten forced to the Internet
Lexington KY Rocker WKQQ-FM has been trying inspire the local college football team. As an incentive for the University of Kentucky Wildcats, the station has been maintaining a billboard featuring air talent Kitten, with the promise of removing an article of clothing whenever the team produces a win. That promise will no longer be fulfilled outdoors. The Wildcats, through incompetence, seem to have largely been protecting Kitten's virtue, but in collecting their third win against six losses, the team brought the Clear Channel station to the point of removing her tee shirt, revealing a bra underneath. She appears to have already lost a button-down shirt and her shoes. The billboard company, which a photo reveals to be Lamar, decided that the station will not be able to go through with the tee shirt removal - - instead, a box reading "censored" will be placed in the offending area, with the shirtless picture at the stations WKQQ.com website. She will be wearing jeans in both versions.

RBR observation: Bikini top. OK on a billboard. Bra. Not OK. We're still not sure what difference is between one and the other. One thing is for sure - - the incident has "exposed" yet another broadcaster use for the World Wide Web.

San Francisco Board to vote on O'Reilly
Chris Daly, a member of San Francisco Board of Supervisors, is introducing legislation which would formally request that Bill O'Reilly be fired from both Fox News Network and Westwood One. At issue are O'Reilly's recent remarks, following voter passage of a ballot initiative discouraging on-campus military recruitment in the city, to the effect that Al Qaeda should feel free to blow up the city without retaliation. On MSNBC, Daly told Keith Olberman that Fox and WW1 "need to take some accountability for this and terminate Bill O'Reilly's employment." O'Reilly has defended the remarks as satire, but Daly found them to be in "flagrant disregard for the safety and welfare of San Franciscans."

RBR observation: It's not every day that an on-air talent becomes the target of a municipal ordinance calling for his scalp. However, we don't see that it'll carry any more weight than the paper it's printed on. And if the old saw is correct, that there's no such thing as bad publicity, then the San Francisco Board of Supervisors may succeed only in providing O'Reilly with some free advertising.


Conference Calls 2005
Movie biz soft for Disney
Revenues for the final quarter of its fiscal year (ended 10/1/05) came in a bit below expectations at The Walt Disney Company at 7.7 billion bucks - - a gain of 3%, rather than the 4% that had been expected by analysts polled by Thomson/First Call. But earnings per share, while down 24% from a year ago, were 20 cents - - beating the consensus by two cents. The soft spot for the quarter was the film studio, where revenues fell 13% for a quarter lacking in blockbusters. "Chicken Little," now in theaters, should improve things this quarter. Revenues for the Media Networks segment rose 16.1% in the quarter to 3.4 billion and the segment's operating income jumped 41% to 632 million. Within the unit, broadcasting was the big gainer, with revenues up 23.9% to 1.5 billion. Operating income went from a negative 75 million a year ago to a positive 48 million as CFO Tom Staggs proudly noted that the ABC Television Network had returned to profitability in the just completed fiscal year. He also noted that revenues for the O&O TV stations were up 2% in fiscal Q4 and that radio revenues were up 1% - - adding that pacings are about the same for the current quarter. In cable, revenues gained 10.8% to 1.9 billion and operating income rose 11.7% to 584. Disney is projecting that its big cable cash cow, ESPN, will continue to enjoy double digit growth - - not just next year, but through 2009.


Adbiz©

Mediaedge:cia looks at
in-game ad effectiveness - - Part I

The launch of Microsoft's Xbox 360 kick-starts the next phase of in-game advertising with online capabilities that enable marketers to continually update ads in real time - - on a daily, even hourly, basis. In a very short period of time, in-game ads have evolved into a viable, highly effective platform for the ad industry. Not to be confused with advergaming - - a form of promotion-driven video game production, in-game advertising has the distinct advantage of enhancing the reality of gameplay. Mediaedge:cia examines how in-game advertising can best be used to create meaningful relationships between brands and consumers in "Playing with Brands," a new study commissioned from Telenation and designed to help advertisers better understand the optimum role for their brands within computer and video games.
| The study looked at: |

Infinity listens to the buyers?
Isn't it ironic-days after buyers commented on Infinity's 800,000-dollar ad buy in Ad Age to promote its new lineup of Stern replacements, a simple, inexpensive suggestion by Rich Russo, JL Media's SVP/Director of Broadcast Services, was likely considered sage advice and employed as well. Twelve days after Russo's comments ran (11/3 RBR #216), the promotional MP3s have already began to surface. Maybe it's coincidence, but we think this is just more evidence how much the radio companies value the buyers' advice. We asked Infinity for more samples, but haven't heard back yet.
| Here's one for David Lee Roth on WXRK-FM NY - - give it a listen |


Media Business Report
Tribune newspapers cutting staffs
Faced with a continued soft advertising market, at least five Tribune Company newspapers - - including its two larges - - have announced staff cutbacks. The company's namesake Chicago Tribune has told employees that fewer than 100 positions are being eliminated, with cuts across all departments. The Los Angeles Times told staffers that it is cutting about 85 newsroom jobs by the end of this year. (Happy Holidays!) Smaller cuts are in the works at Tribune Company's Orlando Sentinel, Newport News, VA Daily Press and Allentown, PA Morning Call.


Media Markets & MoneyTM
EMF goes lakefront
in Wisconsin

Ever-expanding Educational Media Foundation has found yet another station to buy. The latest is a noncommercial WLWR-FM in Fond du Lac, Wisconsin, which it's getting from Cornerstone Community Radio. The price is 350K cash. Fond du Lac is on the southern shore of Lake Winnebago. It shares lakefront property with the two principal cities of the Appleton-Oshkosh Arbitron market. Appleton is on the northern point of the lake, and Oshkosh is at the halfway point on the western edge. Although it always operates as a noncom, Contemporary Christian EMF isn't too particular about which side of the commercial-noncommercial divide it acquires on. In this case, it'll be getting a station just inside the confines of the reserved band at 91.7 mHz. Three translators come with the station.


Washington Beat
More time for CC comments
The FCC is looking at a notice of proposed rulemaking (NPRM) called "Closed Captioning of Video Programming" with a comment deadline of 11/25/05. The NAB has asked for more time, citing a large volume of commentary which it is trying to wade through, along with the fact that the deadline day is the day after Thanksgiving - - a day when most US citizens are not at work. The FCC has agreed to move the date back to 12/16/05.

RBR observation: Closed captioning requirements are supposed to kick in big time at the beginning of 2006. This may be tough to pull off, however, due to a lack of closed captioning professionals. It takes almost three years to train someone to do this job. There are technological solutions which can get captioners up to speed much more efficiently - - but we'd say the there is a strong possibility that more time will be needed before closed captioning will be as ubiquitous as the FCC wants it to be.


Programming
Spanish format variety continues to grow
As competition heats up in the fast-growing Spanish radio sector, format diversity seems to be increasing on an almost daily basis. Mega Communications yesterday debuted "Mega Clasica" on its Washington, DC FM simulcast, WBZS & WBPS, after success with the format in Tampa. Based in Salsa, Merengue and Ballads, "Mega Clasica" offers Adult Hispanics the very best Latin Hits from the 80s, 90s and early part of the current decade from artists like Marco Antonio Solis, Juan Luis Guerra, Ana Gabriel, Eddie Santiago and Juan Gabriel. "The popularity of Reggeaton music, which is targeted to 12-34's, has many Hispanic adults feeling left out - - 'Mega Clasica' is designed to fill that void. There is a great deal of popular Latin music that has been produced over the years and 'Mega Clasica' is going to bring that music back to the forefront," said Rafael Grullon, VP/Operations for Mega and the architect of the Clasica format.


Ratings & Research
Online radio nets reached 2 million in morning drive
Arbitron and comScore Media Metrix, a division of comScore Networks, released the online radio ratings for September. 2,042,100 different people age 12+ tune in to the online radio networks measured by comScore Arbitron during morning drive, Monday-Friday 6AM - 10AM. The September report of the comScore Arbitron Online Radio Ratings service rated America Online's AOL Radio Network; Yahoo! Music; Microsoft's MSN Radio and WindowsMedia.com, Live365 and Clear Channel Online Music and Radio during an average broadcast week in the month of September. All of the networks are represented by Ronning Lipset Radio.
| View the Chart |


Transactions
20M WLVJ-AM West Palm Beach-Boca Raton FL (Boynton Beach FL); and KXEG-AM/KXXT-AM Phoenix AZ (Phoenix, Tolleson AZ) from JCE Licenses LLC, a subsidiary of James Crystal Enterprises (James C. Hilliard) to Communicom Co. of Florida LP, a subsidiary of CCA Inc. (Richard L. Kylberg Jr.). 500K escrow, balance in cash at closing. Includes non-compete. Existing duopoly in Phoenix. [File date 10/26/05.]

10 FM CP Bryan-College Station TX (College Station TX) from Hymn Time Inc. (Billie Jean Emert) to American Family Association (Donald E. Wildmon). Cash. CP is for Class V3 on 89.9 mHz with 8.5 kw @ 338'. [File date 10/26/05.]


Stock Talk
"Cheap" oil helps stocks
The lowest oil prices in months gave a boost to stock prices, along with some good news from the Philadelphia Federal Reserve Bank on the inflation front. The Dow Industrials rose 45 points, or 0.4%, to 10,720.

Radio stocks benefited from the general upswing. The Radio Index rose 2.436, or 1.3%, to 186.287. Beasley reversed the previous day's decline and rose 4.4%. Saga also reversed direction and rose 3.1%.


Radio Stocks

Here's how stocks fared on Thursday

Company Symbol Close Change Company Symbol Close Change

Arbitron

ARB

38.60

+0.60

Jeff-Pilot

JP

54.92

+0.39

Beasley

BBGI

13.47

+0.57

Journal Comm.

JRN

14.00

+0.23

Citadel CDL
13.77 +0.31

Radio One, Cl. A

ROIA

10.34

+0.07

Clear Channel

CCU

32.14

+0.64

Radio One, Cl. D

ROIAK

10.34

+0.03

Cox Radio

CXR

14.98

+0.33

Regent

RGCI

5.02

unch

Cumulus

CMLS

11.25

+0.13

Saga Commun.

SGA

11.45

+0.34

Disney

DIS

25.99

+0.14

Salem Comm.

SALM

19.05

+0.02

Emmis

EMMS

19.34

+0.26

Sirius Sat. Radio

SIRI

7.33

-0.07

Entercom

ETM

31.30

+0.79

Spanish Bcg.

SBSA

5.36

-0.23

Entravision

EVC

7.53

+0.10

Univision

UVN

28.55

+0.21

Fisher

FSCI

45.57

+0.34

Viacom, Cl. A

VIA

33.67

+0.93

Gaylord

GET

42.21

+0.76

Viacom, Cl. B

VIAb

33.64

+0.96

Hearst-Argyle

HTV

23.49

+0.16

Westwood One

WON

17.60

+0.19

Interep

IREP

0.38

-0.02

XM Sat. Radio

XMSR

30.15

+0.18

International Bcg.

IBCS

0.01

unch

-

-

-

-

-



Bounceback

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Arbitrends

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


Radio Media Moves

Hoover heads to Indy
Phil Hoover has been named Vice President and Market Manager for the Entercom's Indianapolis cluster that includes stations WTPI-FM, WZPL-FM and WXNT-AM. Hoover had served since June 2001 as the Vice President and Market Manager of Entercom's New Orleans cluster and first joined Entercom in 2000 as Vice President and Market Manager for Entercom's Wilkes-Barre/Scranton cluster.
[Editor's note: Be sure to catch Hoover's interview about running radio before, during and after Hurricane Katrina in this month's RBR/TVBR Solutions Magazine.]

Summers time at XM
XM Satellite Radio has hired Dion Summers as Senior Programming Director for XM's urban channels. He will be based at XM's Washington, D.C. studios. Summers joins XM from WMIB in Miami, where he has served as PD since 2003, and has held various positions during his 15 year career in markets across the country, including PD at WERQ in Baltimore and PD at WJPZ in Syracuse. He graduated from Syracuse University in 1995 with a B.S. in Communications.

ABCRN ups Knize
ABC Radio Networks announced Michael Knize has been promoted to Director of Southwest Sales, responsible for leading the sales efforts for all ABC Radio Networks properties in the eight-state Southwest territory. He will report to Mike Connolly, SVP/Sales for ABC Radio Networks. Most recently, he was an Account Executive for ESPN Radio, where he was responsible for both the Southwest and Southeast territories.

Tech experts to
focus on media trends

Two technology experts have taken new positions in the Global Media & Communications unit of GE Commercial Finance (GECF) to provide clients with insights into technological trends in the media and communications sector. Robert Raciti was previously VP of Risk for GECF and Ron Stevenson was VP of Technology Advisory Services for the Media & Communications lending unit.


Stations for Sale

Southwestern Virginia AM
Price Reduced! Great coverage with a 10Kw Upgrade CP. Possible terms available. Excellent opportunity for a new owner operator.
Cliff at Clifton Gardiner & Co
(303)758-6900
[email protected]

NEast Facilities
Small City 25kw FM, Profitable, Canadian border area, nice facility, good upside @$595K. Top 100 mkt AM daytimer, Low dial position,
low expenses, good pop coverage, stick @$495K
[email protected]
or 781-848-4201


Below the Fold

Ad Biz
Mediaedge:cia looks at
in-game ad effectiveness
Microsoft's Xbox 360 kick-starts the next phase of in-game advertising...

Infinity listens to the buyers?
promotional MP3s have already began to surface...

Media Markets & Money
EMF goes lakefront in Wisconsin
Ever-expanding Educational Media Foundation buys again...

Washington Beat
More time for CC comments
RBR observation: Closed captioning requirements to kick
in big time...


More News Headlines

Mercedes to offer
Sirius as standard gear

Sirius Satellite Radio and Mercedes-Benz announced they've extended their exclusive relationship to September 1, 2012, and that the automaker plans to offer Sirius as a standard feature on select 2007 models, beginning in 2006. Initially, Mercedes plans to offer Sirius as standard on all 2007 SL-Class and CL-Class vehicles, and all AMG and 600 models. Sirius is available as either standard or a factory option on current Mercedes, with volumes expected at 250,000 vehicles over the next two years - - approximately 50% of sales.






November RBR/TVBR Digital Magazine

Engineering
Cumulus VP Engineering Gary Kline tells us how his Mobile and Beaumont, TX stations fared in Hurricane Katrina--the good, the bad and the ugly, along with how they prepared.


Read RBR/TVBR in 2 simple steps:
1.Create a simple account with Zinio and download the Zinio Reader.
2. You can then download the
November Issue of RBR/TVBR


RBR Radar 2005
Radio News you won't read any where else. RBR--First, Accurate, and Independently Owned.

Hate it but More Gloom for Radio
Goldman Sachs analyst Mark Wienkes sees a no growth environment and no sign of change and expecting flat revenues for Q4 and challenges ahead in 2006. The current consensus of his peers for radio companies to deliver 15% growth in earnings per share in 2006, which implies revenue growth of 3-4%, is still too high, so he's recommending "minimal exposure" to radio stocks. RBR observation: Not a good sign and as RBR has stated before - Time to operate these properties or go private.
11/17/05 RBR #226

Nielsen getting down
to the PPM nitty-gritty
Getting closer to making a go or no go decision on whether to enter into a joint venture with Arbitron to use Arbitron's Portable People Meter (PPM) technology to measure TV and cable, as well as radio says it has expanded its internal due diligence team working on PPM to include additional experts in all areas. Pres/CEO Susan Whiting says "We are committed to moving with all deliberate speed..."
RBR observation: Radio groups have been cautious about moving from Arbitron's diaries to PPM, several major TV groups have been pressing Nielsen to jump on the PPM bandwagon especially groups such as Tribune and the Fox O&Os who really dislike LPM. Many want to see passive measurement. Plus, out-of-home viewing counted. Advertiser/agency community is pushing hard for PPM and not just for radio wanting passive measurement for radio, TV and cable and would love to see a common ratings currency for all three. Meanwhile, TA-DUM, Whiting is having to make a decision at a time when her parent company is in upheaval. Who knows who will even own Nielsen a year from now?
11/15/05 RBR #224

RAB's Gary Fries fires at
industry, Creditability at Stake
"The fact is that I have been telling this industry this in private conversations and industry speeches for the past 3 years. The advertising community can not understand why the radio industry is not embracing electronic measurement. They stated openly at the meeting that they have seen enough to be convinced that the diary is not accurate. They feel that if the radio industry does not move forward quickly that we will not be a credible media and not provide the accountability that the advertiser demands today. They also stated unanimously that if we go to a people meter world it will be a significant move and the net effect is that there will be more and larger spending in radio. They want to go deeper than the planned markets and they want it faster than the proposed roll out."
11/14/05 RBR #223


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