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Volume 23, Issue 249, Jim Carnegie, Editor & Publisher

Wednesday Morning December 27th, 2006

TV News ®

DirecTV: Malone takes over
in billionaire swap-meet
This deal had been percolating for so long that the only way Wall Street would have been surprised is if it had not gotten done. In the end, the terms to resolve the long standoff between News Corporation CEO Rupert Murdoch and Liberty Media Chairman John Malone were right in line with what we spelled out earlier this month (12/8/06 TVBR #238). Liberty will exchange its entire 16.3% economic stake (324.6 million Class A and 188 million Class B shares) in News Corporation for a 38.4% stake (470.4 million shares) in The DirecTV Group, along with three Regional Sports Networks (FSN Northwest, FSN Pittsburgh and FSN Rocky Mountain) plus 550 million of cash, subject to a working capital adjustment. Having removed any threat of a hostile takeover or breakup bid from what had been its largest outside shareholder, News Corporation said it planned to eliminate its poison pill anti-takeover defense and drop its staggered board terms, which also made it difficult to mount a bid to take control of the board of directors. As far as DirecTV is concerned, speculation is now turning to whether Malone will try to buy out other shareholders and make it a 100% Liberty Media holding, or try to merge it with Charlie Ergen's EchoStar, despite the regulatory hurdles such a deal would face, not to mention condemnations from Capitol Hill.

TVBR observation: Early on there had been talk that Malone might take some of the smaller market Fox O&O group TV stations, which combined with the DirecTV stake would have been sufficient to get the non-cash portion of the 11 billion bucks swap over the hurdle to make it essentially tax-free for Liberty. Malone is known for going to great lengths to avoid having to pay the IRS when he does a deal. In the end, however, it was the regional sports nets that were used to fill that gap. So, we can begin speculating once again on whether News Corp./Fox will put some of its smaller O&Os on the market, as NBC did this past year. Murdoch came close to a deal to sell those smaller stations to Emmis a few years back. After failing in that effort to greatly expand his TV group, Jeff Smulyan eventually decided to get Emmis out of the television business, so he would not be a bidder if there is a new go-round.

Former CBS President
Frank Stanton passes
He was the last of his generation of radio and television pioneers. Now Frank Stanton has passed on as well, dying Sunday (12/24) at age 98. "Like the CBS Eye logo that he unveiled in 1951, Frank Stanton was an American icon, recognized and respected around the world," said CBS Corporation President and CEO Les Moonves of the man who had been named CBS President in 1946 by network founder William S. Paley. Known for his unwavering commitment to CBS News, Stanton kept CBS News on the air for four straight days in 1963 without commercial interruption following the assassination of President John F. Kennedy. In 1971, he risked going to jail to keep CBS documentary notes and "out-takes" from congressional scrutiny. Hailed repeatedly as an ardent defender of the First Amendment, Stanton received five Peabody Awards over the course of his career at CBS, which lasted from 1935 until his retirement in 1973. In a statement sent to RBR/TVBR yesterday, former CBS anchor Dan Rather had praise for Stanton: "Frank Stanton was an outstanding champion of First Amendment press freedom. He encouraged aggressive, independent reporting, backed it, fought for it, and stood strongly behind his news division and its reporters - especially when the heat was on and controversy swirled. This was particularly true in the latter part of his tenure at CBS. In so doing, Frank Stanton became a prime example of the fact that great journalism begins with owners and operators who have guts and a deep commitment to public service." Stanton joined CBS after receiving a PhD from Ohio State, where he had done pioneering research into radio listening habits. He joined the company as part of a two-person research department and three years later was heading a research staff of 100. When he became president of the entire company in 1946, having passed on an opportunity to join George Gallup and Elmo Roper in launching an opinion research company, Stanton reorganized CBS into separate division for radio, television and its technology laboratories. He later led the diversification expansion into publishing, producing Broadway plays and movies and owning the New York Yankees.

Speak now or forever hold your peace
Or come get a piece. We're talking about the wedding of Thomas H. Lee Equity Fund VI L.P. and Bain Capital (CC) IX LP, the grooms, and their lovely bride, Clear Channel Communications Inc. Given the size of the transaction, the FCC has put the matter before the public for comment. According to the Commission's interpretation of the parameters of the deal, 1,172 full power radio stations are on the table along with 35 full-power television stations. The surviving entity will continue to be known as Clear Channel Communications Inc. It'll be treated as an ex parte proceeding on grounds that it "involves broad public policy issues." Comments or petitions are due by 1/19/07, responses are due 2/1/07 and responses to responses are due 2/13/07.

TVBR observation: There is a class of frequent filer that is willing to bring to the FCC's attention grievous matters involving Clear Channel simply because Clear Channel is, well, Clear Channel. Generally, the giant is considered to be too gigantic. This time, the odds are that many if not most of them will hold their fire, since so much of the station inventory involved in this transaction is going right back on the shelf for resale. If the ultimate goal is to shrink Clear Channel, allowing this part of the deal to go through is the route to that goal.

Janet Jackson flash fine
defended by FCC
"CBS chose to do nothing," the FCC said Friday in a federal appeals court filing which contended that CBS had ample warning before Janet Jackson bared her breast during the 2004 Super Bowl halftime show. The Commission told the US 3rd Circuit Court of Appeals in Philadelphia that its 550K fine for indecency should stand because the broadcast by CBS was willful. As evidence, it cites a statement from an unnamed choreographer quoted three days before the event that the Jackson performance would include "some shocking moments." That, the FCC insists, should have alerted CBS officials that Jackson and fellow performer Justin Timberlake were preparing to depart from the rehearsed script. CBS has insisted that its management had no way of knowing that the two singers were planning the breast exposure on live TV.

TVBR observation: It is a long stretch from the idea that something "shocking" was in the works to a warning that something indecent and/or illegal was being planned. How is it reasonable for CBS to have expected that two experienced professional entertainers would conspire to do something so unprofessional on live television? The oral arguments earlier this month before the US 2nd Circuit Court of Appeals in New York demonstrated just how arbitrary and inconsistent the FCC has been in its indecency definition and enforcement. No doubt the growing court record in this case before the Philadelphia appeals panel will only add to the evidence of utter confusion at the FCC which has made it impossible for broadcasters to know what standard might be applied on any given day to any particular broadcast. We will all be better off when the court rulings are handed down and the Commission is forced to start obeying the law.

DC Circuit opens BCRA loophole
Candidates are one thing. Public policy is another. And according to the DC Circuit Court, organizations seeking to influence policy cannot be barred from doing so by the Bipartisan Campaign Reform Act (BCRA), often known as McCain-Feingold, even if they mention a candidate currently on the ballot. The case was brought before the court by Wisconsin Right to Life (WRTL), represented by attorney James Bopp. Corporations, unions and other policy groups benefit from the ruling. The ruling was a split decision, with Judges Richard J. Leon and David B. Sentelle carrying the day 2-1 over partially dissenting Richard W. Roberts. The case heads automatically to the Supreme Court for further review. Fred Wertheimer of watchdog Democracy 21 noted that the ruling "...is narrowly limited to the three specific ads at issue in the case," and that WRTL's efforts to get a broader ruling in its favor have thus far been rejected. Wertheimer said the group wants a "grassroots lobbying" exception. He opined that the ads, run in 2004, seemed clearly aimed at assisting in the defeat of incumbent Sen. Russ Feingold (D-WI) and were exactly the sort of political communications BCRA intended to restrict. He also thinks the restrictions pass constitutional muster.

TVBR observation: The Federal Election Commission has just come down on both 527 and 501(c) organizations, belatedly in the minds of some, for impersonating non-profit issue organizations and behaving as political action committees. So while some of those organizations are getting ready to pay substantial fines, the DC Circuit is giving them an avenue to spend their money anyway. Campaign finance is the kind of mess where you get a knot out one place and another one forms somewhere else. Luckily, to the best of our knowledge, broadcasters are not expected to be umpires or referees as to which ads are permissible and which are not. Our advice is to be careful - but in a situation where you can get in as much trouble for refusing an ad as you can for accepting one, we'd accept anything that appears legit, and leave the aftermath to the regulators and the judges.

A legal eagle eye view of city of license changes
Previously we gave you a tech check on the new FCC rules downgrading city of license changes from a rulemaking to a minor modification. Are the rules new and improved or not? Broadcast engineer Frank McCoy of American Media Services found some unwelcome changes (12/7/06 TVBR #237). And at least one of them is confirmed by attorney John Garziglia of Womble Carlyle Sandridge & Rice PLLC. Here is his take on the new rules. As usual, the law firm cautions against using the opinions stated here for anything other than general informational purposes.
| Legal eagle holds forth here |

Wall Street Media Business Report TM

Disney adopts majority voting
As the company which sparked the move toward requiring directors to receive a majority of shareholder votes to retain their seats, The Walt Disney Company has now joined the movement and amended its bylaws to require a majority vote. Hereafter, in an uncontested vote, an incumbent director who fails to receive over 50% of the votes cast by shareholders must submit a letter of resignation which fellow board members must consider promptly. Disney noted that its board adopted a majority vote policy in 2005, although it has only now been written into the corporate bylaws.

TVBR observation: Although it was the shareholder rebellion against Michael Eisner which ignited the movement to require majority voting in the election of directors of public corporations, we would note that Eisner did receive a majority of the votes cast, 57%, at the contentious 2004 Disney shareholders meeting. The 43% rejection was unprecedented for major public corporations and eventually led to Eisner's early retirement. So, while a majority vote provision is a prudent move for good corporate governance, it may have little real world significance.

Ad Business Report TM

Hey big spender - who's the biggest?
Among the year-end Top 10 lists put out by Nielsen from its various media tracking units is the ranking of the biggest advertisers of 2006, as tracked by Nielsen Monitor-Plus. Far and away the biggest single buyer of traditional media (radio, TV, newspapers, magazines and outdoor) in the US is Procter & Gamble. Although General Motors reduced its spending by nearly 16% from 2005, it still ranked #2.

Click for larger version

TVBR observation: These 10 may be big, but they still add up to less than 15 billion out of a total ad spend of nearly 300 billion. That means there are lots and lots of much smaller accounts out there at the national, regional and local level who make up the bulk of advertising on TV and all other media. Don't wait for the political windfall to come back in 2008! This year, 2007, is the time to pitch the effectiveness of local television as advertisers are finally questioning whether the most expensive medium in nearly every market, the daily newspaper, is really worth the cost, particularly with readership dropping rapidly. Don't let online startups claim all of the market share moving away from print. Get out there and tell advertisers how TV can reach those folks who no longer see the need to kill trees.

Media Markets & Money TM

Religious groups accept Mid-South spins
Noncommercial Mid-South Public Communications Foundation has two FMs in each of the Memphis TN and Jackson TN markets (plus a TV and a TV CP in Memphis), and has decided to pare down to one FM in each. American Family Association is fielding the Memphis station. It'll get WKNA-FM, licensed across the border in Senatobia MS, for 2M. M-SPCF retains WKNO-FM-TV and its CP. In the Jackson market, Educational Media Foundation will pick up WKNQ-FM for 825K, while the seller retains WKNP-FM. Both stations being sold are in the reserved band.

Washington Media Business Report TM

Hill Dems already
prepping for 2008
Victorious Democrats have not taken their seats in the 110th Congress yet, and are already laying the foundations for the next campaign, particularly in the case of 12 rookies who won narrow victories in what has widely been considered to be Republican turf. Veteran legislators are coaching them on a wide variety of techniques to build political capital well in advance of November 2008. According to the New York Times, the program is known as the "incumbent retention program." Members of the club are getting committee assignments tailored to their home districts (and are said to be getting positive ink in the hometown press already), their names are going to be attached to prominent legislation as co-sponsors, and their being coached in techniques to maintain a steady and consistent media presence back home. And, oh yeah - they're being coached to start building a warchest of at least 1M right now.

TVBR observation: And you can bet that over on the other side of the aisle, Republicans are acutely aware of the situation in these districts and are making plans of their own to take them back. It will be incumbent upon broadcasters in these districts to make sure their cash registers are in good working order.

Entertainment Media Business Report TM

A Star is reborn
In her first major TV project since parting ways with ABC's "The View," Star Jones Reynolds is appearing this week on TV One. "The Star Jones Reynolds Report" aired last night at 10 pm ET and will be repeated tomorrow night at the same time. The special covers the events that had the biggest impact on the lives of African Americans, from police shootings to Hurricane Katrina to the emergence of mega churches to the adoption of African babies by celebrities. The special also honors beloved African-American icons who have passed away.

New Year's Eve gets Ugly
Disney is using the ABC Family cable channel to boost viewer interest in its new hit comedy on ABC Television. An "Ugly Betty" marathon is on tap for December 31st, with repeat episodes running back-to-back from 9 am to 7 pm ET/PT. The 10 episode sequence begins with the pilot, where Betty, played by America Ferrara, is hired by Mode fashion magazine. The marathon will help kick off the ABC's Be Ugly 07 campaign, defined as "a pro-social movement that asks America to be real, be smart, be passionate and be true to yourself, Be Ugly, like Ugly Betty in 2007." The campaign website is BeUgly07.com

Internet Media Business Report TM

Earthlink pursues free WiFi model in Big Easy
Before Earthlink even began officially offering a free link to the Internet in New Orleans, 1K users a day were logging on, according to the Times Picayune. Earthlink and the city have now officially cut the ribbon on the system which provides coverage of 20 square miles and can handle up to 50K users a day. (The ability of wireless cards to seek out and link to whatever's available accounted for the earlybirds, who benefited from access during system testing.) The service will be provided free "as long as the city rebuilds." It's said to be faster than a phone line but not as fast as other options. Earthlink is hoping to make good its investment by collecting charges from those willing to pay for higher-grade service that it will piggy-back onto the free system.

Monday Morning Makers & Shakers

Transactions: 11/6/06-11/10/06
This week's transaction value not only returned to triple-digit million territory after a week off, it almost precisely matched the two-week prior total, missing by less than 400K. And like that week, almost all of the value came from one contract, LIN's sale of its Puerto Rico television stations to InterMedia. 10 radio agreements kicked in only another 12M between them.

11/6/06-11/10/06	Total
Total Deals	11
AMs	9
FMs	7
TVs	7
Value	142.225M

| Complete Charts |

Radio Transactions of the Week
Staton on both ends of GA deal
| More... |

TV Transactions of the Week
InterMedia buys into the Caribbean
| More... |

Stock Talk

Post-Christmas gains
Santa was apparently good to Wall Street traders this year. They came back to work on Tuesday and pushed stock prices higher, encouraged by lower oil prices. The Dow Industrials rose 64 points, or 0.5%, to 12,407.

TV stocks went along for the ride, as retailers enjoyed a post-holiday surge in business. Fisher led the way, up 3%. Gray Television saw its common rise 2.6% and its Class A stock up 2.5%.

Stocks

**Here's how stocks fared on Tuesday**
Company	Symbol	Close		Change	Company	Symbol	Close		Change
Acme	ACME		5.05	-0.01	LIN TV	TVL		10.00	+0.12
Belo	BLC		18.37	+0.28	McGraw-Hill	MHP		68.13	-0.10
CBS CI. B	CBS		31.41	+0.22	Media General	MEG		37.60	+0.82
CBS CI. A	CBSa		31.43	+0.16	Meredith	MDP		55.99	+0.01
Clear Channel	CCU		35.66	+0.13	News Corp.	NWS		22.26	-0.14
Disney	DIS		34.53	+0.37	Nexstar	NXST		4.60	-0.10
Emmis	EMMS		8.06	-0.07	NY Times	NYT		24.02	+0.13
Entravision	EVC		8.26	+0.12	Ion Media	ION		0.50	-0.07
Fisher	FSCI		44.20	+1.30	Saga Commun.	SGA		9.61	-0.03
Gannett	GCI		60.26	+0.56	SBS	SBSA		4.31	+0.09
Gen. Electric	GE		37.71	+0.14	Scripps	SSP		49.61	+0.38
Granite	GBTVK		0.09	+0.01	Sinclair	SBGI		10.91	+0.14
Gray	GTN		7.23	+0.18	Time Warner	TWX		22.22	+0.14
Gray, C1. A	GTNa		8.10	+0.20	Tribune	TRB		31.75	+0.25
Hearst-Argyle	HTV		25.87	+0.26	Univision	UVN		35.36	unch
Journal Comm.	JRN		12.48	+0.02	Wash. Post	WPO		754.85	+6.33
Lincoln Natl.	LNC		65.60	+0.44	Young	YBTVA		2.85	+0.11

Bounceback

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TV Media Moves

Two upped at Fisher
Fisher Communications announced that Joe Lovejoy, VP/100+ Group, has been promoted to Senior Vice President/Media Operations. He will continue to lead Fisher's 100+ station group, and will now oversee business activities, including content initiatives for the company. In addition, Rob Dunlop, VP/Developing Media, has been promoted to Senior Vice President/Developing Media. While continuing to lead Fisher's interactive businesses, Mr. Dunlop will add corporate responsibility for IT, Engineering and all digital initiatives at Fisher.

New CFO at Bravo
Sabry Mohideen has been appointed Vice President and CFO, Bravo, where he will have responsibility for the financial oversight for the channel. In addition, Mohideen will function as CFO for the Emerging Networks of the NBC Universal Television Group, where he will oversee the financial management of Sleuth and Universal HD. Mohideen joins NBC Universal after 10 years at Viacom, where he most recently served as Senior Vice President, Head of International Finance, for MTV Networks.

Below the Fold

Ad Business Report
Hey big spender - who's the biggest?
In the US is Procter & Gamble as TVBR has the list...

Media Markets & Money
Religious groups accept
Mid-South spins
Has decided to pare down to one FM in each still has TV there...

Entertainment Media
Business Report
New Year's Eve gets Ugly
Disney is using the ABC Family cable channel to boost viewer interest...

Shakers & Makers
Transactions:11/6/06-11/10/06
TV: InterMedia buys into the Caribbean...; Radio: Staton on both ends of GA deal

Stations for Sale

New York City
2 LPTVs for Sale
Price Reduced-both for $9 mil
Washington DC - $5 mil
Philadelphia - $2.5 mil
Atlantic City - $1 mil
GeorgeWKimble@aol.com
Kozacko Media Services
520-299-4869

Market your Stations For Sale
in our daily epapers.
Contact June Barnes
jbarnes@rbr.com

More News Headlines

Sinclair renews
Peacock affiliation
Sinclair Broadcasting Group's WTWC-TV (Ch. 40) will remain the NBC affiliate in the Tallahassee, FL market for the next 10 years. Sinclair announced the renewal through December 31, 2016 just before the Christmas holiday weekend. The Tallahassee station is the only NBC affiliate in Sinclair's 58-station portfolio.

TVBR Radar 2006

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

Bidders getting
serious about Tribune
The initial bids from private equity firms may have been underwhelming, but interest in Tribune Company is heating up - at least to the point where it appears there are at least four potential bidders getting serious about whether to make formal offers.

TVBR observation: Initial bids were said to have been only around 32 bucks a share, which was about where Tribune's stock has been trading for some time. But then Burkle and Broad entered the picture to stir up a little excitement. The latest presentations have been designed to open the books to the bidders and convince them that Tribune's assets are worth more than the value Wall Street has been ascribing to them. It appears all of the bidders are planning on major spin-offs, particularly since there is little hope of retaining the temporary FCC waivers that Tribune has for its newspaper-broadcast combinations. That means that the sell-off of TV stations begun by CEO Dennis FitzSimons, but limited until now to non-core markets, will likely jump into high gear once a buyer is chosen for the entire company. It is not often that you see stations for sale in New York, LA and Chicago, so 2007 will likely be a hot year for TV station trading.
12/22/06 TVBR #248

Indecency on trial: Fox's case
Fox said the FCC has provided no reasoned explanation for pulling a 180 degree turn on its enforcement of fleeting unplanned expletives. The two sides have said these things before, but this time they were in front of a trio of judges.

FCC's case
Explained that the offending remarks from Cher and Nicole Richie delivered on an awards program would not be deemed indecent if the same exact clips were broadcast on a news programming.

TVBR observation: We aren't on the judge's panel, but from what we saw, this will not be decided on points. We don't even need to go into the laughable "mosaic" that has made the rules "clear" to all of us,... Without considering all that, Fox in our observation scored a clean knockout. Pacifica says repeated and deliberate. These incidents were fleeting and unplanned. If we were the judges, the case is closed. Now let's see what the real judges have to say. (Complete details and analysis in)
12/21/06 TVBR #247

Tribune LBO report denied
The lead independent director at Tribune Company insists that top management is not aligned with any group bidding for the company. That follows a report in Tribune's own LA Times that an LBO bid is in the works (12/19/06 TVBR #245), with CEO Dennis FitzSimons and other top executives teaming up with three private equity firms to bid for the company. Not so says William A. Osborn, who is leading the committee of independent directors as they analyze bids for Tribune and its various businesses.

TVBR observation: Maybe the original rumor was totally bogus. If not, then FitzSimons has gotten himself into a jam. The way out, though, would be to quit his CEO job - which is almost certainly going to disappear in a few months anyway - and then submit a bid to buy the company. But this is just thinking out loud on our part...
12/20/06 TVBR #246

Whiting's star rises;
VNU sells Euromags
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 and 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. Also, the payroll reduction was the official corporate announcement of what RBR/TVBR reported last week (12/12/06 TVBR #240). In saying it plans to make permanent cost redu! ctions 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.

TVBR 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. Further detail see
12/19/06 TVBR #245

Moving to cash on the barrelhead
Worth viewing in TV and learn from another Radio cluster well, 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.

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.
12/19/06 RBR #245

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