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Volume 24, Issue 24, Jim Carnegie, Editor & Publisher
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Monday Morning February 5th, 2007
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Radio News ®
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 Payola: FCC, broadcasters
ready to settle?
Word is out that an agreement is at hand in the FCC's investigation into radio payola spurred by the investigations of Eliot Spitzer in New York. 10M or more is said to be on the table in a case involving Clear Channel, CBS Radio, Entercom and Citadel. According to reports, the settlement has all the earmarks of a consent decree. Generally, terms using that path allow companies to admit to no wrongdoing, while engaging in measures designed to alert employees to the problem being addressed and prevent its occurrence in the future. Often there is also a "donation" to federal coffers involved. One version of the settlement that has been mentioned calls for 3M to go to the NAB for an anti-payola training program, with 7M being dedicated to providing airtime for independently-produced music. Administrative and jurisdictional concerns are said to have caused that solution to be scrapped, replaced with a straight 10M-15M payment to the government.
RBR observation: The companies involved would do well to admit no wrongdoing, since it is highly probable that there was no wrong-doing done. As has been the case before in high-profile indecency cases, sometimes companies feel it better just to pay an amount certain to the US Treasury rather than run up unpredictably high attorney bills fighting for their rights in the courts, no matter how just they feel their cause to be. Finally, a question. How in the world would one figure out just when 7M worth of airplay has occurred? Putting a price on each spin almost amounts to the government developing its own bizarre payola menu. Then it would be time to sit back and field the complaints from the independent artists who were not included in the 7M indie windfall.
State of the FCC revealed in statements
Here's some more from last Thursday's face-off between the new Democratic majority and the five FCC Commissioners. It was, in fact, a super majority, since only three Republican committee members showed up, compared to nine of their friends on the other side of the aisle. This was one committee meeting where we place our reporting focus on the face-off rather than the substance. This was because the story, in our judgment, is that the meeting was a scattershot prelude to what is to come. Many, many, many issues were raised, not all having to do with broadcasting, but as Byron Dorgan (D-ND), with five minutes per Senator, it was impossible to get into any depth at all on any one thing. The commissioners did receive one promise from Sen. Ted Stevens (R-AK) - he pledged to reintroduce, with Commerce Chairman Daniel Inouye (D-HI) legislation that would allow the Commissioners to converse with one another in private. "Sunshine" legislation on the books has prohibited this, we guess as a measure to prevent shady back room dealings, but the law of unintended consequences has been the big winner, since it makes it difficult for the five of them to hammer out agreements and build consensus on the routinely complex issues that cross their desks. Anyway, to get a sense of the Commissioners, see below for telling quotes from their prepared statements.
| FCC Commissioners in their own words |
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 WCFB-FM Orlando
tower knocked down
by tornado
A devastating tornado that moved through Central Florida early Friday morning, killing at least 20 people, also destroyed the broadcast tower of WCFB-FM, "Star 94.5." The steel tower that stood 1,500 feet tall, was toppled and now appears as a "twisted mass of metal," says Dennis Sloatman Chief Engineer for Cox Radio Orlando. Sloatman added, that the tower was "designed to sustain winds from a Category 3 Hurricane or better, so it's no telling what happened here overnight." Despite the severe damage, Cox engineers were able to get the station back on the air by mid afternoon Friday from another tower. Throughout the time that WCFB was not broadcasting, the station continued to stream programming at Star94fm.com. Cox DOE Steve Fluker assessed the damage that also destroyed the concrete building the tower is based on; "to be in the millions." Everything including other equipment in the building was destroyed as well.
Fund group bets big on broadcasting
The way Wall Street beat up on broadcasting stocks in 2006 apparently created a perceived opportunity for one mutual fund company. Dimensional Fund Advisors has filed annual holdings statements with the SEC showing its mutual funds with sizeable holdings in a slew of publicly traded radio and television companies. Its holdings range from 5% to nearly 10% of the publicly traded issues of ACME Communications, Regent Communications, Citadel Broadcasting, Radio One, Sinclair Broadcast Group, Cumulus Media, Spanish Broadcasting System, Cox Radio, Entercom Communications, Entravision Communications, LIN Television and Gray Television.
RBR observation: For those companies which have only a single class of stock, a holding of 5% or more would be attributable as far as the FCC is concerned if the owner were a single investor or another broadcaster. But since the mutual fund group qualifies as a passive investor, its radio and TV holdings are not attributable in the eyes of the FCC so long as it stays below 20% ownership of each company. It is certainly a big vote of confidence in the underlying value of the broadcast asset values by this mutual fund manager.
Liberal and conservative talkers find common ground
Conservative talk host Sean Hannity and liberal talker Stephanie Miller may not agree on much when it comes to politics, but they did find something to agree on when Hannity called Miller's show for some on-air bantering. Neither of them wants to see a return to the Fairness Doctrine, which the FCC repealed in 1987. Here is an audio clip provided by Miller's syndicator, Jones Radio Networks. Hannity is syndicated by ABC Radio Networks.
|  Listen Here |
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Ad Business Report TM
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NYMRAD's new
 campaign hits the streets
In keeping with its mission, New York Market Radio Association (NYMRAD) is setting out on a campaign to increase the use of Radio in the NY Metropolitan area. Through an outdoor campaign, NYMRAD advertises the value and power radio has to reach individuals, with taglines touting "We Wake Up 93% of New Yorkers Every Morning" and "We Reach 2.4 Million New Yorkers Every 15 Minutes." You'll find NYMRAD's campaign on major access roads throughout the tri-state area including Westchester, Rockland, Nassau & Suffolk counties; New York's five boroughs and nine counties in New Jersey. Executive Director Deborah Beagan says, "There has been an outstanding response to the new creative and it's our mission to connect these advertisers to their customers."
| View Ad 1 | View Ad 2 |
Julie Roehm comments on NY Magazine story
Julie Roehm, former Wal-Mart SVP/marketing communications shed some light on a recent story (2/2/07 RBR #23) from NY Magazine which said Wal-Mart claimed it had "irrefutable and admissible evidence" that she had an affair with Sean Womack, a Veep who reported to her. "Julie Roehm didn't tell the truth about the inappropriate relationship with one of her subordinates," Wal-Mart spokesperson Mona Williams told the magazine. Roehm explained to RBR and TVBR this evidence is "8 lines taken out of context" in an email. "The piece that they feel is the big evidence is actually an attempt at humor by me, but you would never know that from just reading 8 lines."
AURN President Jay Williams steps down
E. J. "Jay" Williams, Jr. announces his new consultancy practice, The Jay Williams Group, based in New York. Williams stepped down from the presidency of American Urban Radio Networks (AURN) after over 7 years at the helm.
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| Media Business Report TM |
Ernst & Young = conflict of interest?
After reading our story Friday on Ernst & Young establishing a media audit unit (2/2/07 TVBR #23), an MRC Committee member voiced a bit of concern as it relates to E&Y's dealing with the MRC. E&Y does the radio and TV audits for the MRC, so is there the potential for a conflict of interest? An Ernst & Young spokesperson responded: "I can tell you there is no conflict at all between the work we do with The MRC and the work that the extension of the Marketing and Advertising Risk Services (MARS) group will be taking. They are completely independent and separate groups."
Talkers follow the headlines
The Project for Excellence in Journalism news hole index for 1/21-26/07 resulted in a three-way tie for the most coverage, with the SOTU speech, the Iraq policy debate and the 2008 campaign all garnering 13% of the coverage, or 39% altogether. Broadcast and cable talk shows focused on the same three stories, but much more narrowly. Iraq policy was first at 23%, followed by the 2008 campaign (22%) and SOTU (18%), accounting for 63% of the total yak time. No other topic exceeded the 4% that went to discussing the Scooter Libby trial. The #4 news item, day-to-day coverage of events in Iraq, filled 9% of the news hole, but the talkers focused on policy and gave the nuts and bolts a mere 1% of their attention.
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| Media Markets & Money TM |
 Walden sells out
US Rep. Greg Walden (R-OR) is selling his five-station Oregon radio group to Bicoastal Media, a company that has been actively expanding in small markets in Oregon, California and Washington. According to the Oregonian, Walden said he is having trouble balancing his job in Congress with the demands of station ownership. His group is based in Hood River and The Dalles OR, across the Columbia River from Washington and just east of the Cascades mountain range. Terms were not immediately released.
RBR observation: Walden has been and figures to remain a strong voice for broadcasters, and in particular, small market broadcasters, from his all-important seat on the House Committee on Energy and Commerce. During the big Janet Jackson/Super Bowl indecency flap, he noted that a 325K fine may be no big deal to Viacom or Clear Channel, but it could put a small market operation into bankruptcy. He argued strongly for such things to be taken into account when such rules are enforced. So far, it seems that small-market stations have avoided any trouble by getting nowhere near the trouble zone. Here's hoping that the punishment fits the crime if some farmer somewhere on a live aggie call-in show accidentally uses the wrong term for fertilizer.
Li'l ol' deal in Tennessee
Actually, 500K isn't bad for an AM outside Knoxville. WLIL-AM Lenoir City is being sold by Zollie D. Cantrell's BP Broadcasters to Donald P. Fowler's Fowler's Holding LLP in a cash deal. Fowler will also pick up the right of first refusal should Cantrell decide to sell WKZX-FM as well. Fowler also can kick off an LMA prior to closing.
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| Washington Media Business Report TM |
Kerry asks for FCC intervention into baseball deal
"Extra Innings" is a product from Major League Baseball which allows subscribing fans to watch telecasts of out-of-market games. John Kerry (D-MA) said it is currently available to some 75M subscribers via various MVPDs, but that a pending agreement will restrict it exclusively to DirecTV, cutting out all cable carriers as well as Dish Network, and whittle down the number of potential subs to DirecTV's 15M roster, "leaving 50 million Americans without access to out-of-market games that they currently enjoy and a viable alternative to view them," as Kerry wrote in a letter to FCC Chairman Kevin Martin. Putting all quibbling with Kerry's math aside (we get 60M disenfranchised Americans, but freely admit we did not pursue the math/science path when in college), he is asking Martin to poke around and assess the legality of the arrangement. "I am concerned that this deal, and others that may follow, will separate fans from their favorite teams and reduce competition in the sports market. I therefore request that you investigate this exclusive deal and report to Congress on its implications for consumers and recommend any changes to law or regulation that will ameliorate its negative effects."
RBR observation: When the vultures were descending on the meaty carcass of Adelphia Cable, the loudest cries of foul were coming from the DBS providers, who railed against cable giants like Comcast and Time/Warner wrapping up "must-have" sports programming, particularly through regional sports channels. As a condition to the deal going through, it was stipulated that the satellite services must have reasonable access to such programming. Is not what's good for the goose good for the gander? Shouldn't the sports programming door swing both ways? If the FCC can step into the middle of one such situation, can it not step into another? This should be interesting on a number of levels. Stay tuned.
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| Entertainment Media Business Report TM |
 CBS Radio goes
"green" in DC
CBS Radio/DC launched of 94.7 The Globe, its first "green" focused radio station. The station will operate using renewable energy to power its 50,000 watt signal. This move will contribute to lowering the threat of global warming through the purchase of energy resources generated by wind. Additionally, station vehicles will be replaced with hybrid models, and 94.7 The Globe will further its "green" focus by taking a number of steps on and off-air to consistently promote ways for listeners to live an eco-friendly lifestyle. The Globe will continue to be a rock-based format, however, it will increase its playlist incorporating more artists from the late 90s and today including Dave Matthews Band, Coldplay and Red Hot Chili Peppers, among others. A new website has also been created for The Globe featuring station news and environmental resources. Listeners can log on to www.947theglobe.com for more information and to listen to the online stream. Following The Globe's premiere week of World Class Rock music, air talent members Weasel, Schelby, Cerphe and Mark Stevens will re-emerge into daily programming. Highlights of the station's green initiative include: Using renewable energy to supply power to the station's 50,000 watt signal and using hybrid station vehicles; In-studio artists will perform in The Globe's Custom Greenhouse outfitted with low voltage lighting and recycled flooring; Annual Earth Day concert event; Station will create promotional campaigns around socially-conscious events such as Bonnaroo, Lollapalooza and Coachella; Station appearances will be branded "Go Green With The Globe" and provide listeners with information on environmental leadership and energy conservation; WARW will also host events encouraging recycling, tree planting and use of green products.
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| Internet Media Business Report TM |
Website gains at 246 radio groups in 87 markets
30 radio group clusters have increased their net reach by attracting 50,000 or more viewers to their websites in the metropolitan markets they serve and 75 radio groups have attracted 20,000 or more, according to a new report from The Media Audit. "The numbers have been netted out to reveal the portion of the website audience which is not a duplication of the listening audience," says Bob Jordan, president of The Media Audit. In the net out computations a station's most often or most preferred designated listener numbers were used. Those classifications describe listeners who say the radio station is the one they prefer or the one they go to first. The Media Audit surveys only adults, age 18 plus. The report, covering 246 radio group clusters in 87 metropolitan markets, will be released at the RAB's Management Leadership Conference in Dallas, February 8 - 11. In New York City, the Emmis radio group achieved a net website gain of 201,900 for a net gain of 22.7% in their most preferred station audience. Five other group clusters pulled more than 100,000.
| Read More... |
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| Technology Business Report |
 New meaning to the
term over-drive?
For those of use raised on Hanna-Barbera's "The Jetsons," the future has been pretty darned disappointing. We guess that those instant dinners they were always eating have come, thanks to the microwave, but we think what everyone really wanted, especially everyone who now commutes to work every day, is one of those flying cars. According to the Associated Press, an Israeli inventor named Rafi Yoeli has a prototype on its way to market-readiness. The X-Hawk, and its little brother, the X-Mule, could be ready in as short a time-frame as three years down the road. It would basically utilize helicopter technology to allow vertical take-off, but with encased rotors instead of the external type that make helicopters impractical for most urban uses. An early application would be to rescue people stranded in the upper reaches of skyscrapers, and for military personnel to avoid roadside IEDs.
RBR observation: The prospects of flying cars should give pause to the advertising community. When they get around to figuring out new rules of the road to accommodate those who leave the macadam behind, it could well cause drastic cuts in the duration of morning and afternoon drive. That's what commuters would wish for anyway, and it would hurt radio stations in particular. But, on the perverse theory that the grass is sometimes more scorched on the other side of the fence, just think about the devastation this would cause the outdoor folks.
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| Monday Morning Makers & Shakers |
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Transactions: 12/18/06-12/22/06
The FCC had a relatively high stack of paper this week, but the values came back down to earth in the week following the Clear Channel blockbuster. CCU was at the top of the chart again, selling off its Lincoln NE cluster. Almost half of the station volume came in one noncom deal, with AFA sending seven active FMs and 11 FM CPs to Educational Media Foundation for 2.5M. There was no action on the TV side.
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Total
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Total Deals
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17
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AMs
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8
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FMs
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32
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TVs
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0
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| Value |
31.028M
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| Complete Charts |
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Radio Transactions of the Week
Eagle soars over Nebraska
| More... |
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TV Transactions of the Week
Back into hibernation
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| Transactions |
41.5M WTCV-TV San Juan PR, WVEO-TV Aguadilla PR, WVOZ-TV Ponce PR from International Broadcasting Corporation (Pedro Roman Collazo) to Caribevision Station Group LLC (Carlos Barba). 2.49M escrow, 34.01M cash at closoing, 5M in advertising to be used by seller's radio stations. Deal also includes WIVE-LP Ceiba PR. [File date 1/5/07.]
17M WJKL-FM Chicago (Elkin IL) from Elgin Broadcasting Company Inc. (K. Richard Jakle et al) to Educational Media Foundation (Richard Jenkins). 850K earnest money, 2.65M cash at closing, 13.5M note. If EMF resells station during 10 years after closing, seller will receive 50% of any sale value in excess of 25M. [File date 1/8/07.]
Clear Channel stock transaction,
16B radio, 1B television, filed 12/15/06.
Markets 251-300 (from BIAfn reports filed with contract and other sources)
| Read More... |
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| Stock Talk |
Inflation news good, but stocks mixed
Stock prices closed mixed on Friday, despite a government report showing that the US economy added fewer new jobs than expected in January and the unemployment rate moved up to 4.6% from 4.5% - news that indicated no heating up of inflation and no reason for the Fed to think about raising rates. Nevertheless, traders took some profits in blue chips and the Dow Industrials closed down 20 points at 12,653. Other major indices were slightly higher.
Radio stocks were mostly higher. The Radio Index gained 0.806, or 0.5%, to 159.767. Citadel was the big gainer, up 2.6%. Saga gave up some territory, slipping 1.8%.
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| Radio Stocks |
Here's how stocks fared on Friday
| Company |
Symbol |
Close |
Change |
Company |
Symbol |
Close |
Change |
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Arbitron
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ARB
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47.33
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+0.05
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Journal Comm.
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JRN
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13.44
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unch
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Beasley
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BBGI
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9.25
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unch
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Lincoln Natl.
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LNC
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68.29
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+0.28
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| CBS CI. B |
CBS |
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31.35
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-0.18
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Radio One, Cl. A
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ROIA
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7.50
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+0.04
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| CBS CI. A |
CBSa |
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31.36
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-0.05
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Radio One, Cl. D
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ROIAK
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7.50
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unch
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| Citadel |
CDL |
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10.77 |
+0.27 |
Regent
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RGCI
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3.08
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-0.01
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Clear Channel
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CCU
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36.43
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+0.16
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Saga Commun.
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SGA
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9.45
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-0.17
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Cox Radio
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CXR
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15.73
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+0.21
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Salem Comm.
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SALM
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12.59
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+0.21
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Cumulus
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CMLS
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10.41
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+0.10
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Sirius Sat. Radio
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SIRI
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3.68
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-0.02
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Disney
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DIS
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35.18
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+0.17
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Spanish Bcg.
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SBSA
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4.10
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+0.05
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Emmis
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EMMS
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8.43
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-0.08
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SWMX
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SMWX
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1.50
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unch
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| Entercom |
ETM
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28.63
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+0.48
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Univision
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UVN
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35.88
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+0.03
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Entravision
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EVC
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7.93
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+0.05
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Westwood One
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WON
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6.93
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-0.05
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Fisher
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FSCI
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44.61
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-0.46
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XM Sat. Radio
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XMSR
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14.21
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+0.06
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Hearst-Argyle
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HTV
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26.03
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+0.14
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Bounceback
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 We want to
hear from you.
This is your column, so send your comments and
a photo to radionews@rbr.com
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Below the Fold
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Ad Business Report
Julie Roehm comments
On NY Magazine story...
Media Markets & Money
Walden sells out
US Rep. Greg Walden (R-OR) is selling his five-station...
Li'l ol' deal in Tennessee
Actually, 500K isn't bad for an AM...
Internet Media Business Report
Website gains at 246 radio groups
In 87 markets as 30 radio group clusters have increased their net reach by...
Transactions
Clear Channel stock transaction,
16B radio, 1B television, filed 12/15/06--Markets 251-300...
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Stations for Sale
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10 TX, AZ, NC, and GA
FM radio stations at an exceptional value offered for sale. Broker cooperation encouraged. Please visit www.toweritrust.com for complete information including pricing.
Market your Stations For Sale
in our daily epapers.
Contact June Barnes
jbarnes@rbr.com
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Radio Media Moves
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CFO leaves
Liberman (again)
Another CFO has exited LBI Holdings, the parent company of Liberman Broadcasting, after a brief tenure. According to an SEC filing, William Keenan resigned January 26th "to pursue other opportunities." He had joined the company last May (4/24/06 RBR #80). Once again, Exec. VP Lenard Liberman has picked up the mantel of CFO as well.
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More News Headlines
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Peace returns to the Redstone family
Sumner Redstone has settled the lawsuit filed last year by his 56-year-old son, Brent, over control of National Amusements, the company via which the Redstone family controls both CBS Corp. and Viacom (2/15/06 RBR #32). Claiming he had been unlawfully denied control of his stake, Brent had sought to dissolve the family company. Terms of the settlement were sealed, but the Wall Street Journal quoted a source as saying that National Amusements had agreed to buy back the one-sixth stake held by Brent in the eight billion bucks company.
Thanks, dad!
News Corporation CEO Rupert Murdoch has made a sizeable increase in the allowance he gives his kids. According to filings with the SEC, the media mogul has distributed about 100 million worth of News Corporation stock to each of his six children. Four, born to his second wife, Anna, are adults, while two, born to third and current wife, Wendi, are still small children.
BE, Tunefly
to showcase
messaging at RAB
Broadcast Electronics (BE) introduces the latest in multi-platform opportunities at the RAB07 conference with an exhibitor showcase of new Messagecasting applications for radio. BE, in partnership with Tunefly, showcases several key data services for building TSL, generating new sponsorships, and creating a media-rich listener experience, including music bookmarks, contest connect, off-air, personalized dedications, scrolling text readouts of school closings and more. Tunefly resides on BE's AudioVAULT digital media system with The Radio Experience data management suite for generating and dayparting electronic messages. The BE Messagecasting system delivers text to the radio dial, cell phones, billboards, e-mail, instant messages, and the web for enriching the station brand.
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TVBR - TV News
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Mediacom settles
with Sinclair
Mediacom cable subscribers in eastern Iowa were able to watch the Super Bowl yesterday and the MSO's customers in many other markets will be able to watch "American Idol" this week without having to resort to rabbit ears. Just shy of a month after Sinclair Broadcast Group forced Mediacom to pull its network affiliate stations from all of the cable company's systems (1/8/07 TVBR #4), a settlement was announced late Friday and the Sinclair stations were restored to some 700,000 cable households in 12 states. Terms of the agreement are not being disclosed, but Mediacom is, for the first time, paying for the right to carry the Sinclair stations. Mediacom has also agreed to withdraw the antitrust lawsuit it filed against the broadcaster.
TVBR observation: The world has changed and some cable MSOs are having trouble adjusting to the new reality. As demonstrated first by Nexstar and now by Sinclair, cable systems cannot hold onto their subscribers if they do not carry the major broadcast television networks. DirecTV and EchoStar are viable competitors and, in some areas, cable over-builders such as FiOS from Verizon are real options as well. Having failed to get the courts, the FCC and the US Congress to come to its aid, Medicom was eventually forced to do just what the law on retransmission consent had envisioned - negotiate in the free market to pay fair market value for the content it wanted to deliver to its subscribers.
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RBR Radar 2006
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Radio News you won't read any where else. RBR--First, Accurate, and Independently Owned.
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Radio revenues:
Local red, overall black
Results for December closely mirrored results for the year as a whole. Local was down 1%, national was up 6% for the month and 5% for the year, and the combined result for both combinations was neither red nor black, but a flat 0%. The ever-growing and creative non-spot category was up 8% for the month and 10% for the year, enough in both cases to produce a 1% gain for radio revenue overall. Both national and non-spot were strong throughout Q4, picking up 12% apiece to local's flat performance. That combination brought Q4 in a 3% to the good, giving the year as a whole a tow into black ink territory.
RBR observation: We've been pounding away at this just about every time the RAB releases another report, but the fact remains that radio is a local business. The constant refrain, that the Internet is eating away at the advertising revenue pie, should be easily defeated by its relative inability to deliver a decent-sized local audience to advertisers. Many have speculated that advertisers should be realizing the folly for their ways just about now, and will return to the local fold. We suggest that you nudge them back in the firmest possible way, and provide some enticing Internet connections for them on the side, so they don't have to look at their recent online flirtations as a total waste - just another extra benefit from dealing with your friendly, effective, LOCAL radio station.
02/02/07 RBR #23
Higher CCU bid
Based on the increased stock price of Clear Channel Outdoor (CCO), Bear Stearns analyst Victor Miller figures the private equity consortium trying to buy Clear Channel Communications (CCU) could now up their bid to 40 bucks and still pay a lower multiple for Clear Channel Radio than under the original 37.60 bid. Since the buyout deal was announced last November, the CCO stock price has gone up 15.8%. That has some major institutional investors, including mutual fund giant Fidelity Investments, pressuring Thomas H. Lee Partners and Bain Capital to increase their offer for CCU, which owns 90% of CCO.
RBR observation: Will it happen? There are a lot of variables in play here. Miller argues that the Mays family has a lot at stake in getting the current deal approved. He figures that Lowry, Mark and Randall Mays will cash out for nearly 1.2 billion, while Mark and Randall are reinvesting only 20 million of that, or 1.68%, in the new company. If the deal is voted down, there is certain to be a backlash on Wall Street. We agree with Miller, though, that the CCU stock will likely not be punished as badly as Emmis was last year when the buyout bid from CEO Jeff Smulyan was rejected. A recent Wall Street Journal article quoted one shareholder's fears that CCU could drop into the mid-20s. Given the support of the strong CCO stock price, Miller notes that such a scenario would value the radio assets as 3.4 times, which he called "inconceivable." That seems pretty far fetched to us as well.
02/02/07 RBR #23
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