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Volume 24, Issue 118, Jim Carnegie, Editor & Publisher
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Monday Morning June 18th, 2007
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TV News ®
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 DARS wars continue
The proponents of the XM/Sirius merger found an expert to support the case for allowing the transaction to go through in the person of Thomas Hazlett (pictured), who was once the Chief Economist for the FCC. The National Association of Broadcasters, unsurprisingly, takes exception. And a pair of key Congressmen, John Conyers (D-MI) and Steve Chabot (R-OH) wrote a letter that went to both Alberto Gonzales and Kevin Martin asking how this merger is any different than the EchoStar/DirecTV merger shot down in 2002. The economist and the legislators agree on one key point - defining the marketplace is the key to analyzing the transaction. Hazlett argues that if satellite audio and AM-FM were not in competition, then why are they so strongly opposed to the merger? It the combined entities use monopoly status to drive up cost while cutting corners on quality, wouldn't that cut into the subscriber base and ultimately benefit "free" radio? His study says, "Since satellite radio first appeared on the scene, broadcasters consistently attempted to restrain this new service to protect their interests at the expense of market competition." The NAB's response was swift. EVP Dennis Wharton said, "This report defies logic. The study's contention that consumers would benefit from a monopoly merger of the only two satellite radio services is laughable, as evidenced by the fact that Consumers Union and the Consumer Federation of America are opposing the merger." In their letter, Conyers and Chabot reminded Gonzales and Martin that two DARS licenses were given out at the outset to assure competition. Noting the denied TV satellite merger, they ask, "Please explain how approval of this merger would be consistent or inconsistent with the finding in the EchoStar/DirecTV order."
TVBR observation: Broadcasters have been forced to "restrain this new service" to make sure that the two licensees did not encroach on broadcast territory in violation of their charters. That means keeping them away from local content. The satellite licenses were designed to have a national scope, while leaving local content to companies that have local staffing who will actually be around in a time of emergency, and who have some knowledge of local events, tastes, weather, traffic, etc. On top of that, the satcasters required somebody to police them as they played fast and loose with terrestrial repeater siting and receiver specs. We still find it difficult to believe that this proposed merger is going to make it anywhere near the finish line.
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 Time to turn away from
Spanish broadcasting?
The Governor of California was an immigrant. And when he came to the US, he disciplined himself to only rarely use his native German tongue. He recently told the National Association of Hispanic Journalists that Hispanic immigrants should break away from Spanish-language media and also immerse themselves in English. Arnold Schwarzenegger's remarks, as he predicted, were a mortal lock to draw fire from members of the aforementioned Hispanic media. According to MiamiHerald.com, Schwarzenegger said, "You've got to turn off the Spanish television set" and went on to list other Spanish outlets that he felt should be avoided. Staying away from these outlets forces Hispanics to learn English faster, which helps them better function in the English-speaking nation. National Hispanic Media Coalition President/CEO Alex Nogales told MiamiHerald.com, "I'm sitting shaking my head not believing that someone would be so naive and out of it that he would say something like that." He said access to Spanish media was a necessity to being able to function in the US, not an impediment.
TVBR observation: Schwarzenegger's remarks to the contrary, we don't think Spanish-language media is going away any time soon. It is still a growth sector as American businesses strive for a share of the rapidly-expanding Hispanic population. We would expect to see more use of hybrid "Spanglish" formats before the current Spanish-speaking population follows other immigrant blocs before it into the fully-integrated melting pot, and full integration seems to be many years in the future.
Will freedom of speech rein Supreme?
The Supreme Court's newest justice, Samuel Alito, spoke before the National Italian American Foundation last week, and although he pointedly declined to offer any insight into the courts leanings on pending cases, he did make remarks which may have shed light on its tilt nonetheless when it comes to First Amendment cases. Responding to a question, he said, "I'm a very strong believer in the First Amendment and the right of people to speak and write. I would be reluctant to support restrictions on what people could say." The questioner was wondering how far free speech goes on the Internet. Of interest to broadcasters is the challenge of McCain/Feingold Bipartisan Campaign Reform Act provisions affecting issues advertising just prior to an election.
TVBR observation: The big question is how Alito would go if the FCC decides to takes the Second Circuit rebuff of its attempt to punish the utterance of fleeting expletives over the air up to the Supreme Court. Some might expect that the conservative Bush-appointed justice would go along with the FCC's attempt to clean up the air waves, but if he is a die-hard First Amendment fan, his vote may well go the other way. This is something the FCC will have to weigh carefully before considering an appeal.
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 Chalk one up for Huckabee
The media is under constant fire for its coverage of the news, with watchdogs doing studies on a constant basis. Even though television news has gone from one network newscast and two or three local telecasts back in the day to a 24/7 cycle, there are still legions of observers who think there is not enough news available, and that much of what does get covered is trivial. Of course, the watchdogs have a point. There is a war in Iraq, there is a major ongoing debate about climate change and what to do about it, there is an almost daily showdown in progress between the White House and Congress, and there is a presidential campaign already in progress. Many wonder why a legal battle over something as insignificant as a DUI sentence was able to grab a major share of the news hole. One of them is presidential candidate Mike Huckabee (R-AR). Currently residing in the second tier of candidates, he is struggling to break into the front ranks but is finding it hard to get his case into the news and before the electorate. According to the Associated Press, he said, "One of the frustrations is that there is more attention on Britney Spears getting out of a car without underwear than there is about who is going to be the next president." He has figured out a way to get into the spotlight, however, if he can pull it off. "Accompanying Paris Hilton to jail might work."
SWMX announces changes to board
SWMX, a major electronic advertising marketplace for radio and television, announced the confirmation of two new members to the Company's Independent Board of Directors to replace departing members Gary Lee and Bruce Lev. The new members are Bruce Fogel and Edward Karlik. Fogel is Founder, Chairman and CEO of Phone Programs, Inc., a company that produces and markets short duration information and entertainment programs for dissemination via telephone. Fogel also founded and served as CEO of Shadow Traffic, as well as Air Time, Inc., an independent media buying and planning services company. Karlik is founder and CEO of Straightline Communications, Inc., a company founded in 1997 that acquired and manages three television stations in Florida, Rhode Island and Vermont. In addition, since 1997, Karlik has served as a consultant to SBS Broadcasting where he has led the development of commercial television properties in foreign markets, including Switzerland and Hungary.
TVBR observation: With SWMX's COO Bill 'Fig' Figenshu, (06/07/07 RBR #111), leaving the building in two weeks SWMX seems to be attempting to readjust their board with some broadcast experience. TVBR has reached out to CEO Josh Wexler in a number of occasions and so far with not success. TVBR trusts the Wexler will be in contact with us soon and advise us of their their game plan.
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| Wall Street Media Business Report TM |
MG needed fresh TV blood to avoid red ink
 Media General (MG) brought in 75.4M in May, up 2.8% over the results from the same month in 2006. However, the upswing was due to the addition of four new NBC affiliates last summer. Take them out of the equation and the ink was red. The usual culprit, the political off-season, was blamed. Without adding in the new acquisitions, the month was down 7.8%. Despite being the down side of the roller coaster on the television side, publishing was still the drag on the company's economy, decreasing 12.8%. Broadcast, adding in the new stations, rose 31.3%; without them, it dropped by a slight 1.9% margin. A triple low in Tampa was also cited as a particular problem as the Tampa Tribune, WFLA-TV and website TBO.com all experienced difficulties.
TVBR observation: Bottom line and many in TV take this as a lesson of old line not moving to keep up with the new times and we are not talking newspaper St. Pete Times. First, the Tampa Tribune has seen an upper management swinging door more than a slamming screen door in a Florida hurricane. The Trib is so thin that even the birds in a cage don't want it. It boils down to Content and Presentation at the Trib as that is their first of many issues. Their website is not consumer friendly. WFLA is an NBC affiliate and at the mercy of the networks programming but that is only one half of MG's problem as their content, as all TV owners have to take a lesson from Nexstar, - Cut your Retran deals and get your network and local programming HD content on all providers.
TVBR note: Technology is waiting for no one and for TV operators to get the most from their programming this fall they will have to cut their deals and get HD programming to all suppliers. Consumers are buying the HD screens and the outside HD antenna just does not cut it. Consumers are searching more for HD content and if you snooze you will lose. More on this topic later.
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Ad Business Report TM
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 Zucker: NBCU to get
3.9 billion in upfront
NBC Universal CEO Jeff Zucker told analysts last week he expects NBCU's broadcast and cable networks to score 3.9 billion in upfront revenue, about flat from last year. Zucker said that while NBC's primetime share of adults 18-49 has dropped to a 2.4 rtg. from 3.7 three years ago, the free-fall has been stopped. Zucker's presentation was held just a day after the struck a 1 billion upfront deal with Group M (6/14/07 TVBR #116). Reportedly, the deal includes 4-5% CPM increases for NBC-TV primetime programming, and CPM increases of 7% for Bravo and 8% for USA and Sci-Fi Channel. Zucker expects to sell some 75% of the broadcast inventory in the upfront. Cable is expected to sell off 50% of its ad time. NBCU highlighted its coverage of 2008 Olympiad, which will be held next summer in Beijing. Dick Ebersol, Chairman of NBC Sports & Olympics, said 55 to 60% of the Games will be seen live in primetime. NBCU will carry 2,600 hours of Olympic competition, spreading its coverage across the broadcast net, USA Network (and its HD simulcast), CNBC, MSNBC, Telemundo and Universal HD.
BBDO NY scores 200 million Best Buy account
Buy announced today that it has chosen BBDO New York as its advertising agency for the Best Buy brand. The selection of BBDO follows a multi-month-long review for the Best Buy brand account, which was previously handled internally. BBDO's scope of work will include planning, strategy & execution and media and consumer connection planning. Estimated billings, as measured by media spending, will be 170 to 200 million. The firm will begin work immediately on internally-focused projects supporting Best Buy's brand position. "We're psyched and humbled by Best Buy's confidence in us," said David Lubars, chairman and chief creative officer, BBDO North America. "We're looking forward to doing historical things together." In addition, Best Buy will expand its relationship with Crispin, Porter + Bogusky beyond Geek Squad to partner on business development and in-store activation opportunities for the Best Buy brand.
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| Media Markets & Money TM |
Twin Cities mogul wants more radio, TV
We have some additional color to add to the tale of the 28M acquisition of KTTB-FM in Minneapolis-St. Paul. Steve Woodbury will run the new company, Northern Lights Broadcasting, and now we know who he'll be running it for. That individual would be Carl Pohlad, owner of MLB's Minnesota Twins. As GM, Woodbury knew the station would be coming on the market and was able to convince Pohlad to be the one to invest in it, according to WCCO-TV. Pohlad has also instructed Woodbury to be on the look-out for more radio stations, and possibly for television stations as well. KTTB-FM, a standalone, was a logical liquidation target for Radio One, but nonetheless Woodbury says it is very profitable and plans no changes in either the staffing or format. Star Media Group's Peter Handy had a hand in the transaction on behalf of the seller.
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| Washington Media Business Report TM |
 All children's issues, all the time?
The Kaiser Foundation is hosting a number of luminaries today to discuss its new report, "Parents, Children & The Media: A Kaiser Family Foundation Survey." It'll feature representatives from Fox Interactive Media, TV Watch, Parents Television Council and the University of Mexico School of Medicine. Now the Federal Trade Commission is getting into the act. It's hosting its own forum, scheduled for next month on 7/18/07, entitled "Weighing In: A Check-Up on Marketing, Self-Regulation, and Childhood Obesity." Here's a run-down of the agenda: "Food industry, media representatives, and self-regulatory groups will report on progress implementing initiatives that respond to the recommendations in the 2006 report. The forum also will provide an opportunity for consumer groups, advertising specialists, and other key experts to review the progress of actions undertaken to date, and to consider what steps should be taken next. Other speakers will discuss public education efforts addressing healthy eating and physical activity and will present new research on the amount and types of advertising children see on television."
TVBR observation: Protecting the children is always a great way for those inside the Beltway to score easy lay-ups and burnish their reputations. It's been a particularly active year with children's DTV requirement, obesity and violence all getting a lot of attention. Kellogg just put itself ahead of the curve last week, announcing a major initiative to curb its advertisements of nutritionally-suspect food items to the preteen set. All we know is that it is best to the word "voluntary" in front of the word "initiative," rather than the potential replacement word: "mandated."
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| Entertainment Media Business Report TM |
 Lehman: TV sports rights update
In this week's "Thoughts To Entertain," Lehman Global Equity Research took a closer look at media company ownership of the broadcast rights to the three largest professional sports leagues in the U.S.: the National Football League, the National Basketball Association, and Major League Baseball. They believe the broadcast and cable networks and the sports leagues are all searching for incremental, alternative distribution revenues, best demonstrated by the launching of cable networks by each of the three major sports leagues. These new networks are competing directly with the leagues' traditional broadcast and cable network partners. Lehman says these new sports league-focused networks may impact the television ratings of the games already broadcast on network and cable television, as the audience is diluted across an increased number of broadcasts. This makes the control of alternative distribution methods for sports programming the most important issue for the leagues and the media companies, as aggregating the total sports audience becomes the key to revenue growth, rather than game-by-game viewership. Season-to-date, total Big Four Network ratings are down 6.7% y/y in Total HH ratings and 10.7% in A18-49. CBS won for Total Households, while FOX won across all the remaining demographics. Year-to-date, CBS remains the top network in Total HH and A25-54, while FOX is in the lead for A18-49 and A18-34. NBC remains down y/y in all demographics. ABC continues to see low-teen y/y declines for the year. The total box office was down 11.8% this past weekend vs. 2006, facing tough comps from the 60 million opening of Cars and the 20 million second weekend of The Break-Up. Warner Bros.' Oceans 13 was the top film this past weekend, earning 36 million in its opening weekend. YTD in cable Networks performance against target demographics, Discovery Communications is up 6.7%, News Corp. is up 4.6%, Disney is up 2.5%, Time Warner is down 4.2% and Viacom is down 5.9%. General entertainment networks are seeing negative growth rates, while specialty content networks are trending higher YTD.
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| Internet Media Business Report TM |
Retrans deal with Verizon FiOS
Nexstar Broadcasting Group has reached a multi-year agreement with Verizon for retransmission services through Verizon's fiber-optic powered FiOS TV service. The deal gives Verizon the non-exclusive right to distribute Nexstar's locally produced content, including market-leading local newscasts, and to carry both the analog and digital, including HD, signals of all Nexstar stations located within FiOS TV markets. Nexstar in 2/06 announced successful retransmission negotiations with approximately 150 cable operators as well as with both direct broadcast satellite providers, overbuilders (secondary cable providers) and wireless cable providers in its markets. Under the agreement, Verizon will carry the FOX affiliate (WFFT) in Fort Wayne, Indiana, a new FiOS TV market that launches this summer. As of 3/31, Verizon FiOS TV was available to 3.1 million households in parts of 10 states: California, Delaware, Florida, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, Texas and Virginia.
TVBR observation: Reminder that Nexstar is in play and this deal only helps.
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| Ratings & Research |
 Sporting Goods shoppers:
Households with kids driving traffic
According to a new National Report from The Media Audit, presence of children and household size are determining demographic factors for frequently shopping a sporting goods store. Among all U.S. adults who shop a sporting goods store in the typical month, 53.4% have children living at home, making households with kids 21% more likely than the average adult to frequently shop a sporting goods store. Also, households with five or more persons are 20% more likely than the average adult to frequently shop a sporting goods store. Nationally, 28% or more than 40 million adults shop a sporting goods store in the typical month, up from 26.8% a year earlier. Among the top U.S. markets for sporting goods shoppers are Spokane, Washington (40.1% shop a sporting goods store in the typical month), followed by Boise, Idaho (37.5%), Tulsa, Oklahoma (36.9%), Salt Lake City, Utah (36.7%), and San Antonio, Texas (35.2%). The study further reveals that sporting goods shoppers are most likely to be heavy users of outdoor advertising and the internet. Among sporting goods shoppers, 47.3% drive more than 200 miles in the typical week, making them heavy outdoor users, and 48.4% spend 430 minutes or more online in a typical week, making them heavy internet users. According to the 88-market report, sporting goods store shoppers are also among the more affluent. The average adult who shops a sporting goods store in a typical month earns 80,353 in household income, compared to 65,290 for the average U.S. adult. 72.5% of frequent sporting goods shoppers are professional basketball fans, followed by 63.9% who follow professional baseball and 51.5% who follow professional football.
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| Monday Morning Makers & Shakers |
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Transactions: 4/30/07-5/4/07
After just about the entire trading community pulled a no-show last week, there was finally some action this time. Most of it was thanks to Clear Channel and its 11-market, 52-station, 139M spin to George Laughlin and GAP Broadcasting. Three Georgia television stations changed hands, and a couple of small radio transactions rounded out the week.
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Total
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Total Deals
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7
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AMs
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14
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FMs
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42
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TVs
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3
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| Value |
186.873M
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| Complete Charts |
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Radio Transactions of the Week
Filling the GAP in trading
| More... |
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TV Transactions of the Week
Double double in Savannah
| More... |
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| Transactions |
2.6B WPXN-TV New York NY (Ch. 31); KPXN-TV Los Angeles CA (San Bernardino CA, Ch. 38); WCPX-TV Chicago IL (Ch. 38); WPPX-TV Philadephia PA (Wilmington DE, Ch. 61); WBPX-TV, WDPX-TV & WPXG-TV Boston MA (Boston Ch. 21, Vineyard Haven MA Ch. 58, Concord NH, Ch. 68); KKPX-TV San Francisco-Oakland-San Jose CA (San Jose CA, Ch. 65); KPXD-TV Dallas-Ft. Worth (Arlington TX, Ch. 7); WPXW-TV & WWPX-TV Washington DC (Manassas VA, Ch. 66, Martinsburg WV, Ch. 60);
| Read More... |
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| Stock Talk |
Winners take the cake
Television stocks had a healthy Friday, with some 75% of the stocks being up. On the down side, Media General (see related story) took a hit of 95 cents; News Corp. was down 24 cents.
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| Stocks |
Here's how stocks fared on Friday
| Company |
Symbol |
Close |
Change |
Company |
Symbol |
Close |
Change |
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Acme
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ACME
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4.91
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+0.02
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Lincoln Natl.
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LNC
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72.25
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+0.01
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Belo
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BLC
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21.83
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-0.14
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LIN TV
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TVL
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19.87
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+0.47
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| CBS CI. B |
CBS |
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33.23
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+0.12
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McGraw-Hill
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MHP
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71.10
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+1.19
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| CBS CI. A |
CBSa |
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33.20
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+0.10
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Media General
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MEG
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33.88
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-0.95
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Clear Channel
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CCU
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38.34
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-0.11
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Meredith
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MDP
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61.89
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-0.05
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Disney
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DIS
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34.45
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+0.66
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News Corp.
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NWS
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23.95
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-0.24
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Emmis
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EMMS
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9.61
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-0.01
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Nexstar
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NXST
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13.35
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+0.25
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Entravision
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EVC
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10.60
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+0.10
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Ion Media
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ION
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1.44
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-0.02
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| Equity Media |
EMDA |
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4.20 |
unch |
Saga Commun.
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SGA
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10.02
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+0.02
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Fisher
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FSCI
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51.88
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+0.70
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SBS
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SBSA
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4.44
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+0.07
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Gannett
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GCI
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57.74
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-0.04
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Scripps
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SSP
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45.73
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+0.48
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Gen. Electric
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GE
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38.10
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+0.30
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Sinclair
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SBGI
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15.11
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+0.38
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| Google |
GOOG |
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505.89
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+3.05
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SWMX
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SWMX
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0.12
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-0.02
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Gray
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GTN
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9.52
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+0.09
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Time Warner
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TWX
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20.90
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+0.03
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Gray, C1. A
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GTNa
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9.50
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-0.20
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Tribune
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TRB
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30.45
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+0.24
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Hearst-Argyle
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HTV
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24.91
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+0.03
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Wash. Post
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WPO
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773.03
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+1.03
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Journal Comm.
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JRN
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13.70
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+0.14
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Young
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YBTVA
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3.64
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-0.07
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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 tvnews@rbr.com
Is the age old broadcast/music marriage in need of counseling? Here's one opinion:
 I wonder if the artists who used to thank "radio" at awards shows for all their success selling records and getting famous will no longer find a reason to thank radio? I wonder if radio should charge artists for "airplay" time for the privilege of introducing their product to consumers? Fair is fair. We charge you what we feel entitled to, and you charge us what you feel you are entitled to. I think we've gone full circle now, back to where we were when we started and have been for decades, recognizing the mutually beneficial relationship we provide for each other.
Dennis Anderson
President, Anderson Radio Broadcasting Inc.
Montana
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Below the Fold
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Ad Business Report
Zucker: NBCU to get 3.9 billion
In upfront but nothing to yell about as it is Flat from last year and Flat is Flat...
Best Buy account
Has chosen BBDO NYC as its advertising agency...
Media Markets & Money
Top Twin backs Twin Cities buy
We have some additional color to add to the tale of the 28M deal of...
Entertainment Media
Business Report
Lehman Global Equity Research
"Thoughts To Entertain," a closer look at media company ownership...
Ratings & Research
Sporting Goods shoppers:
Households with kids driving traffic...
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Stations for Sale
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 Market your Stations For Sale
in our daily epapers.
Contact
June Barnes
jbarnes@rbr.com
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More News Headlines
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As per usual, talkers follow the news
The top two news items for the week of 6/3-8/07, according to the Project for Excellence in Journalism, were the 2008 campaign (15%) and immigration (9%). Talkers followed their usual pattern to a tee, taking the same stories and amplifying them to 26% and 19% respectively. In fact, the focus on immigration was so intense and routinely negative that PEJ speculates talkers may have played a role in derailing proposed immigration legislation. Talkers also followed and amplified two jailhouse stories, upgrading the Scooter Libby saga from 5% to 9%, and the Paris Hilton saga from 4% to 9%. The #3 news story, US/Russia relations (7%), was almost skipped over by the talkers however, who gave it a scant 1% of their attention and barely got it onto the very bottom of the top 10 list. Like news directors, talkers also largely gave Iraq the week off.
June Executive Briefing
According to BIGresearch's June Executive Briefing, with a shaky housing market, pump prices draining consumers' wallets, and the war in Iraq, consumers have plenty to be concerned about in June...43.9% are confident/very confident in chances for a strong economy, down almost a point from May (44.7%), though an encouraging 8 point gain from June '06 (35.9%). This month's reading is still down slightly from the pre-Katrina level recorded in June '05 (46.3%). The U.S. will lose a powerful ally in the war on terror when Tony Blair steps down this month, and consumers might be feeling this impact...almost one in five (19.6%) consumers continue to worry about political and national security issues, up three points from last month (16.6%) and almost half a point from '06 (19.2%). Declining confidence and record high pump prices in late May appear to have affected consumers' spending psyche...40.3% indicate in June that they've become more practical in their purchases, up from 36.7% last month and 39.9% in '06. Those focused on needs over wants on the rise as well...almost half (47.0%) are prioritizing spending based on needs, up from 44.8% in May, but slightly below last year's 49.8%.
Bob Barker endorses Rosie for TPIR
Life after "The View": Bob Barker has endorsed his friend Rosie O'Donnell as a possible successor on "The Price Is Right," although the newly retired host isn't sure CBS wants a woman to take over the game show. According to an AP story: "I believe they're going to have a meeting with Rosie," Barker said backstage Friday night at the Daytime Emmy Awards, where he won his 19th trophy. "She knows the show. There's no doubt in my mind she could do the show. Now, whether they want a lady host, I don't know. I've never heard that discussed. As far as I know, they've only auditioned men." Other possible replacement hosts, according to the story, include Todd Newton of the E! network, Mark Steines of "Entertainment Tonight," George Hamilton and John O'Hurley.
Consumer sentiment drops to 83.7 in early June
U.S. consumer sentiment eased in early June, according to a monthly survey released Friday by Reuters and the University of Michigan. The consumer sentiment index fell to 83.7 from 88.3 in May. Economists were expecting the index to fall to 87.0, reported MarketWatch. The current conditions index dropped to 100.2 from 105.1. The expectations index fell to 73.0 from 77.6. Inflation expectations over the next five years fell to 3% from 3.1%, while inflation expectations for the next year rose to 3.5% from 3.3%.
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RBR - Radio News
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Radio One straightens out its books
Urban specialist Radio One, which also operates CATV's TV One, has conducted an extensive research effort culminating in a restatement of its financial reporting for year-end 2002 and for each year through 2005. The change concerned net revenue, and was tied to stock-based compensation packages. It is believed this will solidify their standing on with Nasdaq. In a 10K filing with the SEC, Radio One said that "...stock-based compensation charges, including the tax effect and other adjustments, decreased net income by approximately 9M for the years ended December 31, 1999 through December 31, 2005. For the year ended December 31, 2006, the stock-based compensation charges, including the tax effect and other adjustments related to the restatement increased the net loss by 246K." The company used law firm Covington & Burling to investigate its stock option practices and a number of tech companies to retrieve electronic data from computer and backup storage systems.
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TVBR Radar 2007
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Television News you won't read any where else. TVBR--First, Accurate, and Independently Owned.
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Primo properties on the block
There may have already been a lot of television station inventory up for sale, but the nine stations that Rupert Murdoch has decided to divest from the News Corporation portfolio are definitely primo and will attract lots of attention from private equity groups seeking a strong base for a new group - or possibly expansion of an existing one. Based on 2006 revenue estimates from BIAfn, the nine stations, all carrying the Fox network, raked in 347.8 million. We know that the Fox O&O group generally has strong broadcast cash flow margins, so if we figure 45% margins, that's 156.5 million in BCF. If we assume the bidding starts around 12-13 times, that's a total price tag that might push past two billion.
TVBR observation: News Corporation is not selling stations anywhere that it has duopolies, which explains why market #19, Orlando, is not in the divestiture group. We would not be surprised, though, to see the company entertain bids separately for its two smallest Fox O&Os in Austin, TX (#52) and Gainesville, FL (#162). This might not be an optimal time, though, to try and sell the MyNetworkTV standalone in Baltimore (#24). The other nine MyNet O&Os are all in duops with Fox O&Os. As for the nine primo properties that Allen & Co. is now shopping, we will be surprised if they are not sold as a group - a Very Impressive Group. Take a look at the shopping list compiled by TVBR.
06/15/07 TVBR #117
Musicians bite the hand that promotes them
There's a new coalition on the block - the musicFIRST Coalition, and it's looking for cash. Comprised of performing and recording musicians, it wants to receive compensation whenever one of their performances is played over the air. AFTRA agrees, NAB does not.
RBR observation: What nobody seems to be talking about is that the music industry was caught completely flat-footed by the internet revolution and is still struggling to come up with a business model to get back its former profitability. In its search quest, it's trying to muscle cash out any source it can. But in the final analysis, NAB is correct. Musicians can't rail against broadcasters for forcing them into prolonged obscurity by not airing their work on the one hand, and then rail against broadcasters for failure to pay up when they are on the air. Radio and music have long had a symbiotic relationship which is beneficial, even vital, to both. Radio needs the content, and musicians need the exposure. That's a fair trade.
06/15/07 RBR #117
Suit filed over Ion buyout
As we had predicted, disgruntled preferred shareholders have sued over the terms they've been offered in the reorganization of Ion Media Networks. Citadel Investment Group has already bought out most common shareholders under its deal with NBC Universal to take Ion private, but all along there has been more resistance from the preferred holders.
TVBR observation: The exchange deadline isn't until July 10th, but with AIG and some other former major holders out of the picture, it seems certain that most of the preferred shares (absent a court order blocking the exchange) will be submitted for conversion to the new bonds which will move them up in the capital structure at Ion, albeit at a lower face value. A lot of the objections to the Citadel/NBC Uni deal seem to revolve around the claim that Ion's board of directors breached its fiduciary duty to shareholders by not pursuing a buyout offer from EchoStar. We understand, though, that Charlie Ergen never made a formal offer and that talks about a buyout bid for two billion plus never got beyond the preliminary stages.
06/15/07 TVBR #117
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