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Welcome to RBR's Daily Epaper
Volume 23, Issue 30, Jim Carnegie, Editor & Publisher
Monday Morning February 13th, 2006

Radio News ®

Feingold seeks Senate hearing on payola
Russell Feingold (D-WI) is not a member of the Senate Commerce Committee, but he has asked both Chairman Ted Stevens (R-AK) and Dan Inouye (D-HI) to put one of his pet issues on the committee's agenda. In light of the ongoing actions from New York AG and gubernatorial candidate Eliot Spitzer and Jonathan Adelstein at the FCC, Feingold wants a special session convened just for this topic. He cited his bill, the Radio and Concert Disclosure Act of 2005 (S.2058) as a starting point. "A dedicated hearing to these issues will help to develop ideas about ending this practice and assuring radio listeners that they no longer have to wonder whether what they are hearing on the radio is based on merit or thinly veiled bribes," he wrote.

RBR observation: They say that the most common flaw of military leaders throughout the centuries is the use of tactics appropriate for the last war in the books, rather than new tactics appropriate for the war in front of them. Feingold seems guilty of fighting the last war. (On the other hand, we think Spitzer may well be cooking up some leftovers to keep his name in the papers.) In large part due to Feingold's efforts, the independent record promoters are history and the big radio companies are swearing off the gifts and refusing to participating in the scoring system - - the wheezing weekly add charts. Further, if there is anything to be gained, and/or temptations for exploitation offered, by vertical integration of radio and concert businesses, and admittedly you'd think there would be, Clear Channel's experiment with such an operation certainly failed to prove it. Feingold has won - - it's time to raise a flag of victory over the carcass of the old pay-for-play system and start looking ahead to the newer concerns - - pay-for-say, unattributed fake news releases, undisclosed product placements, and false product endorsements from allegedly independent expert reviewers.

Citadel-ABC deal has lots of moving pieces
Citadel Broadcasting and Disney have now filed the contracts with the SEC for their deal to have Disney spin off ABC Radio into a separate company and then merge it with Citadel to create the nation's third largest radio group (2/7/06 RBR #26). As you can imagine, this is complicated. The ABC Radio stations and other assets, except for those associated with Radio Disney and ESPN Radio and their stations, will be moved into Spinco. Shareholders of Disney will be the new owners of Spinco, although they won't actually see those shares because Spinco will last only long enough to take on 1.4-1.65 billion of debt before merging with Alphabet Acquisition Corp. (clever name, huh?), a new subsidiary of Citadel, leaving the 1.4-1.65 billion of cash with Disney. The contracts confirm what Wall Street analysts had speculated - - that Citadel will make a special dividend payment to its current shareholders before delivering new stock, amounting to 52% of the total company, to former Spinco shareholders. The exact amount of that special dividend to get Citadel's balance sheet properly aligned to value Spinco at 2.7 billion will be determined just before the merger, expected sometime this fall. Citadel shareholders won't need to vote on the merger, since majority owner Forstmann Little & Co. has already given the deal its blessing. But several other approvals are needed before the merger can close. The FCC has to approve the license transfers, the deal has to pass federal antitrust review and, very importantly, the IRS has to agree that the deal is properly structured for Disney and its shareholders not to owe any capital gains tax on the merger. The contract calls for closing to occur no later than February 6, 2007 (one year after its signing), although that can be extended by written notice from either Disney or Citadel until August 6, 2007.


Tribune revenues down in January
There's more evidence that the advertising market continues to be soft. Tribune Company reports that January revenues were down 1.1% overall to 472 million. The biggest drop was in the radio/entertainment unit, although Tribune's lone radio station, WGN-AM Chicago, didn't have much to do with it. Rather, Tribune said revenues dropped 15.5% to 4.3 million largely because of lower TV syndication revenues. For the company's broadcast TV station group, January revenues were down 0.5% to 100.3 million, with weakness in ad sales to the auto and packaged goods sectors partially offset by strength from movies and education. All in all, Broadcasting & Entertainment revenues were off 1.2% for the month to 104.6 million. Newspaper ad revenues were up 0.2% to 289 million, but a drop in circulation revenues produced a 1% decline in publishing revenues to 367 million.

Harvey replacement in the wings?
Youthful Fred Thompson, age 63, is the leading contender to take over at ABC Radio Networks for 87-year-old Paul Harvey, according to the New York Post. A lawyer and former US Senator (R-TN), Thompson is now known for his role as the District Attorney on NBC's "Law & Order." Indeed, he managed to maintain a successful acting career both before and after his stint on Capitol Hill. There is, of course, no confirmation from ABCRN that Thompson, or anyone else, is being groomed to take Harvey's place behind the microphone. The network's star performer and chief cash flow generator still has years to go on his current contract and appears to be generally healthy for his age, although he was off the air for several months in 2001 with a throat infection.

RBR observation: What do Paul Harvey, Casey Kasem, Howard Stern and Rush Limbaugh have in common? Each is such a unique radio personality that they can't be replaced. Certainly ABC Radio Networks has to plan for the future, since Harvey is less than three years from his 90th birthday. The folks at ABC can only hope that he proves to be as vigorous as former FCC Commissioner Jim Quello, soon to be 92. But when Harvey retires or is unable to continue working, whoever takes over those time slots on the network will have to build up a following of their own. It will never be the same without the signoff, "Paul Harvey, good day."

Author insists A la carte, not study, Is flawed
FCC Chairman Kevin Martin said there were flaws in a Booz Allen Hamilton (BAH) study on cable a la carte put together for his predecessor Michael Powell. BAH agrees there were flaws, but says they were caught, and that their ultimate conclusion - - that there are harmful elements inherent to a la carte - - remains unchanged. Taking to its own website, BAH said, "In December 2005, in a letter to the FCC's Chief Economist we acknowledged ' and corrected ' a mistake in one of our calculations. We shared with the FCC our findings that, after making the appropriate adjustments, our conclusions remain unchanged. We continue to stand by our conclusions and underlying assumptions, based on our experience and on the information we collected at the time our report was written, in July 2004: A la carte pricing would result in higher costs to consumers for comparable access to cable programming; Diversity would suffer. A significant number of cable networks, including those that offer innovative and untested formats, will be forced out of business before they have a chance to build the audience they need to become profitable. Others will have to make dramatic budget cuts, harming the quality of their programs."

RBR observation: This will be music to the cable industry's ears. And we have to say, it would seem to be an extraordinary intrusion of government into the affairs of the business world to mandate an a la carte regime on the cable industry. Imagine if the Sudz Brewery were called before Congress and the FBC (Federal Brewery Commission) and were told that not all customers want to buy six packs, and henceforth they would be required to offer singletons, three packs and five packs as well. We doubt it would get very far in the courts. An attempt to pull off something like this for the cable industry could well trip over the same hurdle.


Ad Business Report TM

Donlin on GM's new
local TV relationships

GM Planworks President Dennis Donlin got back to us on the news that GM share deals would all be cancelled from Q2 on and that stations, not buyers, would then monitor pod violations (2/10/06 RBR #29).

Here's what he told us: "[Last] week GM Planworks had a constructive dialogue with local TV stations on a new approach that will improve partnership. Our partners understand that this is an opportunity to build business and were focused and listening to what we were asking of stations. Our approach will help us level the playing field and result in a more robust marketplace for GM's local media investments. We fully expect this move will provide General Motors greater flexibility, better pricing and less complexity as well as increase the volume and quality of added value programs."

Carat clears the air on the DVR ultimatum
Ray Warren, Carat Americas President, tells RBR/TVBR about a bit of a misunderstanding that may have been behind ABC's Mike Shaw's recent ultimatum that ABC will not do business in the 2006-07 upfront with media agencies that insist on using only Nielsen's live ratings as the measurement currency (2/7/06 RBR #26). He first addresses the imminent AAAAs announcement that Jon Mandel and Jean Pool have been mentioning (2/10/06 RBR #29).

Says Warren: "I'm on the media policy committee of the AAAAs. And there is a meeting coming up-I think before March 1st [the first day of the AAAAs' conference]-so that may be what they're preparing to present to us." He adds, "I'm not sure if Mike [Shaw] read our position, which was not the Magna [Global] position. Our position simply was that it wasn't part of the '05-'06 negotiations-we're not going to let it be. After we feel more comfortable with the data, we'll discuss putting it into the '06-'07 negotiations. But we're not going to change the negotiations mid-stream. Our point was simply that Nielsen went in on 12/26 with 40 homes that had DVRs in them that they were measuring. And they now have 160, I think. It should be 700 if they were going to represent an accurate percentage of DVR homes. So they're still so under-represented, it's not meaningful research. But again, my biggest issue is Mike may not have read our position, because if he did, he'd understand that we aren't taking the same line as Magna was."

GE launches "Healthcare Re-Imagined"
GE launched a multi-phase campaign, "Healthcare Re-Imagined," highlights GE's abilities to leverage technological and biological breakthroughs to transform healthcare delivery from treating "late disease" to a focus on "early health" - where prediction, diagnosis, and information management are key to prevention and pre-symptomatic disease detection. TV ads will premiere in the U.S. on the NBC during its coverage of the Winter Olympic Games. Four spots will focus on the benefits of early health and the advances GE has made in early detection. "Welcome to the Earth" provides an introduction to "early health." "Beats" showcases the breakthrough technology of GE's LightSpeed VCT, the only CT scanner that enables physicians to scan the human heart in as few as five beats. "Monster" offers a cinematic fable to communicate how GE's PET/CT technology helps doctors detect heart disease and other life-threatening illnesses earlier - with the potential to help keep monster diseases at bay. And "Power of Sound" highlights GE's commitment to developing advanced ultrasound technologies and addressing important aspects of women's health. In addition to NBC, the ads will also appear on MSNBC, CNBC and USA. Print premieres with an eight-page insert in USA Today and The New York Times on 2/13 and The Wall Street Journal on 2/14. Trade advertising and an integrated global marketing campaign are also planned, as are longer-term trade and global media placements. On 2/14, GE will launch "Picture a Healthy World," an interactive web site (www.ge.com/health) that invites visitors to contribute photos and stories describing what they do to stay healthy. Online to support the site launches globally on 2/13 and 14 with Yahoo! homepage takeovers in Germany, France, the United Kingdom, China, Japan, Hong Kong and the United States.


Media Markets & Money TM
Clear Channel will Confer TN trio to Alt-ernate owner
It won't take forever to close, but it will take Forever to close a deal for a radio triple-play in Jackson TN. Clear Channel will be a little less of a radio giant after sending an AM and two FMs to the Kerby Confer/Donald Alt outfit. The stations are WTJS-AM/WTNV-FM in Jackson and WYNU-FM in nearby Milan TN. The value of the deal is 4.75M cash. It represents a territorial expansion for Forever, despite the fact that the Milan station has a bit of overlap with Forever's WFGE-FM Murray KY. An LMA kicks off 3/1/06.

Is EMF looking to do a double?
Broker John Pierce tells us Contemporary Christian Educational Media Foundation has a 4M deal for KOKF-FM which serves the Oklahoma City market from its city of license Edmond OK. The seller is RDM Broadcasting Enterprises. Although noncommercial EMF does not confine itself to the reserved portion of the FM dial in its many acquisitions, this station is down there at 90.9 mHz. What makes the deal unique is the fact that EMF is already in the market with KYLV-FM, also in the reserved band, and licensed to OKC proper. KOKF is a hands-down winner when it comes to signal strength - - it packs about 20 times the punch of KYLV. Pierce tells us, however, that EMF may break with its pattern of one station per market and hang on to at least a part of KOKF's "Air One" format, which is compatible with EMF's own K-LOVE network.


Washington Media Business Report TM
DBS chipping away at cable, telcos in the wings
Eight hours/11 minutes. That's how long the TV is turned on in the average household. And each member of the household is averaging four hours/32 minutes of personal viewing time, according to the FCC's assessment of video competition for the 12 months from 9/04 through 9/05. During that period, cable saw its MVPD share dwindle from 71.6% to 69.4%, even while the two main satellite competitors combined to increase from 25.1% to 27.7%. Commissioner Jonathan Adelstein made an even starker comparison by looking back to the 2001 study, which had cable at 77% and DBS at only 18%. And salivating just off stage, except for a few limited forays here and there, are the big telephone companies, who hope to in turn take their own great big bite out of the video delivery pie. All three services to remain competitive are looking at enhancing their video service, and adding completely unrelated services, including Internet access. The report also notes that other options, such as DVRs, Internet-delivered video and many others, continue to gain use.

RBR observation: The current trend, under which it is harder and harder to deliver a mass audience, is likely to continue, and it will inevitably force changes in the relationship between entertainment companies and their advertiser clients - - this goes for audio as well as video services. Put on those thinking caps and fasten those seatbelts, ladies and gentlemen. The only prediction you should put stock in right now is that even the near future looks utterly unpredictable.
| Specifics of the FCC report here |


Hollywood Media Business Report TM
American Idol DVD game coming
Screenlife, a pioneer of the DVD game industry, will soon offer music fans and wannabe pop stars the chance to relive the past four seasons of "American Idol" with the launch of the American Idol-All Star Challenge DVD Game in partnership with FremantleMedia. The game hits store shelves in late March, just as the show's fifth season of finalists will be gearing up to battle it out for the victory. The DVD game features real show clips, questions and performance challenges that send players touring around the game board from Auditions to Hollywood to the Finals in a quest for stardom. Along the way, players step into the spotlight as their American Idol knowledge is put to the test with questions like "What group sang 'Sweet Home Alabama' with Bo Bice in Season 4?" and "What was Carrie Underwood's audition city?" Contestants also have the chance to score bonus Performance Stars with the judges by accepting performance challenges.


Monday Morning Makers & Shakers

Transactions: 1/2/06-1/6/06
The first filing week of 2006 breezed into the triple-digit million mark, unfortunately due to a departure in the radio family. A spin-off from the big Raycom acquisition of Liberty also hit the FCC database on the TV side. Relatively low trading volume for the first week of the year therefore yielded a more than respectable dollar total.

1/2/06-1/6/06

Total

Total Deals

8

AMs

5

FMs

8

TVs

1
Value *total subject to rounding
119.262M*
| Complete Charts |
Radio Transactions of the Week
A moment of silence for a partnership ended
| More...
|
TV Transactions of the Week
Morris liberates NC TV from Raycom
| More...
|


Transactions
42M KDEN-TV Denver (Longmont CO) from Longmont Channel 25 Inc. (Charles Ergen, David Drucker, George Flinn) to NBC Telemundo License Co. (Jay Ireland), a subsidiary of NBC-Universal/General Electric Corporation. 1M escrow, 1M loan, balance in cash at closing. Includes non-compete for Hispanic video service, excluding Ergen's interest in EchoStar/Dish Network. Duopoly with KMAS-TV Steamboat Springs, although without terrestrial signal overlap. KDEN-TV is independent on Channel 25; KMAS-TV is Telemundo affiliate on Channel 24. [File date 1/30/06.]

1.1M WKAB-FM Wilkes Barre-Scranton PA (Berwick PA) from 4M Broadcasting Inc. (Robert J. Moisey) to Columbia FM Inc. (Joseph F. Reilly, Nancy L. Reilly). 50K escrow, 750K cash at closing, 300K in non-compete agreements. Combo with WHLM-AM Bloomsburg PA. [File date 1/26/06.]

N/A AM CP Eureka-Arcata CA (Eureka CA) from RAMS I (Joan K. Reynolds) to Starboard Media Foundation INc. (Mark C. Follett). Charitable donation. CP is for 1400 kHz with 1 kw-U, ND. Assignee is non-commercal. [File date 1/26/06.]


Stock Talk
Late rebound misses radio stocks
The broader stock market rebounded late in the session Friday and closed on the up side, despite falling earlier on news of a record trade deficit. The Dow Industrials finished with a gain of 36 points, or 0.3%, at 10,919.

Radio stocks fell as CIBC downgraded several stocks in the sector. The Radio Index dropped 1.206, or 0.7%, to 173.824. Cumulus was hardest hit by the downgrade, falling 4.2%.


Radio Stocks

Here's how stocks fared on Friday

Company Symbol Close Change Company Symbol Close Change

Arbitron

ARB

38.90

+0.08

Hearst-Argyle

HTV

23.87

+0.19

Beasley

BBGI

14.00

+0.35

Interep

IREP

0.30

unch

CBS CI. B CBS

25.46

-0.17

Jeff-Pilot

JP

58.87

+0.66

CBS CI. A CBSa

25.44

-0.18

Journal Comm.

JRN

12.26

+0.15

Citadel CDL
11.61 -0.10

Radio One, Cl. A

ROIA

10.08

-0.13

Clear Channel

CCU

28.78

-0.11

Radio One, Cl. D

ROIAK

10.09

-0.06

Cox Radio

CXR

13.70

-0.16

Regent

RGCI

4.61

-0.04

Cumulus

CMLS

12.16

-0.53

Saga Commun.

SGA

9.95

-0.11

Disney

DIS

26.68

-0.04

Salem Comm.

SALM

14.51

-0.19

Emmis

EMMS

17.55

-0.37

Sirius Sat. Radio

SIRI

5.74

-0.06

Entercom

ETM

28.62

-0.41

Spanish Bcg.

SBSA

5.81

+0.06

Entravision

EVC

7.28

+0.02

Univision

UVN

34.70

-0.20

Fisher

FSCI

42.54

-0.04

Westwood One

WON

14.27

+0.02

Gaylord

GET

45.30

-0.24

XM Sat. Radio

XMSR

25.58

-0.20



Bounceback

Send Us Your OpinionsWe want to
hear from you.

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

Our readers don't always agree...

Dave [Lange], I beg to differ with a portion of what you said regarding Clear Channel's ownership of RCS and stations' concerns (2/9/06 RBR #28). While you are correct, anyone could look at MediaBase or BDS to get a feel for a station's library and how rotational patterns are set, it would most likely take a week or more to get that detailed feel. On the other hand, send me your RCS database and I'll know your station inside out within a couple of hours, particularly if the set-up is as complex as many people create.

Greg Gillispie
Greg Gillispie Consulting




Below the Fold

Ad Business Report
GM Planworks President
On GM's new local TV relationships...

Carat Americas President
Ray Warren clears the air on ultimatum...

Media Markets & Money
Clear Channel will Confer
TN trio to Alt-ernate owner...

Washington Media Business Report
DBS chipping away
At cable, telcos in the wings...


Radio Media Moves

Upped in Boston
Greater Media has promoted Chris Paquin to Director of Sales for its Boston cluster. He had been Station Manager of WBOS-FM.

Heading to Philly
Clear Channel Radio announced the appointment of Manuel V. Rodriguez to the position of Regional Vice President for the Philadelphia Trading Area. He will oversee CC Radio in Philadelphia; Wilmington, DE; Sussex, NJ; and Poughkeepsie, NY. Rodriguez had been Regional VP for the New York Trading area (New England and upstate NY).



Stations for Sale

Houston 50,000 kW AM
New transmitter site
& transmitting equipment
John W. Saunders
(713) 789-4222 or e-mail
[email protected]


More News Headlines

RAC awards
retail advertisers

From top discounters to department stores, the 2006 RACie award recipients impressed the best with their creativity. The NRF's Retail Advertising and Marketing Association (RAMA) hosted its annual RACie (Retail Award for Creativity Innovation and Excellence) Awards Dinner last week where the retail industry's top creative minds were honored. The RACie, one of the retail industry's most sought-after and coveted awards, is given out each year at the Retail Advertising Conference (RAC) to retailers that exhibit true ingenuity and creativity throughout the year in their advertising and marketing campaigns. The Peter Glen Award, which recognizes retailers for cause-related marketing was awarded to The Home Depot. The Home Depot raced to the winners circle with their KaBoom! Racing to Play Program. The program made a lasting impression in the lives of at-risk children who live in NASCAR race communities. In addition, Mike Boylson, Executive Vice President and Chief Marketing Officer, JCPenney, was officially inducted into the Retail Advertising Hall of Fame.


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

Groups still cutting inventory
Even a year after implementing Less is More (LIM), Clear Channel was still cutting inventory in January, reports Harris Nesbitt analyst Lee Westerfield, who was a bit surprised to find CC Radio cutting spot loads 9.8% from a year earlier in the top 10 markets. He then took a closer look at the data and found that the percentage change was less in the second half of January, which made sense since CC Radio had been phasing in the impact of LIM in December 2004 and January 2005.

RBR observation: Reports coming in heavy from front line managers saying pacing is way off and first quarter in trouble. When the Q1 calls come months from now and well into 2nd quarter look for the 'You Know What' to hit the fan and it will not be pretty no Less the Mess.
02/10/06 RBR #29

RBR First
GM share deals to be cancelled
Stations to monitor pod violations as GM Planworks SVP/Local Investment Director Kevin Gallagher made the announcement to all in the Television Business. Reps were called to a meeting and told that GM share deals would all be cancelled from Q2 on and that stations, not buyers, would then monitor pod violations. Said one industry source: "These moves lose GM multiple millions of ad time at a time when they need every dime they can get. In the local community the reps are out celebrating as are the stations."

RBR observation: This is good for radio so read the details
02/10/06 RBR #29

RBR First
CBS Radio may
dump
all RCS systems

It is an RBR First because we certainly voiced the concern after Clear Channel bought RCS last month that this could happen. RBR confirmed through two high-level sources independently at CBS Radio there have been meetings about pulling RCS systems company-wide. Source #2: "It's true. ! If you were running CBS Radio, would you want your number one competitor having inventory on your radio stations?" RBR, through our investigation, has also confirmed that while CBS Radio will honor their current contracts, the source stated, "We will be honoring our contracts, but we aren't going to do business with RCS." In an email response to CBS's issues Philippe Generali, President/CEO RCS wrote: "Confidentiality has been, and will always be the cornerstone of the RCS business. For more than 27 years, radio stations around the world have trusted RCS with their databases, format changes, and music libraries.

RBR observation: This is a hurdle RCS will have to overcome--the image that Clear Channel may have access to clients' proprietary databases. But all should just calm down and breathe into a brown paper bag and not put the cart before the horse. For more see
02/08/06 RBR #27

RBR First
What have we done???

By Jean Pool, Keynote Speaker 4A's '06 EVP/Director N.American Ops. Universal McCann
Just why is it that we're hell bent on irritating the very people that we are trying to sell our products and services to? Clutter is the death of the media. Early Saturday morning call... a telemarketer that instructs me to wait for the next available operator. What are they thinking? Another favorite is my Sunday New York Times stuffed full of inserts that usually end up scattered on my hall floor. Then there is radio... driving along listening to Dr. Laura berating a call-in when you're interrupted by a commercial. Or one hour of Howard Stern's show of 18 commercials ...38 units ran. Geez, that barely gives Howard time to get in the F word. For a reality check read the entire article
02/01/06 RBR #22

Billboard owner VNU
in no rush to sell itself
There's still no indication of the fate of Billboard, Adweek, The Hollywood Reporter and other US media magazines owned by VNU as their parent company mulls whether to accept a buyout bid. VNU confirmed that the head of its Supervisory Board, Aad Jacobs, and VNU's Executive Board met Monday with Eric Knight, who heads the Knight Vinke Asset Management investment group, to hear his views on the possible sale of VNU to a consortium of equity investment funds. VNU says it is continuing to have active talks with the equity funds about a buyout of the company. But while there are lots of talks going on, VNU management appears to be in no hurry to strike a deal.
02/08/06 RBR #27



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