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Welcome to RBR's Daily Epaper
Volume 23, Issue 227, Jim Carnegie, Editor & Publisher
Tuesday Morning November 21st, 2006

Radio News ®

Pricing still a problem
After a heart-to-heart with some private station managers, Wachovia analyst Marcia Ryvicker tells clients that radio inventory is still up because of shorter length spots. More importantly, pricing is still down and radio is still without pricing power. Wachovia investment clients were able to dial in last week to a private radio group conference call with Blaise Howard, GM of WBEB-FM Philadelphia, and Andrew Shearer, CEO of Royal Broadcasting to get the point of view of broadcasters not involved with a publicly traded company. What they told Ryvicker and her Wall Street clients is that inventory is up and pricing down as a result of the focus on shorter spots by Clear Channel as a result of its Less is More initiative. "While the number of minutes has declined, the number of units has increased, resulting in lower CPP (cost-per-points). We believe that without pricing power, radio cannot exhibit top-line growth. Therefore, we remain cautious going into 2007," Ryvicker said in a not to investors summarizing the call. Like many broadcasters, the Wachovia analyst is trying to figure out what Google is up to by hiring lots of top radio salespeople for big guarantees in several major cities, even though it doesn't have much radio inventory to sell. There have been lots of rumors about a big deal of some sort coming with Clear Channel. Ryvicker now has a different theory. "Westwood One may be the company to provide Google with radio inventory. Should this happen, we think companies that rely on shorter-length spots will feel the greatest impact as Westwood One sells network and national spots, which are typically shorter in nature," she said.

RBR observation:
Just wishful thinking

Had Clear Channel CEO Mark Mays talked to his lawyers before he was interviewed by David Lieberman of USA Today about the management-backed plan by Thomas H. Lee Partners and Bain Capital to buy out the public shareholders? When asked what will happen in markets not up for sale where Clear Channel Radio has clusters with more stations than now allowed under FCC rules, here is what Mays said: "We're looking at that right now. We would expect that our grandfathered stations would continue to be grandfathered. But that's something we have to work through with the FCC." Time for a reality check. In order for the grandfathered clusters to remain in place without a waiver, the transaction would have to qualify to be filed on FCC Form 316, which is for corporate restructurings that don't change the controlling shareholder(s) and involve the transfer of less than 50% of the voting interests. Clearly the transfer of well in excess of 90% cannot qualify. The sale of all stock of Clear Channel Communications to the new entity will have to be filed on FCC Form 315 and all of the stations to be transferred would have to comply with the current ownership rules. The only option would be to ask for a permanent waiver of the ownership rules to retain the now-unlawful clusters just as they are. That would have been a hard sell when the Republicans were firmly in control of the government and would be impossible to pull off since the November 7th election. We doubt that the new partners of the Mays family want to see this deal held up for months and months at the FCC as opponents of deregulation battle mightily against approval of any permanent waiver, with no guarantee or even likelihood of eventual approval. What will almost certainly happen is that the proposed new owners of Clear Channel will request temporary waivers to allow time for orderly divestitures. The private equity consortium buying Univision has asked for six months, so it seems unlikely that the private equity consortium buying Clear Channel could justify any longer period than that.


Radio/Entertainment a bright spot for Tribune
Company-wide, revenues were down 1% to 428 million in October for Tribune Company. The bright spot was the Radio/Entertainment segment, where revenues were up 36.7% to 14.4 million. That was because the Chicago Cubs had more home games in October this year, which meant more ticket sales and likely some extra ad dollars for WGN-AM Chicago, the company's only radio station. TV revenues rose 5.1% to 96.4 million, with strength in political, auto and telecom partially offset by weakness in restaurant/fast food, movies and retail. The drag accounting for all of the red ink for the month was the newspaper business. Print ad revenues fell 4% to 254 million. Retail was up 3.3%, but national fell 15.5% and classified was down 3.8%. Circulation revenues were down 6% to 43.1%. As Tribune's board of directors evaluates bids for pieces of the company, or the whole thing, year-to-date revenues for the whole operation are down 1.6% at 4.48 billion, with print and broadcasting both down for the first 10 months of 2006.

The Hill has eyes
In case you thought that the House Democrats, basking in the glory of their new claim on majority status, would have lots of things on their agenda besides media issues. Think again. Maurice Hinchey (D-NY), the driving force behind the Future of American Media Caucus, isn't waiting for FCC Chairman Kevin Martin to schedule a public forum in his district. He's holding his own. It'll be held this evening from 6:00PM-8:30PM in Hyde Park, and the guest of honor will be Democratic Commissioner Michael Copps, adding to his already awesome collection of frequent forum miles. The session "...will feature various local community leaders, will discuss how media consolidation impacts local news coverage with a special focus on the Hudson Valley." The public will be invited to participate, and a transcription of the event will be submitted as evidence in the Commission's ongoing review of media ownership regulation.

RBR observation: Hinchey represents New York's 22nd District, which is anchored on the Southeast by Newburgh, runs up to Poughkeepsie and Kingston, and extends Westward in a panhandle which includes Binghamton, and at the Westernmost extremity, includes a sliver of turf to the North which includes Ithaca. That means that Hinchey's district is part of three Nielsen DMAs (Binghamton is one in its own right, Poughkeepsie is part of New York City and Ithaca is part of Syracuse) and four Arbitron markets (Newburgh-Middletown, Poughkeepsie, Binghamton and Ithaca). Maybe that's why Hinchey has a heightened awareness of media issues.


Guess the industry
"We provide integrated seamless efficiencies that centralize functionalities with ground-breaking optimization enhancement, customized integration opportunities, maximized relational interface paradigms and streamlined solutions. On a platform."

RBR observation: If this sounds something you might say or write, it's time to walk over to someone who is employed in some sort of creative endeavor, preferably in the advertising field, and have them smash a two-by-four over your head. Then the two of you can sit down and figure out how to explain to a non-android just what it is you and your company do for a living and how its different and better than your competition. We're not going to say which industry specifically inspired us to go on this mini-rant, but as frequent readers of press releases, suffice it to say that the prose we put between the quotes above did not come from any one company, but could have come from any of a zillion companies that do anything which might involve a computer.

Fox agrees to decree
to avoid black mark

The thunderstorm with tornado potential which hit the Washington DC area 5/25/04 is long gone. Now, finally, is the regulatory tug of war between Fox Television's WTTG-TV Channel 5 and the FCC. The FCC charged that on two occasions, the station warned viewers aurally that a thunderstorm/tornado watch was in effect without providing visual warnings to communication emergency information to the hearing impaired, and proposed a fine of 16K. Fox and the FCC have now decided it is in the best interests of both to put this matter in the past once and for all via the consent decree route. Fox admits no wrongdoing and will not be liable to further action on the two NALs. In exchange, it will fire off a check for 12K to the US Treasury, will make sure that it provides visual emergency warnings via closed captioning, and if that's not available, it will use an alternative method even if it means resorting to as primitive a method as chalk and a blackboard held in front of a camera. It will also provide relevant information and training to all station personnel.

RBR observation: Our second-grader was worried recently that something might go down on his "permanent record" at school. We are not aware if there is a policy whereby he can negotiate with his principal and work out an alternative procedure to dispense with the matter, but the FCC and other government agencies do have the consent decree when for one reason or another the government and the governed cannot agree and the cost of pursuing the matter exceed whatever the hassle quotient may be. Of late, it's most frequent use has been to put indecency disputes to bed. This emergency closed captioning dispute seems to be more routine than most of the other cases that wind up in consent decree that we've seen, but it points out that this particular avenue of dispute settlement apparently is available for almost anything if you're willing to drag the case out that far.


Ad Business Report TM

BofA's Jacoby details
media buyer predictions

Bank of America analyst Jonathan Jacoby provided some highlights after BofA's first Fall '06 Media Buyer Lunch, with the guest being the head of media at a "smaller, regional firm that specializes in radio." Here are the highlights: * Pre-Buys of 2007 rates are being offered at steep discount to 2006 rates for radio. According to the buyer, most operators are offering significant rate discounts (down 5-10% YoY) to place early business on the books for 2007. The exception seems to be Clear Channel - where the buyer noted that the stations were attempting to hold a more solid line (although, the buyer noted discounted rates where available, but not the same degree as its peers). The buyer felt the current environment heading into next year could be described as "volume over pricing". * The shift away from traditional advertising to new media will continue. The buyer did not feel that "bottom" of the shift away from many of the traditional mediums had been reached. The buyer will continue to use radio in 2007 for clients, but less than in '06. Dollars will be shifted into cable, internet, outdoor and guerilla marketing. * GOOG/dMarc initial plans seem to be more focused on the agency business, rather than the local spot business. The buyer had a meeting with GOOG/dMarc in the past week. Key takeaways were a) GOOG/dMarc seems initially to be targeting advertising agencies with their product (if they are able to secure a large amount of inventory). The buyer felt the current offering was simply a more efficient rep offering - i.e., a national network with very efficient tools. * Sector View:Audience erosion will continue to cap top-line growth over the next decade, whether radio "goes Google" or not.

RBR observation: The Google speculation continues! Yep, if this buyer is right, Google is attempting to secure networks of inventory with advanced means to trace and track the buys, a la dMarc's system. If the pricing is as weak in 2007 as described here, Google may become a bit more welcome than many thought, to grab up large plots of radio group inventory. Consumer trending away from traditional radio will continue unless it can re-image and re-invent itself as a means to find new music and new formats faster than the 12-24 and 18-34 demos can get to them on the internet. The going private trend in radio may help-not being beholden to Wall Street will allow radio to take more format and programming chances-block programming, listener programming blocks come to mind. The HD multicast formats may be a means to help in this area, if they can ever get them right and get the radios into more bedrooms and dorm rooms. Get the formats right and give them away at junior/high schools and colleges.

Cold Stone chooses Saatchi & Saatchi
Cold Stone Creamery announced the selection of Saatchi & Saatchi as its new AOR. The New York office will generate new ideas and be responsible for all strategic brand navigation and integrated advertising development. Founded in 1988 in Tempe, Ariz., Cold Stone Creamery is an independently owned franchise system with nearly 1,400 stores across the US. While redefining the category, Cold Stone has taken a bite out of the 20.7 billion U.S. ice cream industry to become the sixth best selling ice cream brand in the U.S. Saatchi will assist Cold Stone in achieving their vision: "The world will know us as the Ultimate Ice Cream Experience by making us the #1 best selling ice cream brand in America by December 31, 2009."


Media Business Report TM
Yahoo! partners with
150 newspapers

Yahoo! announced a strategic partnership with more than 150 daily U.S. newspapers to deliver search, graphical and classified advertising to consumers in the communities where they live and work. Beginning with recruitment advertising, the newspapers and Yahoo! HotJobs are bringing one of the largest online audiences, targeting capabilities, local expertise and advertising power to recruiters. In addition, the consortium plans to work together to provide search, content, and local applications across the newspapers' websites. Adding to Yahoo!'s list of partners across its search, graphical and classified advertising networks, such as eBay and Right Media, members of the newly formed consortium include: Belo Corp.; Cox Newspapers Inc.; Hearst Newspapers; Journal Register Company; Lee Enterprises, Incorporated; MediaNews Group; and, The E.W. Scripps Company. The newspapers in this consortium reach 38 states, and include major market dailies such as the San Francisco Chronicle, The Dallas Morning News, The Atlanta Journal-Constitution, Houston Chronicle, Denver Post, Rocky Mountain News, St. Louis Post-Dispatch, San Jose Mercury-News, New Haven Register and the Commercial Appeal (Memphis). Yahoo! and the consortium have initiated plans to work together in: Advertising: Use Yahoo!'s technology platform to sell online advertising for the newspapers' Web sites. Search: Use Yahoo!'s search monetization functionality on newspaper Web sites, such as Web search, downloads of the Yahoo! toolbar and sponsored search. Local: Offer Yahoo!'s local products such as Yahoo! Local listings, Yahoo! Maps and Event Listings on the newspaper Web sites. Content: Use Yahoo!'s extensive network to distribute the newspapers' content in areas such as Yahoo! Search results, Yahoo! News and other content verticals.


Media Markets & Money TM
Bottom dollar in noncom land
A pair of Religious non-coms are changing hands, and even though one of them is near one of America's largest cities, the total amount of cash involved is only 5K. That's what it'll cost Life on the Way Communications Inc. to acquire WJCG-FM from The Moody Bible Institute of Chicago. The station is licensed to Monee IL, south of Chicago. The 100 watt station doesn't figure to have a huge imprint on the far-flung metro area, however. The other station is neither near a rated market, nor is it built. The CP for WPRH-FM in Paris TN is going from Abundant Life Broadcasting to the American Family Association because the assignor wants AFA programming to be available in the community. All AFA will have to do is build the station, a Class C3 on 90.9 MHz with 14.5 kW @ 289'.


Washington Media Business Report TM
New Congress seen as net neutral
The prospects for legislation protecting the concept of network neutrality are on the upswing with the new Democratic-led Congress set to report for work after New Years. The Democratic leaders set to take control at the House Committee on Energy and Commerce, John Dingell (D-MI) and Ed Markey (D-MA), are known to be strongly in the net neutrality camp, and Dingell has already discussed modifying or rewriting the Telecom update which stalled after Republicans put it forward earlier this year. According to Information Week, watchdog SaveTheInternet is also pleased that all of the senators it listed on its side were re-elected, and fresh allies are coming into the Senate in many of the seats which changed hands one way or another.


Internet Media Business Report TM
Nissan expands online advertising alliance with Microsoft
Nissan North America will expand its Web advertising initiatives across online properties of Microsoft, the two companies announced today. This expanded alliance will enable Nissan to more powerfully engage with consumers across multiple digital touch points throughout Microsoft Digital Advertising Solutions including MSN, Windows Live, Live Search, Xbox and Windows Mobile. Furthermore, this new alliance allows Nissan to work directly with Microsoft content developers, strategists and subject matters experts to help Nissan reach its target consumers. Microsoft Digital Advertising Solutions is designed to connect advertisers with their target audiences across such devices as PCs, Xbox video game systems, Web-enabled mobile phones and personal digital assistants (PDAs). Through these channels, advertisers can reach more than 465 million consumers each month across the MSN network and millions more through Windows Live, Xbox Live and Microsoft Office Online. Key parts of this alliance will include sponsorship of the "Forza Motorsport 2" console game on Xbox 360 and global tournament on Xbox Live, a co-branded "blogazine" for Infiniti on MSN called "Open for Design" (http://openfordesign.msn.com ), search advertising with Microsoft adCenter, behavioral targeting, and participation in pilot advertising programs within Windows Mobile and Microsoft Office Live. Central to the alliance is a customized regional dealer strategy that involves the embedding of Nissan and Infiniti dealerships into Live Local Search mapping technology and geo-targeted advertising for dealerships.

IBC to offer up to 40 Fox News TV clips daily
Internet Broadcast Corp. (www.ibctoday.com), an online destination for breaking TV news from around the globe, and FOX News announced a content sharing agreement that gives viewers greater online access to international and national TV news stories. Under the agreement, www.ibctoday.com will bolster its roster of content with up to 40 FOX international and U.S. national news, business and entertainment video stories a day. IBC also has exclusive agreements with Associated Press TV, Canadian Broadcasting Corp., as well top South-Western Asian, Eastern European and African local television broadcasters.


TVBR TV News
Fox cancels OJ special
Bowing to public outrage and affiliate worries, Fox Television announced yesterday afternoon that it had cancelled the O.J. Simpson interview special, "If I Did It," which had been scheduled to air in two parts next week (11/16/06 TVBR #224). Publication of Simpson's book, which also dealt with how he would have killed his ex-wife, Nicole Brown-Simpson, and Ron Goldman, although he denies that he did, has also been cancelled by the publishing arm of News Corporation. "I and senior management agree with the American public that this was an ill-considered project. We are sorry for any pain this has caused the families of Ron Goldman and Nicole Brown-Simpson," said News Corporation CEO Rupert Murdoch in an announcement canceling the book and TV special. Goldman's family had organized petitions urging stations not to air the program and for bookstores not to stock the book. Numerous TV critics across the country had declared it a new low for television and several Fox affiliates had already announced that they would not air the two-part special. Now, none will.

TVBR observation: We foresaw the public outcry against the program last week when we said it was "just sick" (11/16/06 TVBR #224). Apparently a lot of people agreed. News Corporation is now in damage control mode as the result of some poor decision making. We wonder why they didn't see this coming when they decided to publish the book and create the TV special to go with it.


Transactions
500K KANA-AM/KGLM-FM & KBCK-AM Butte MT (Anaconda, Deer Lodge MT) from Carroll Montana Broadcasting LLC (Jimmy Ray Carroll) to Butte Broadcasting Inc. (Ronald J. Davis). 25K escrow, balance in cash at closing. KBCK-AM is immediately being resold. Duopoly with KBOW-AM/KOPR-FM. . [File date 11/3/06.]

100K KBCK-AM Butte MT (Deer Lodge MT) from Butte Broadcasting Inc. (Ronald J. Davis) to Robert Cummings Toole. Combo with KQRV-FM. [File date 11/3/06.]


Stock Talk
A mixed day
Investors liked all of the M&A action lately, including last week's Clear Channel deal and a move yesterday to create the world's largest copper mining company. But they remain a bit worried about the strength of the underlying US economy. Having been driven up to dizzying heights, the Dow Industrials fell 26 points, or 0.2%, yesterday to 12,317. Other major barometers were mixed.

Radio stocks were slightly lower. The Radio Index slipped 0.128, or 0.1%, to 152.210. Salem rose 3.6% and Journal gained 3.5%. Going the other way, Westwood One declined 2.4% and Cumulus was down 2.1%.


Radio Stocks

Here's how stocks fared on Monday

Company Symbol Close Change Company Symbol Close Change

Arbitron

ARB

45.30

+0.05

Hearst-Argyle

HTV

25.35

-0.14

Beasley

BBGI

6.95

-0.02

Journal Comm.

JRN

11.90

+0.40

CBS CI. B CBS

29.78

-0.02

Lincoln Natl.

LNC

65.73

+0.55

CBS CI. A CBSa

29.81

+0.16

Radio One, Cl. A

ROIA

7.14

-0.03

Citadel CDL
9.88 -0.01

Radio One, Cl. D

ROIAK

7.17

-0.03

Clear Channel

CCU

35.26

+0.04

Regent

RGCI

3.42

-0.01

Cox Radio

CXR

16.54

-0.18

Saga Commun.

SGA

8.84

+0.17

Cumulus

CMLS

11.01

-0.23

Salem Comm.

SALM

12.15

+0.42

Disney

DIS

33.12

+0.18

Sirius Sat. Radio

SIRI

4.02

-0.03

Emmis

EMMS

12.35

-0.07

Spanish Bcg.

SBSA

3.96

unch

Entercom

ETM

28.57

-0.04

Univision

UVN

35.43

-0.01

Entravision

EVC

7.41

+0.01

Westwood One

WON

6.62

-0.16

Fisher

FSCI

45.27

+0.64

XM Sat. Radio

XMSR

14.47

-0.22

Gaylord

GET

50.65

+0.42

-

-

-

-

-


Bounceback

Send Us Your OpinionsWe want to
hear from you.

This is your column, so send your comments and
a photo to [email protected]




Below the Fold
Ad Business Report
BofA's Jacoby details
media buyer predictions
Bank of America analyst Jonathan Jacoby reports that pre-buys of 2007 rates are being offered at steep discount to 2006 rates for radio. Ouch!

Media Business Report
Yahoo! partners with
150 newspapers

Newspapers are in desperate need of some help - and it looks like they've found some.

Media, Markets & Money
Bottom dollar in noncom land
A pair of Religious non-coms are changing hands, and even though one of them is near one of America's largest cities, the total amount of cash involved is only 5K.

Washington Media Business Report
New Congress seen as net neutral

The prospects for legislation protecting the concept of network neutrality are on the upswing.



Arbitrends

Arbitron
Market Results
| Cincinnati |
| Dayton |
| Phoenix |
| Pittsburgh |
| St. Louis |
| Tucson |


Stations for Sale

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


Radio Media Moves

Changing of the guard at OAB
With the coming retirement of Carl Smith, Vance Harrison Jr. has been selected to serve as the new President of the Oklahoma Association of Broadcasters. "Vance Harrison brings a successful broadcasting background and an extensive knowledge of the OAB and the standards that have been established under Carl Smith," said OAB Chairman Roger Harris. Harrison started in radio in Chicago and was transferred to Oklahoma City when Diamond Broadcasting acquired KOMA/KRXO. He remained with the stations as Market Manager when they were acquired by Renda Broadcasting. In recent years, after leaving radio management, Harrison has served as President/Owner of Creative Marketing.

Tom Cochrun
sets retirement

Veteran Indianapolis radio/TV newsman Tom Cochrun has announced plans to retire January 4th as News Director of WISH-TV, a position he has held since 2003 (8/7/03 TVBR #154). Cochrun began his news career at WERK-AM Muncie in 1965 and was on-air at WIBC-AM Indianapolis from 1969 to '79 when he made the transition to TV, at WISH, then WTHR and finally back to WISH.




More News Headlines

Radio Shack HD Radio going for 99 bucks
RadioShack is now offering a new Accurian HD tabletop HD digital radio for a special price of 99.99! It's a three-day sale, available Friday, November 24 through Sunday, November 26. The 99.99 special price (after a mail-in-rebate) is available in 2,400 RadioShack locations nationwide and on RadioShack.com. This special price represents a 100 dollars savings off the usual 199 retail price of the Accurian.

Second generational Redstone lawsuit
Now it is Michael Redstone suing his uncle, Sumner Redstone, claiming he was cheated out of his share of the family fortune. A lawsuit filed in Massachusetts this month claims that Sumner and his brother, Edward, who is Michael's father, pulled off a series of low-value transactions in the 1970s and '80s that bilked Michael out of his share of National Amusements, the family company through which Sumner Redstone controls both CBS Corporation and Viacom. Sumner's own son, Brent, has a lawsuit pending which seeks to break up National Amusements and give him his share of the business. A judge in Maryland refused to toss out that lawsuit in an August ruling (8/11/06 TVBR #156).


International

Private equity
scores down under

Kohlberg, Kravis, Robert & Co. was part of the private equity consortium outbid for Clear Channel Communications, but KKR now has another media investment deal in Australia. It is setting up a joint venture valued at four billion Australian bucks (3.1B US) with Seven Network Ltd. to invest in TV, magazines and online media businesses. There is no word yet on just what those ventures will be, since this deal is really about lining up cash for deregulation. A new law easing foreign-ownership limits on newspaper, radio and TV ownership will take effect in 2007 and Seven Network, controlled by media mogul Kerry Stokes, is getting ready to pounce. He will have competition, though. Other private equity companies have already cut deals with two other major players in Australian media. As previously reported, News Corporation, which began as an Australian newspaper company, has expressed an interest in acquiring a radio group once dereg takes effect (9/11/06 RBR #176).


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

The devil is in the details
Private equity funds are moving into broadcasting in a big way, but they have to dodge some landmines at the FCC. Thomas H. Lee Partners already has a 23.3% attributable interest in the group buying Univision and both it and Bain Capital hold 25% attributable ownership stakes in Cumulus Media Partners, so it is going to take a creative ownership structure to make their 26.7 billion buy of Clear Channel comply with the FCC's ownership rules. No one is saying yet how the ownership issues will be dealt with, but it has already been worked out.

RBR observation: Lowry Mays and other folks have dealt with this issue before, so they know how to solve FCC attribution problems. As the headline stated The Devil is in the Details and to read it see
11/20/06 RBR #226

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. 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.

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. There is more in this report of RBR
11/17/06 RBR #225

What's for sale at Clear Channel
Look at the shopping list RBR has done the work for the Radio Business. Key is finding the right player that wants these stations in these markets.
11/17/06 RBR #225


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