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Volume 23, Issue 245, Jim Carnegie, Editor & Publisher

Tuesday Morning December 19th, 2006

Radio News ®

RAB moving to cash on the barrelhead

Sometimes a percentage does not tell the whole tale, or at least it tends to distort it. Add to that the fact that most media report their results in hard dollar totals, and you will have two of the reasons that the RAB is going to add quarterly cash totals to its ongoing practice of calculating and releasing monthly revenue comparisons. RAB President/CEO Jeff Haley explained, "Our purpose is to give the marketplace a solid foundation on which to analyze radio. Quarterly reporting will stabilize the perspective on radio revenue. Disclosure of the dollar amounts will align radio with the other media's reporting practices and demonstrate the industry's position as a formidable player in the wireless media arena."

RBR observation: Knowledge is power, and the more of it the better. We've seen fear of knowledge in the past on occasion. For example, back when RBR was a weekly print product, it used to publish forward pacing reports. The purpose of these reports was to assist executives in managing their inventory. But when the dot-com bust started producing some ugly numbers, many saw the reports not as a tool for management but as a club to simply bash radio with, and stopped providing the accountants with the necessary raw data. The biz is poorer for this, in our opinion. And it will be richer for RAB's decision to shine its spotlight bright on the medium's raw power to attract paying customers. The caveat is that radio must do what it takes to pull those customers in. The gauntlet is thrown, and we think a strong focus on local content is the way for radio to prosper.

Publisher note: Look for our Special Report on how 8 key Association participants are confronting their issues within their medium. Read how: Jeff Haley (RAB), Chris Rohrs (TVB), Mitch Burg (SNTA), Sean Cunningham (CAB), John Sturm (NAA), Nancy Fletcher (OAAA), Sheryl Draizen (IAB) and Burtch Drake (AAAA) each confront the inevitable in 2007. This is coming in RBR-TVBR's January debut issue of SMARTMEDIA(tm), a re-branded Radio & Television Business Report publication.

November better than expected
Jim Boyle has hardly been a bull on radio lately, but the CL King analyst says he is surprised by how strong ad sales were in November. With numbers in from 40 of the 51 markets that he tracks, Boyle now expects November radio revenues to be up 5% -- blowing away his previous estimate of 3% and the consensus of 2% on Wall Street. Boyle says easy comps, "lush political" and a solid economy came together for the November surprise. But he notes that the strength was in medium to small markets, up 7-8%, while the big markets were only up 2%. With October no longer looking like a one-month spike, Boyle has raised his December estimate as well, but only to 2% from his previous 1%.

VNU sells Euromags
As new CEO David Calhoun continues to remake VNU, the company has announced a deal to sell its European business-to-business publications, mostly computer titles, and confirmed plans to cut its payroll by 10%. Also, Nielsen Media Research CEO Susan Whiting was moved up to a corporate level post. VNU had put its Business Media Europe group up for sale in October as the first major divestiture since being taken private. There was no announcement of the price being paid by 3i, a European private equity/venture capital firm, but the Financial Times reported that the price tag was over 320 million euros (418 million bucks). The payroll reduction was the official corporate announcement of what RBR/TVBR reported last week (12/12/06 RBR #240). In saying it plans to make permanent cost reductions of 10% over the course of 2007, VNU said the focus will be on simplifying its business processes and organizations structure, with most cuts from "non-client-facing activities." As we previously reported, Nielsen Media Research, the company cash cow, will not face cuts nearly as deep as some of the other divisions, such as the US publishing and trade show operations, including Billboard, The Hollywood Reporter, Mediaweek, R&R and such, and the ACNielsen consumer data operation. Meanwhile, Susan Whiting is becoming an even more important player at VNU, which RBR/TVBR had also predicted several times in recent months. Her title at Nielsen Media Research has been boosted from President to Chairman and she is now also Executive Vice President of VNU, reporting directly to Calhoun and providing counsel to VNU's Supervisory Board, which is made up of directors appointed by the new private equity owners.

RBR observation: Why had we expected Whiting to move up? Back when the private equity firms were placing their bid to buy out the public shareholders of VNU, our sources said she was the executive who impressed the would-be buyers with her savvy observations on what worked at VNU and what needed to be fixed. Now she is going to have a key role in restructuring the entire company, under Calhoun, who is the heavy-hitter brought in from GE to captain the ship. Look for events to move fast in 2007. As costs are cut and businesses restructured, we expect VNU to reincorporate in the US from its current home in The Netherlands, take a new name built on the Nielsen brand name and then file for an IPO.

Media use up, and so is radio
The Census Bureau has released a report noting that US consumption of the media is continuing its upward trend. According to USA Today, the average citizen will go from 3,333 hours a year in 2000 to an estimated 3,518 hours next year. That's 146 solid 24-hour days, or about five months. Veronis and Suhler places the lion's share of that time - 1,555 hours - in front of the television, with 43.6% going to broadcast and 56.4% to cable/satellite. The total is up from a combined 1,467 hours in 2000. And those predicting a long, slow decline for radio will have to think again. The senior broadcast medium is up from 942 hours to 974. However, the big winner will be no surprise, According to the Associated Press, internet use has gone from 104 hours to 195, in the process eclipsing both newspaper (201 hours to 175) and magazines (135 hours to 122). Book readers are about flat, down an hour to 106, while video gamers are on the rise, from 64 hours to 86.

RBR observation: OK advertisers. Radio 974, internet 195. This is no contest, especially if you want to weave your product or service into the daily routine of your geographical market, something the internet is ill-suited to do. Advertisers, you'd be crazy not to have an internet presence. We've completely remodeled our changed our whole business concept around it. But we're a magazine, one of the mediums clearly leaking air. Radio is not, and it remains one of the straightest and strongest paths to the local population that you can find.

Kalil to helm Clear Channel sell-off
With so much to do to prepare for going from a public company to a private one, Clear Channel has moved from in-house marketing to tap the brokers at Kalil & Co. to handle the job of selling off its smaller market radio stations that it has decided to pare from its portfolio. When originally announced, the stations to be sold totaled 448 (11/17/06 RBR #225). Since then a couple of deals have been filed with the FCC, but the folks at Kalil will still have quite a bit of inventory to move. "We're honored to work with Clear Channel and assist them in this process," said Kalil broker Kelly Callan as he delivered news of the big listing.

RBR observation: The listing with Kalil is only for the previously announced small market divestitures, so now we wait to hear who will be tapped to handle the nearly 80 additional divestitures that Clear Channel has committed to because its oversize clusters are losing their grandfathered status as the company s ownership changes. That includes stations in New York, LA, San Francisco, Dallas, DC, Atlanta, San Diego and nearly four dozen other markets. Who will get those listings as Kalil handles the original radio group and Goldman Sachs sells the 42-station TV group?

Wall Street Media Business Report TM

Tribune brass to enter bidding?
Rumors always leak out when a company is up for sale - all the more so when the company up for sale is a media company. For example, there was no way to keep it secret that officials from Gannett have paid a second visit to Tribune Company headquarters to receive due diligence presentations on assets it may bid on. The visit was reported by Tribune Company's own flagship Chicago Tribune. The report said Gannett is particularly interested in the Los Angeles Times and New York/Long Island Newsday. Meanwhile, another Tribune paper, the LA Times, reports that Tribune management, headed by CEO Dennis FitzSimons, is in talks with private equity firms to make an LBO bid for the company. The report said the management group consortium includes Providence Equity Partners, Apollo Management and Madison Dearborn Partners. Also, the Chandler family, which owns about 20% of Tribune Co., is said to be talking with billionaire Ron Burkle about a joint bid for the company. Burkle had previously joined Eli Broad in a bid for the company (11/9/06 RBR #219).

RBR observation: It is all very fluid as the board at Tribune tries to find a way to get maximum shareholder value out of the sale process. To be sure, pricing is not what they had initially hoped for, but there are valuable assets here, even in the struggling newspaper business. Different parties are interested in different pieces, so we could see any combination of buyers team up in the end. Well, maybe not any combination. The Chandlers blame FitzSimons for the company's problems, so it is pretty unlikely they will end up in the same bidding group.

Ad Business Report TM

Arbitron releases RADAR 91 radio network ratings
Arbitron has released the RADAR 91radio network audience report, covering 9/22/05-9/20/06. As par, ABC Daytime Direction Network took the top slot. RADAR 91 was more difficult report to evaluate overall because of all the anticipated special tabs that have been ordered (every network group but Jones MediaAmerica has requested them) to more accurately reflect recent changes in their affiliations or in Premiere's case, a reconfiguration of some of its networks. Network radio continues to deliver audiences on a consistent level. This is evident in the fact that only one trendable network in RADAR 91 had a double-digit audience increase and only one had a double-digit audience decrease. Plus, almost three quarters of the trendable networks had audience changes less than 3%. RADAR's sample was almost 119,000 - the highest ever and increasing even more in future RADARs - provides greater stability, especially for narrower demos like Hispanics and Blacks. There were a total of 56 networks; 43 trendable due to reconfigurations. Overall, Gross Impressions were down 4% for RADAR 91.
| Chart, and numbers broken down by provider |

Media Markets & Money TM

Beasley doubles down in Vegas with DIY AM
Broker John Pierce reports that Beasley Broadcast Group is paying 2.5M for unbuilt KBET-AM Winchester NV. The station, a Class B 1 kw-D, 300 w-N, DA2 facility headed for 790 kHz, is coming from Morgan Skinner's Legacy Communications Corporation (it's actually licensed to AM Radio 790 Inc.). It'll form a superduopoly with KDWN-AM, KKLZ-FM, KSTJ-FM and KCYE-FM. A complicated compensation formula includes advance deposits, debt payments, and a loan credit, followed by a cash payment at closing to bring the total into focus.

Air America Radio may have a buyer
Air America Radio is close to a sealing a deal with a buyer, as a letter of intent has been signed. Douglas Kreeger, an initial AAR investor and former CEO, was quoted by the NY Times saying there was a signed letter of intent for a new group to take over and that he is likely to be a part. The lead equity position would be taken by Terence Kelly, another Air America investor from the beginning and a former board chairman. Kelly said the investor group included a new strategic media partner he declined to name. No word when the deal might be finalized. Currently, AAR is allowed to operate while it goes through bankruptcy proceedings and looks for a buyer. Bob Glaser, the CEO of RealNetworks, is leading an investor group that's currently financing the company.

Washington Media Business Report TM

Give me just a little more time
Did anybody out there think that the FCC was about to wrap up its review of the Second Circuit remand of its 6/2/03 attempt at a media ownership rulemaking in the next day or two? We didn't think so. So it should come as not big surprise that the deadline for filing reply comments on the topic has been extended. The deadline for original comments was 10/23/06, and the original reply deadline of 11/21/06 has already been extended 30 days to 12/21/06. Media General was the company looking for another extension. It notes that it may be most efficient to allow companies wishing to submit information for the record to wait until after the FCC releases its recently-announced ten-prong study of ownership issues. Failing to be granted that open-ended extension, it wanted the 30-day extension to be a 45-day, to address what is known about the studies and to avoid conflict with standard end-of-year administrative concerns. The latter extension was granted, to 1/16/07. The FCC notes that when its studies are released, there will be another opportunity for interested parties to comment.

Watchdog says TV nets
undervalue religion
Television is weaving less and less religion into its programming, according to the Parents Television Council, and when it does get it, more and more it's depicted in a negative light. "The results of this study clearly show that the entertainment industry is not reflecting the strong religious beliefs of Americans in its television programming. The industry is in fact hostile to people of faith - no matter if the person is Christian, Jewish, or Muslim," said L. Brent Bozell, president of the PTC. Bozell said reality programming which gives a platform to ordinary citizens was far more likely to include a positive expression of religious faith than was scripted programming, leading to an indictment of the Hollywood creative community. "...in scripted shows, where Hollywood writers express their worldviews, faith and religion become four letter words - to the tune of 95.5% negative portrayals," charged Bozell. "This is an industry that is completely out of touch with reality." Bozell said portrayals of religion are down from 2.3K in 2003-2004 to 1.4K in 2005-2006, and that in the most recent season negative portrayals outnumbered positive 35%-34%. Fox was the most negative, at 49.3%, followed by NBC (39.3%). UPN was about at the industry negativity rate (35.4%), while the others treated religion more benignly. Other results were ABC (30.4%), CBS (29%) and WB (21%).

RBR observation: It seems obvious that the networks are completely agnostic about all facets of program content save one, expressed in the question "Do people watch it, causing advertisers to sponsor it?" We remember Mel Karmzin on Capitol Hill after the Dixie Chicks flap. He said if Clear Channel is down on the Chicks and they'll help him win in New York, then he's all over the Chicks. That strikes us as the typical executive attitude toward programming. If enough people turn on their TV or radio looking for positive statements on religion, they'll get it. The government, of course, has very little to say about programming, thanks to the First Amendment. PTC regularly steers its members to programs it thinks they will like. That's fine. It can get on its bully pulpit and shine its spotlight on those it likes and those it does not. That's fine too. But that's about all it can do, so until PTC gets enough people to tune their dials based on it's expressed taste in programming, not much is likely to change.

Entertainment Media Business Report TM

O&A pull another
questionable stunt
Opie and Anthony have pulled another possibly problematic stunt. This time, the duo bused an army of homeless men to the upscale Short Hills Mall in New Jersey to shock holiday shoppers last weekend. The Boston Herald reports the publicized trip took "homeless and lunatics" to the mall and treated them to Christmas presents, makeovers and booze. The paper quoted Boston mayor Thomas Menino as saying: "This so-called 'shopping spree' is a sick and twisted exercise that degrades the most vulnerable members of our society. This is an outrage. This is wrong, and we need the public and our partners who care about the homeless and about basic human decency to stand up and tell them so...The homeless people who will be used for this event are human beings who may have been struggling for years with the adversity and problems that come with alcoholism and addictions, or with mental illness and other disabilities. The fact that WBCN has chosen the homeless and the holidays to present this humiliating and shameful attempt at humor is inhumane and shameful." The story also points out Menino has a grudge against the duo - they pulled a prank on April Fool's Day in 1998, the one that got them duo fired by WAAF-FM Boston. They told listeners that Menino had been killed in a car crash, terrifying his wife, children, grandchildren and loved ones.

Transactions

1.239M WVAR-AM & WAFD-FM Elkins-Buckhannon-Weston WV (Richwood, Webster Springs WV) from J&K Broadcasting Inc. (James A. Hardman) to Summit Media Inc. (Nunzio Serghi, Daniel W. Finch Jr.). 150K down payment, 239K debt assumption/payment, 850K note. Daisychain with WKQV-FM Richwood, WSGB-AM/WDBS-FM Sutton WV. [File date 12/1/06.]

540K KMTA-AM/KKRY-FM Miles City MT from Senger Broadcasting Corporation (Kevin J. Senger) to Custer County Community Broadcasting Corporation (Stephen A. Marks). 440K to secured creditors, 110K to seller for studio building. Seller receives on third of proceeds if AM is resold. Duopoly with KIKC AM & FM Forsyth MT. Technical cross-ownership with KYUS-TV Miles City, but it's a satellite of KULR-TV Billings and per the contract is said to be unattributable. [File date 11/30/06.]

Stock Talk

A down day to start the week
The winning streak on Wall Street ended at three sessions, as traders became a little cautious on Monday. The Dow Industrials were off four points to 12,441.

Radio stocks also slipped. The Radio Index was down 0.079, or 0.1%, to 152.987. Beasley was the big mover, up 4.1% as it announced a station acquisition in Las Vegas. Citadel was the worst performer, down 2.6%.

Radio Stocks

**Here's how stocks fared on Monday**
Company	Symbol	Close		Change	Company	Symbol	Close		Change
Arbitron	ARB		43.94	-0.16	Hearst-Argyle	HTV		25.89	-0.11
Beasley	BBGI		8.39	+0.33	Journal Comm.	JRN		12.36	-0.12
CBS CI. B	CBS		31.99	unch	Lincoln Natl.	LNC		64.52	-0.31
CBS CI. A	CBSa		31.93	-0.02	Radio One, Cl. A	ROIA		6.63	-0.04
Citadel	CDL		9.57	-0.25	Radio One, Cl. D	ROIAK		6.57	-0.10
Clear Channel	CCU		35.52	+0.02	Regent	RGCI		2.91	+0.16
Cox Radio	CXR		16.27	-0.19	Saga Commun.	SGA		9.24	+0.23
Cumulus	CMLS		10.61	-0.07	Salem Comm.	SALM		11.30	-0.24
Disney	DIS		34.49	+0.19	Sirius Sat. Radio	SIRI		3.79	-0.11
Emmis	EMMS		8.15	+0.10	Spanish Bcg.	SBSA		4.33	+0.03
Entercom	ETM		28.16	-0.05	Univision	UVN		35.35	+0.02
Entravision	EVC		8.00	+0.02	Westwood One	WON		6.88	-0.09
Fisher	FSCI		42.15	-0.51	XM Sat. Radio	XMSR		15.69	-0.20
Gaylord	GET		50.50	+0.29	-	-	-	-	-

Bounceback

Send Us Your Opinions We want to
hear from you.
This is your column, so send your comments and
a photo to [email protected]

Radio Consolidation is a lot like the Iraqi war - we should have never entered into it, unfortunately we do not have an exit plan.

Exit plan suggestion #1.
The government mandates a new ownership limit rule, something in the area of 25FM and 25AM. Two years for conglomerates to satisfy the new limitation rules. Of those stations not sold to meet the new limitation rules - the government holds an auction and values the stations at "X" times cash flow (the "X" would vary according to market size. i.e., 10X in Major 9X in top 100, etc.). Using a 10X multiple, if a station had $1 Million in cash flow and the top auction bid was 9 Million the government would owe the seller 1 Million. If the top bid was over 10 Million, the government keeps or splits the overage. In the end, since the government is responsible for creating this situation, it will likely cost them. Don't worry, the government likes to serve the public, spend money, and they love auctions, plus this will give the lawyers lots to do - our system at its finest! For this not to ever happen again, I would impose a cap on the number of stations that individual bankers (the real conglomerate group owners) could hold in their portfolios. While the term "cut and run" might not sit well in regards to Iraq, I do believe it make a great battle cry for this new phase of consolidation!

Skip Crossland
Bensley Media Consultants
New York, NY

Below the Fold

Ad Business Report
Arbitron releases RADAR 91
ABC Daytime Direction Network took the top slot...

Media Markets & Money
Beasley doubles down in
Vegas with DIY AM...

Air America Radio
May have a buyer...

Washington Media Business Report
Give me just a little more time
Did anybody out there think that the FCC was about to wrap up...

Watchdog says
TV nets undervalue religion...

Arbitrends

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Radio Media Moves

Veteran sales pros join ABC Radio Networks
Adam Gilbert is the new Senior Director of Western Sales for the ABC Radio Networks located in the Burbank. Adam is a 13 year radio veteran who most recently worked at CBS Radio LA as the GSM at KRTH-FM. Pandora Yeargin-Johnson is the new Urban Sales Manager for ABC Radio Networks based in Atlanta. She'll be covering the Southeast and Dallas markets with key responsibility in New Business Development and revenue growth for Michael Baisden, Tom Joyner and Doug Banks.

Behrendt joins
Dial Global
Dial Global has announced that Mark Behrendt will join on as VP/Detroit Sales and be responsible for sales in Detroit/state of Michigan. He was formerly an AE with ABC Radio Networks.

Vacancy at CBS
CBS Corporation told the SEC that Judith Sprieser, former CEO of software firm Transora Inc., has resigned from its board. That leaves CBS without a majority of independent directors, but the company says it expects to name a new independent director soon to return to a 5/4 split.

More News Headlines

United Stations ends deal with Al Roker
Old News? United Stations Radio Networks has parted ways with Al Roker. USRN debuted Al in 2004 for "The Radio Network With Al Roker" as a weather forecasting service for affiliates. USRN SVP Andy Denemark, however, tells us Roker has been done since May, but he's still on their website. Maybe old news, but news anyway! Also, a reminder, USRN DOS Dick Silipigni has retired. Chicago Sales office Rich Baum took over as DOS.

RBR Radar 2006

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

Tight rein at Clear Channel;
Divestitures coming
Details have finally been filed at the FCC for the 26.7 billion buyout of Clear Channel Communications. Mark and Randall Mays will be on the board, but their new equity partners will be in control. Divestitures will be required in several large markets. (Those markets and how many in RBR.) The buyout agreement indicated that the attributable shareholders of the new Clear Channel would not have any attributable interests in any other broadcast licenses to avoid any difficulties with the FCC, but until now RBR did not know how that would be handled. It turns out the Thomas H. Lee Partners and Bain Capital will be amending the terms of their investments in Cumulus Media Partners (each 25%) and the proposed buyer of Univision (Lee 23%) so that they are not attributable as far as the FCC is concerned. Bain and Lee will each have a 50% fully attributable stake in the new Clear Channel, with no direct ownership by any member of t! he Mays family. Bain and Lee will each appoint four of the 10 board members, with Mark and Randall Mays occupying the other two seats.

RBR observation: The game is changing at Clear Channel. We know who will be running the company in 2007. But the real question is, will they still be there in 2008 or 2009? The Mays family will no longer have de facto control of a public company with No Majority shareholder. Instead, CEO Mark Mays, President/CFO Randall Mays and CC Radio CEO John Hogan will have to hit the performance marks set by their new bosses or risk being sent packing. Since the Mays brothers had previously agreed to dramatically reduce their golden parachutes, they obviously believe they are up to the new task.
12/18/06 RBR #244

Media Seller
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